Once again, the market is disappointed. All of the excitement leading up to the signing of Phase 1 China agreement yesterday seems to be a letdown for the market. The traders are skeptical that China will follow through with the agreement. The markets tumbled after the signing with soybeans down 13 cents and trading 5 cents lower today. The signing of the trade deal is a step in the right direction for U.S. – China trade relations, but wasn’t enough to make a positive impact on the market. The Chinese said that they will purchase U.S. goods on their needs and market conditions. This one line is causing the traders to use caution on what to expect for sales to China. Most of their tariffs remain in place, but can be adjusted on a need be basis.
Corn is also trading lower after the signing. The export report that came out this morning was really strong for corn, but not enough to overcome the downward slide. December corn futures continue to trade near the $4.00 level. This could be a place to start making sales with big acres forecasted for corn. The USDA requested the Higher Blends Infrastructure Incentive Program. It seeks to gain input to “expand domestic ethanol availability” and opportunities to consider infrastructure projects to facilitate increased sales of higher biofuel blends”. Maybe ethanol can get the market excited.
Wheat is lower this morning following the Phase 1 let down. The market should find support with weekly US export sales over 23 mln bu which is larger than expected. Global demand for wheat remains strong.
The U.S. Senate is expected to approve the USMCA trade deal today with bipartisan support.
The vagueness of Phase 1 has set the market back. The market will be watching what exactly China buys, so uncertainty in the markets will continue. Even as the market is reacting negatively at the moment we are in a better trade relationship with China.
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