Corn moves higher on positive trade news
March corn futures moved higher this week improving 6-3/4 cents to close at 387-3/4. July corn poked above the $4 mark this week but settled at 399-1/2 up 5-3/4. Good news came as an early Christmas present to corn export demand late in the day on Thursday when the USMCA was approved by the US House of Representatives. Ratifying the USMCA has been the NCGA (National Corn Growers Association) top legislative priority because Mexico and Canada are the US corn industry’s largest and most reliable markets. This ensured stability in our major corn import partners is great news for farmers across the country.
As 2019 comes to a close many farmers are happy to put this trying year behind them. A majority of the northern corn belt, the Dakotas, Minnesota, Wisconsin, Michigan as well as Northern Iowa and Illinois, have seen their record wettest years to date since recording began in 1895. This was much of the reason for a record amount, 19.6 million acres of prevent plant in 2019. In other words, the US saw almost one acre of prevented planting for every 10 acres planted. Leading all states with prevented planting was South Dakota at 3.9 million acres, followed by Ohio at 1.5 million and Illinois at 1.5 million. With all of these stats it is still truly amazing the American farmer managed to plant 91.7 million acres of corn in 2019.
Soybean market continues move higher on trade optimism
January soybeans posted its third consecutive positive week this week improving 20-3/4 cents this week to settle at 928-1/4. July soybeans also had an impressive week improving 15 cents to close at 962-1/2. Much of the improvement this week in the soybean market came after news the US and China had agreed to a so called “Phase One” trade deal.
Both China’s State Council and the US Trade Representatives have come out and said the two countries have reached a deal. But, confirmed details of the deal or any sort of deal in writing has yet to publicly surface. US officials say China has promised to buy at least $40 billion of agricultural goods in 2020 and 2021. This $40 billion would compare with a 2017 baseline of $24 billion in Chinese purchases of US farm products. Chinese officials have said they will “significantly increase” US ag imports but no specific values or volumes have been announced. The Chinese hog herd has been decimated by ASF and overall feed demand has followed. Animal protein will likely be a large portion of what the Chinese consumer will be looking for. Both sides seem to be in agreement that signing of the phase one deal should be done sometime in early January. We will wait in anticipation of what exactly the details of the deal entail.
Wheat moves higher
March Chicago wheat improved 8 cents this week to close at 542-1/4. July Chicago wheat finished the week at 548-3/4. March KC wheat moved 19-1/2 cents higher ending the week at 462-1/4. Front month Spring wheat moved higher also improving 11 cents to close at 536-3/4. Long-term supply and demand factors seem to be improving in the wheat market. All winter wheat plantings in Europe look to be down due to excess moisture, much like the conditions faced here in the states. Export sales came in better than expected this week and the market still could see some demand emerge from China.
Cheese Extends to 3 Day Winning Streak
The spot cheese market saw a third consecutive day of bidding on Friday. The block/barrel average finished out the week up 1.625 cents higher after trading 2.5 cents higher today. It is nice to see the spot market completely reverse the negative start to this week. It looks like the spot cheese market may go and retest the $1.80/lb level. Butter continued to move higher pushing 0.5 cents above the $2.00/lb level. The powder market was down slightly today and the week finishing at $1.25/lb. Some of this softness may be from the 6.8% decline in GDT non-fat powder this week. Whey prices were up slightly today to finish at $0.315/llb.
The spot market finished higher in cheese today but the futures market was trading significantly lower during today’s session and even after spot cheese settled. But buyers slowly came back into the market. This could have been a rough start to the session where sellers pushed prices lower before they returned higher. But the Class III 2020 average finished up 5 cents on the day and is now only about 30 cents away from its all-time high.
Author
Kelly Rubisch