Well, the U.S. government remains closed for the most part, but grain/soy markets are open, but some might argue differently. If we were to close the trade for the week right now, March corn would be down 2 ¾-cents, March beans up ¾-cents and March wheat up 2 ¾-cents. I guess on average; we are at least up for the week.
The two key, or maybe better phrased, the only two topics markets are focused on right now are Brazilian weather and the upcoming U.S./China trade discussions. The Brazilian weather situation will increasingly become less of a story each week as harvest progresses down there. As of last weekend harvest completion was estimated to have been 6%. Still, the question does remain as to how much lower the production will be ratcheted. As I reported a couple of days ago, a survey of 10 different consulting firms resulted in an estimate right now of 117.06 MMT. Dr. Cordonnier had lowered his estimate this week to 115 MMT but again, keep in mind, either would still represent the second largest Brazilian crop on record.
That leaves us with the other topic, and as is well publicized, the U.S. and Chinese trade negotiators will gather in Washington on the 30th/31st to try and work out a few more differences. If you were to listen to U.S. Commerce Secretary, Wilbur Ross, one would not be overly optimistic about any resolution. Yesterday he commented that the two nations were “miles and miles” away from resolving trade issues. Granted, we have until March 1st to hammer something out, but each time it is delayed it produces another letdown for the markets.
It turns out China did import some beans from the U.S. in the month of December. A whopping 69,298 MT. That is an improvement of 69,298 MT over November but is 6,120,702 MT less than a year ago for the month. That was the lowest figure for the month of December since 2008. For the calendar year, this means China imported 16.6 MMT from the U.S., which is slightly more than 50% of the 2017 imports of 32.9 MMT.
The figures are now also in on the pork trade with China and are no better than beans. For the calendar year, China imported 263,000 MT from the U.S. which is right at half of the quantity in 2017. Recognize that China previously represented about 2% of our export business but it is still vital as they are a major purchaser of offal. They are the world’s largest purchaser of pig’s feet, ears, elbow, and other such items, probably something most of us will not find at the local butcher counter. Of course, China is overall the world’s largest consumer of pork period. Hope does spring eternal though, and many analysts continue to believe that they will need to step up imports in the latter half of 2019 to keep prices in check and maintain an adequate supply.
Last but not least, there is probably a no better reflection of what is happening in global trade right now than in shipping rates. Using the adage that a picture is worth a thousand words, here is the chart of the Baltic Dry Index. While we have not quite pushed down to the lowest point traded last year, the trend is unquestionably lower, indicating less demand for vessels.
Loading News