The Hueber Report

Finally, we have some news that would indicate that concrete steps have been made towards coming to a resolution in the U.S./Chinese trade battle.  Treasury Secretary Mnuchin told reporters yesterday that the two countries have agreed to set up “enforcement offices” that will monitor if the other is living up to the new agreements.  This would only seem to be reasonable, but obviously has been a stumbling block up to this point, particularly from the Chinese side of the table. I understand there are still issues and details that need to be worked out on topics such as intellectual property theft and forced technology transfers as well as the desire by China to have the increased tariffs lifted as soon as a new agreement is signed, which evidently the U.S. is reluctant to do. No doubt Washington enjoys the additional revenues generated by this as we consumers continue to snap up products made in China. 

It was also mildly encouraging to hear that the Chinese commerce ministry has confirmed that it is a request by the U.S. Grains Council to lift anti-dumping tariffs on U.S. DDG’s. By now means does this assure that they will comply with the request, but it is a positive step.  

Corn and bean markets have failed to build on the weather inspired advance from yesterday, but wheat, and notably Minneapolis wheat has stretched into higher ground.  As of last weekend, spring wheat planted stood at 1% compared with a 5-year average of 5% and one has to suspect that at least in the northern plain states, there has been little to no progress this week.  Of course, it probably did not hurt that Minneapolis futures came into this week sitting at lows for the year and very close to the low end of the range for the past two years.  

The Rosario Grain exchange updates estimates for the Argentine crops.  This now projects a 48 MMT corn crop, up from 47.3 in the last report and a 56 MMT bean crop, which was boosted 2 MMT.  This compares with the latest USDA estimate of 47 MMT corn and 55 MMT beans and last year’s drought-stricken crops of 32 MMT corn and 37.8 MMT beans. 

This is Thursday morning, which usually means we have weekly export sales to mull around, but with the only category that I see that provided us with good news was over in pork. Here we made sales of 90,700 MT of which 77,700 were to China.  Corn sales were up 2% for the week at 548,000 MT or 21.58 million bushels, but this was still 18% under the 4-week average and below the lowest estimate of 650k MT. The top buyer was Colombia with 181.5k MT, followed by Unknown destinations at 169.9k and then South Korea with 138.9k.  Wheat sales dropped 61% from the previous week coming through at 273,000 MT or 10.03 million bushels.  Mexico was the top buyer with 89.1k MT, followed by South Africa taking 49.9k and then Japan with 49.4k.  Misery loves company though, and bean sales were probably the most disappointing of the lot.  The trade was expecting to see sales in the 750k to 1.2 MMT range, but in reality, the number came in at 270,400 MT or 9.94 million bushels.  The top purchaser was Indonesia with 73.7k MT, followed by Mexico at 71k and then the Netherlands with 66.3k.   

The weak commodity trading sector continues to reverberate throughout the industry and is showing up even in those diversified into processing.  ADM announced a plan overnight to encourage early retirement for some North American employees and could begin eliminating some positions. Their CEO only made $19.6 million last year ( 23%) so obviously, not all are being asked to make sacrifices.