The Allendale Wake-Up Call

Markets Watching Headlines Closely

Good Morning from Allendale, Inc. with the early morning commentary for January 16, 2019.

Grain market traders are weighing the possibility of a US/China trade deal as mixed messaging swirls the market. With the US government still shutdown, the lack of data increases the uneasiness some market participants are feeling. Energy traders look to this morning's EIA crude oil inventory report, and watch the latest in temperature forecasts.

December NOPA crush exceeded expectations at 171.759 million bushels. That was a new record for any previous December. This December number is 3.2% over last year. Sep, Nov, and Dec crush rates have run 17.9%/ 4.9%/ 2.1%/ 3.2%. We have beat USDA’s whole year goal of only 1.2% higher in each of the four months of this marketing year.

The year ahead is sure to bring its challenges and opportunities. Start the new year with a complete fundamental outlook for corn, soybeans, wheat, cattle, and hogs complete with price outlooks and trade strategies. We’ll also feature a a complete year-ahead weather outlook with Drew Lerner of World Weather, Inc. It all takes place just a few short weeks away, January 29 - 31. Get registered here.

Agroconsult lowered their estimate of Brazil's 2018/19 soybean crop by 5.2 million tonnes due to ongoing dryness in the region. Their crop estimate now stands at 117.6 million tonnes, down from their previous 122.8 million. This reduction is inline with other recent estimates.

APK-Inform increased their estimate of Ukrainian grain exports in the 2018/19 season to 46.07 million tonnes, an increase of 2.1%. They see 25.75 million tonnes of corn and 15.5 million tonnes of wheat being exported.

United States Trade Representative Robert Lighthizer did not see any progress made on structural issues during trade talks with China last week, Republican U.S. Senator Chuck Grassley said on Tuesday. Grassley, who held a meeting with Lighthizer on Friday, said the top trade negotiator commented very positively on China's soybean purchases, which resumed in modest amounts last month after Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods. (Reuters)

A French court has revoked the license for Monsanto's Roundup Pro 360 and other glyphosate-based weedkillers on safety concerns.

Managed money funds were sellers of 20,000 corn, 7,500 soybeans, 4,000 wheat, 2,00 soymeal, and 1,500 soyoil in yesterday's trade.

Economic reports out this morning include MBA Mortgage Applications, Import/Export Prices, NAHB Housing Market Index, and EIA's Crude Oil Inventories. This afternoon will feature Fed's Beige Book report.

China has culled 916,000 pigs after around 100 outbreaks of African swine fever in the country, the agriculture ministry said on Tuesday, as the disease continues to spread to new regions and larger farms. The disease has reached 24 provinces and regions since the first outbreak in August, roiling trade in the world's top pork market and related sectors. China slaughtered almost 700 million pigs in 2017. (Reuters)

Traders are talking about the possibility of a short term rally in cash hog prices because of the snow systems moving through the midwest which have the potential to disrupt transportation and cause marketing problems.

Weekly Comprehensive Boxed Beef report showed end users were not too active in procurement last week. Their purchases of beef for extended delivery, that over 21 days from now, ran 7% under last year. The previous two weeks, both holiday weeks, ran 19% and 23% under last year.

Dressed Beef Values were higher with choice up .19 and select up .41. CME feeder index was at 144.44.  Pork cut-out values were down .86.