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Traders Want New Commitments as Negotiations End

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Good Morning from Allendale, Inc. with the early morning commentary for January 9, 2019.

Grain Market traders are looking for resolution and new commitments from the trade negotiations between the US and China. Some attention continues to be paid to the weather situation in South America, while fundamental data is limited due to the ongoing US government shutdown.

Trade talks between the US and China continued again today amid progress, according to both sides of the negotiating table. The talks were scheduled to end yesterday, but both parties agreed to continue. The talks ended during the overnight markets with a promise of details, "soon". Negotiators sounded upbeat at the conclusion.

Reuters released average analyst estimates for USDA's government shutdown-delayed reports (originally scheduled for Friday), even though it remains to be seen when the reports will be released. The average estimate for world ending stocks has wheat at 268.22 million tonnes, corn 307.32 MT, and soybeans 114.36 MT.

US ending stocks are estimated at .987 billion bushels for wheat, 1.694 for corn, and .904 for soybeans. US Quarterly grain stocks (December 1st) are estimated at 1.960 billion bushels of wheat, 12.097 corn, and 3.725 soybeans.

All Winter wheat seedings are estimated at 32.279 million acres, Hard Red Winter wheat at 22.727 MA, and Soft Red Winter wheat is estimated at 6.019 MA. The release of these reports remains dependent on the US government reopening.

A spokesman for the Environmental Protection Agency said that finalizing the E15 rule is a priority for the Administration and that it would be complete before the Summer driving season.

South American weather continues to garner attention as well. World Weather, Inc. noted, " Even though most of Brazil has good moisture in place today there is a good chance many important crop areas will become too dry in the second half of this month without better returning rainfall. The northeast is already dry and the next ten days will build a ridge of high pressure into the interior south drying out those areas next."

The USDA on Tuesday extended the deadline for farmers hurt by trade wars to apply for aid payments as the partial shutdown of the federal government drags on. The deadline, originally set for Jan. 15, will be delayed for the number of business days that USDA offices are closed, according to the agency. (Reuters)

Managed money funds were thought to be mostly sellers in yesterday's trade, selling 7,000 corn, 6,000 soybeans, 2,500 soymeal, and 3,000 soyoil. They were buyers of 3,500 wheat.

New contract highs were posted for the February and June live cattle contracts. They both also posted a new high close. Futures appear to be finding support in cash bids which posted at $123 in Nebraska, and confirmation of $124 cash cattle sales in Iowa.

We have word from Nebraska/Iowa cattle sources that this week's feeder cattle sales will be huge. That's not unusual for this particular week after about three weeks of holiday disruptions.

Comprehensive Boxed Beef report showed that end users purchased 23% fewer loads of beef for extended delivery than last year in the latest week. The week before that was also poor at at 19% under last year.

A rumor in the hog market is that China is preparing to remove tariffs on US pork, however, traders seem to want proof before jumping on that bandwagon.

Dressed Beef Values were lower with choice down 0.30 and select down 0.95. CME feeder index was at 145.63. Pork cut-out values were down .40.

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About the author

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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