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Grain Markets Quiet Despite Confirmation of Sales

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Good Morning from Allendale, Inc. with the early morning commentary for February 5, 2019.

Grain markets pushed higher while waiting for the USDA to clear a backlog of crop reports delayed by the partial government shutdown. The volume was lighter than expected after traders announced China had booked at least 1 million tonnes of U.S. soybeans. The USDA confirmed private sales of only 612,000 tonnes of soybeans to China yesterday.

November soybean crush likely totaled 177.0 million bushels, according to the average forecast of seven analysts surveyed by Reuters. Estimates ranged from 176.4 million bushels to 177.2 million bushels, with a median of 177.1 million bushels.

White House economic adviser, Kevin Hassett said "there's still a lot of work to do" in China trade talks. A U.S. trade delegation will visit China again in mid-February for another round of talks.

Egypt's GASC bought 360,000 tonnes of French and Romanian wheat in its tender last week. The Russian wheat on offer was too expensive to be competitive.

Russian wheat prices remain supported by high demand from exporters searching for supplies for previously agreed contracts and lower supply as some farmers are still holding back sales from their stockpiles in the hope of seeing further price growth in coming weeks, SovEcon said. The seasonal decline in grain supply from Russia has so far happened more slowly than SovEcon earlier anticipated, it said.

Brazil grain processors have been negotiating export permits with the Chinese government for dozens of soybean and cotton processing plants as crushers seek to boost capacity utilization and sell higher-value products, said Daniel Amaral, an economist with Abiove. The entity is seeking permits for between 30 and 35 soybean and cotton crushing units to trade in soymeal and other oilseeds byproducts with China.

Cotton futures continued sliding yesterday, touching their lowest level in three weeks, hurt by a stronger dollar and increasing uncertainty over the U.S.-China trade deal.

Oil prices pushed higher due to expectations of tighter global supply amid U.S. sanctions on Venezuela and production cuts led by OPEC.

Cattle and hog futures were sharply higher on technical buying, with live cattle nearing recent contract highs and lean hogs rebounding from a multi-month low, traders said. Firmer prices for pork and beef in the wholesale market also helped push future prices higher.

Several countries started to reduce the amount of beef they import from Poland after a TV documentary showed an abattoir killing sick cows, the head of the meat producers lobby said. He did not name any countries or give details on the size of the cuts. Poland produces roughly 560,000 tonnes of beef per year with 85% of it for export.

Dressed Beef Values were higher with choice up 3.39 and select up 0.26. The CME feeder index is 141.01. Pork cut-out values were up 1.13.

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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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