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Grain Markets Stabilize as AgForum Begins

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Good Morning from Allendale, Inc. with the early morning commentary for February 21, 2019.

Grain markets started the day session sharply lower and closed mixed with corn and soybean futures a few cents higher while wheat finished higher limiting session losses. Wheat futures pulled back as traders continued short selling over concerns of lagging U.S. exports despite them being competitively priced in the global market. Soybean futures were also pressured earlier by news of African swine fever continuing to spread in China, and the first cases being confirmed on hog farms in Vietnam.

President Trump said trade talks with China were going well and suggested he was open to pushing off the deadline to complete negotiations, saying March 1 was not a "magical" date. "They are very complex talks. They're going very well," Trump told reporters. "I can't tell you exactly about timing, but the date is not a magical date. A lot of things can happen."

USDA trade estimates forecast 2019 corn plantings at 91.512 million acres, corn yield at 177.1 bu./acre, corn production at 14.882 and corn ending stocks at 1.792 billion bushels, soybean plantings at 86.144 million acres, bean yield at 50.9 bu./acre, bean production at 4.320 and bean ending stocks at 0.893 billion bushels and wheat plantings at 47.196 million acres, wheat yield at 47.7 bu./acre, wheat production at 1.904 and wheat ending stocks at 0.960 billion bushels, ahead of the USDA's annual outlook forum on Feb. 21-22.

China will rely on overseas purchases for supplies of the oilseed, even as it tries to revive domestic production, a top official said. "We will for sure trade soybeans in the international market," Han said, adding that the United States is an "important partner" in soybean trade, said Agriculture Minister Han Changfu.

Brazil's soybean production in the 2018/2019 crop cycle is poised to fall by 4 percent from the previous cycle due to adverse climate conditions, according to the average of 12 estimates in a Reuters poll. Farmers there are expected to harvest 114.6 million tonnes of soybeans, below the record amount of 119.3 million tonnes last year.

Egypt's General Authority for Supply Commodities (GASC) said it bought 360,000 tonnes of wheat at an international purchase tender on Wednesday. The purchase was made up of 180,000 tonnes of French wheat, 60,000 tonnes of Romanian wheat, 60,000 tonnes of Russian wheat and 60,000 tonnes of Ukrainian wheat, the grains buyer said.

Funds yesterday were estimated short 11,600 corn contracts, long 9,700 soybean contracts, short 26,100 wheat contracts, long 5,500 soymeal contracts, and long 6,100 soyoil contracts.

Cattle on Feed Report will be released this Friday (originally scheduled for January 19). Allendale expects to see December cattle placements at 3.1% over last year. That would stop the previous three weeks of lower than last year numbers.

Cold Storage will be released on Friday as well for the month of December. We forecast 529.616 million lbs. of beef at the end of December. That would come from a 15 million lb. increase over November. We see 495.968 million lbs. of pork in frozen warehouses at the end of December. This estimate would represent a 12 million lb. decline from November.

Dressed Beef Values were lower with choice down .78 and select down 2.04. The CME feeder index is 141.10. Pork cut-out values were up 0.26.

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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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