The Allendale Wake-Up Call

Trump Ask China to Immediately Remove All Ag Tariffs on U.S.

Good Morning from Allendale, Inc. with the early morning commentary for March 4, 2019.

Grain markets were mixed with soybean and corn future prices higher, rebounding from earlier losses, but gains were limited on concerns surrounding strong export competition.  Wheat future prices fell again as they posted their steepest weekly decline since late August as technical selling and competitive global supplies pressured prices.  Traders will continue to wait for developments in the U.S.-China trade dispute as they will start to position themselves for this Friday’s USDA WASDE report.

U.S. President Trump said he had asked China to immediately remove all tariffs on U.S. agricultural products because trade talks were progressing well.  "I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions," Trump said on Twitter, pointing out that he had not raised tariffs on Chinese goods to 25 percent from 10 percent on March 1 as planned. "This is very important for our great farmers - and me!" Trump said. (Reuters)

President Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27 given progress in upcoming talks, according to the Wall Street Journal.  China would lower tariffs on U.S.-made goods including agricultural products, chemicals and cars in exchange for sanctions relief from the U.S., the Journal said, citing people briefed on the matter on both sides.

CFTC Commitment of Traders report for data through 2/19/19, showed funds estimated new net position short 86,275 corn contracts, short 42,810 soybean contracts, short 42,718 wheat contracts, short 9,148 lean hog contracts and long 115,607 live cattle contracts.

U.S. busiest grain ports have been swamped by flooding and ice buildup on key rivers in the Midwest which has stalled the movement of barges who supply export terminals at the Gulf of Mexico with grain, said grain traders.  "It's a logistical nightmare, with this lock being closed ... and the high water at the Gulf, and high water at Cairo, (Illinois). It's just going to be that way for the next couple of weeks," said one cash grain trader.

Allendale's annual acreage survey will conclude this Friday, but we can still use your help! US planted acreage intentions will soon become a major trade focus, and your estimates help us all gain insight into what the USDA will report later this month. Submit your acreage estimates here. Thank you!

January Soybean crush was reported by the USDA at 182.8 million bushels.  Last January's crush was 174.6 million bushels.

OPEC oil output dropped by 300,000 barrels per day in February despite criticism from President Trump, who tweeted Monday for the group to ease its efforts to boost prices, saying they were "getting too high".  "We are sticking to the plan," one OPEC source said when asked about Trump's tweet.

USDA Bi-annual Cattle Report showed combined beef and dairy herd at 94.760 million head (0.5% over last year).  The beef cow inventory was seen at 31.766 million head (1.0% over last year).  Beef heifers held for the cow herd were noted at 5.925 million head (-3.0% from last year). The “other heifers” category was noted at 9.604 million ( 2.8% over last year).  The 2018 calf crop was revised to 36.403 million head ( 1.8% over last year).

Dressed Beef Values were higher with choice up 1.34 and select up 1.52.  The CME feeder index is 139.23.  Pork cut-out values were up 1.43.