Wheat Markets Rise on Trade Agreement Coattails
Successful Farming – 12/16/2019
When we try to quantify how much wheat would be involved in the China business, the numbers don’t look that big. Some estimate about 250,000 of higher quality wheat. We’ll take it but it’s not a game changer. They typically buy spring wheat to blend with their own, and we have plenty of high-grade springs. The world has plenty of high-grade wheat, but Chinese purchases would shift at least some business to the U.S. With the North American agreement coming into place, we will see Mexico ramp up grain purchases as well. Wheat is also finding support from steadily rising world values. Russian FOB offers were higher again this week, and Egypt purchased wheat from four different countries at $238/MT CIF, $4/MT higher than last week. Slow farmer selling out of Russia has supported domestic, and thus world, prices. But that just bunches up selling down the road.
Kudlow: U.S.- China Deal ‘Absolutely’ Done, U.S. Exports to China Will Double
Reuters – 12/16/2019
The so-called Phase One trade deal between Washington and Beijing has been “absolutely completed,” a top White House adviser said on Monday, adding that U.S. exports to China will double under the agreement. “They’re … going to double our exports to China,” National Economic Council Director Larry Kudlow told Fox News Channel. Under the trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $200 billion over the next two years. While U.S. officials have touted the deal, Chinese officials have been more cautious, emphasizing that the trade dispute has not been completely settled.
Mexico Withdraws USMCA Objection
Mexico is withdrawing its objection to a labor provision in the U.S.-Mexico-Canada Agreement that threatened to derail the USMCA approval process, which is expected to take a major step forward this week in the U.S. House of Representatives. Jesús Seade, Mexico’s chief North American negotiator, told reporters Monday that Mexico is now satisfied with new promises from U.S. Trade Representative Robert Lighthizer that U.S. officials in Mexico would not be conducting inspections at factories to evaluate the improvement of labor standards, actions that Mexico would see as violating its sovereignty. “These personnel will not be labor inspectors,” Seade said after a rushed meeting Monday morning with Lighthizer at USTR headquarters in Washington. “Their business is cooperation and assistance. I contacted authorities in Mexico and they are satisfied.”
US Wheat Net Export Sales More Than Double on Week, Physical Exports Up 68%
S&P Global – 12/12/2019
US net export sales of wheat for the current marketing year (June-May) more than doubled on the week to 502,674 mt for the week ended December 5 after a steep fall last week, Department of Agriculture data showed Thursday. On a year-on-year basis, the net export sales were 33.3% lower for the reporting week. Physical wheat exports from the US, in the reporting week, were 68.1% higher on the week and 20.6% lower from a year ago. Physical exports are shipments of reportable commodities exported against sales. Major destinations for the weekly net export sales were Japan with 100,000 mt, the Philippines with 85,900 mt, Thailand with 74,000 mt, Indonesia with 57,000 mt and South Korea with 50,300 mt. About 64,100 mt were sold to unknown destinations.
Source: U.S. Wheat Associates