Crop Prices Dip Despite Trade Deals
Crop prices have dropped since the signing of trade deals meant to buoy the farm economy, clouding the outlook for farmers working to secure financing for this spring's planting season.
Soybean futures have fallen 7% to nearly $8.75 a bushel on the Chicago Board of Trade since a trade agreement meant in part to boost Chinese demand for the U.S. crop was reached two weeks ago. Corn futures have fallen by over 2% in that time, a span that also included the signing on Wednesday of a new trade agreement between the U.S., Canada and Mexico -- a major buyer of American corn.
"Mexico was already a buyer of U.S. corn and pork, along with other commodities," said Karl Setzer, a commodity risk analyst for agricultural research firm AgriVisor.
Wheat Falls on Fears Coronavirus Will Hurt Demand
Wheat fell 1.2% to $5.53 3/4 on the CBOT Friday on worries that the virus outbreak in China will eat into demand.
The coronavirus outbreak will likely reduce China's ability and willingness to buy huge amounts of U.S. agricultural produce, as agreed in the trade deal that Beijing recently signed with President Trump, an official at the Food and Agriculture Organization of the United Nations said Friday. "It was already a bit difficult mathematically to figure out whether China would in fact meet that commitment," Abdolreza Abbassian, a senior economist at the FAO and secretary of the Agricultural Market Information System, told Dow Jones Newswires. "And now, the situation has deteriorated more on the demand side. This is not China's fault."
Brazilian Soybean Stockpiles Expected to Surge if China Fulfills Trade Deal With US -- Market Talk
1420 GMT - Soybean prices will remain under pressure in 2020 even if China starts to buy U.S. oilseeds in large quantities in the second half of the year, says Pedro Dejneka, co-founder of MD Commodities. The reason: if China buys more soybeans from the U.S., it will stop buying as many beans from Brazil. Brazil would struggle to sell those soybeans to other importers, leading to a massive buildup in stockpiles inside the Latin American country. Dejneka calculates that the volume of soybeans stored in Brazil at the end of the season could leap from 1 million metric tons in 2019 to 14 million metric tons in 2020. "There's going to be a lot of beans left over in Brazil," he tells Paris Grain Day, weighing on global prices. (email@example.com)
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Climate Change Raises Costs for Grain Importers, Exporters -- Market Talk
0942 GMT - Climate change and efforts to avoid more drastic increases in global temperatures are already raising costs for agricultural importers and exporters, says Cyrille Coutansais, director of research at the Center for Strategic Studies of the Navy in France. The drought that struck Europe in 2018 led countries in Northern Europe to buy more grain from Ukraine, because plunging water levels made it more expensive to transport grain from Central Europe. Less than two years on, Panama has raised the price of using its canal because of low water levels. Meanwhile trading companies face stricter rules on the sulfur content of shipping fuel from the International Maritime Organization. One way of meeting these requirements--fitting scrubbers--required taking ships into dry docks for three or four months. Some companies will simply keep using non-compliant fuel and pay the fines, Coutansais tells Paris Grain Day. (Joe.firstname.lastname@example.org)
Another Roundup Trial Delayed as Bayer Talks Settlement -- Market Talk
1229 ET - Bayer and plaintiffs' lawyers agree to delay a California trial in the long-running cancer litigation centered on the German company's Roundup herbicide, a week after pushing off a separate trial that was set to start in St. Louis. The company and plaintiffs' lawyers are in talks overseen by court-appointed mediator Kenneth Feinberg, debating terms around which plaintiffs could qualify for settlement compensation, and how much. Bayer, which lost three consecutive trials in the litigation over the past year and a half, says the delay lets mediation continue without the distraction of a trial, and says there's no timetable for or certainty of any settlement. Bayer shares fall 0.6%. (email@example.com; @jacobbunge)
French Farmers Face Challenge from Rise of Multinational Traders: Transgrain -- Market Talk
1131 GMT - The main challenge facing the French agricultural sector is the increasing power of multinational trading houses in the supply chain connecting farms with end users, says Jean-Philippe Everling, director of Transgrain. "In the future French producers could become sub-contractors to multinational firms," Everling tells Paris Grain Day. "That is a major risk. We have a lot of assets and yet we could become sub-contractors of multinationals that have no particular interest or connection with French farming." He says one of the main selling points for French wheat, like French wine and cheese, is its "terroir." (Joe.firstname.lastname@example.org)
Hogs End Rough January with Big Loss -- Market Talk
15:08 ET - Lean hogs sink another 7.2%, coming slightly off its expanded limit losses earlier in the session--and following a limit-down trading session yesterday--while live cattle are off 0.3% as coronavirus continues to weigh on the global economy. Karl Setzer at AgriVisor says the Chinese quarantine is affecting livestock supply and feeders aren't getting needed supplies. Pork sales last week were 34,090 metric tons, up 67% on year, but only 2,560 metric tons of that were sold to China. For January hogs fell 20%, in a month the Hueber Report says came "in like a bull and went out like a bear." (email@example.com; @jonvuocolo)