Weekly market review
Planting progress for the week ending April 12th was as expected at 3 percent complete for corn, up 1 percent from the previous week and just behind the 5-year average at 5 percent.
Nearly all of the southern states are ahead of the 5-year average, except for Arkansas and Oklahoma. Milo, which trades off the price of corn, is at 16 percent planted and is 3 percent behind the 5-year average. Spring wheat seeding is 11 percent behind the 5-year average.
Surprisingly, there has been a slight increase in soybean meal demand in China recently. Trade issues between China and Canada have resulted in an increase in soymeal for aquaculture replacing Canadian canola. This demand increase is far from offsetting the large drop due to the African swine fever, but an increase nonetheless. At this point, the price spread is likely to result in more demand for Brazil.
The European Union stated it is ready to start talks on a trade agreement with the United States, with hopes of having an agreement before the end of the year. The two main areas of discussion are cutting tariffs on industrial goods and make it easier for companies to show that products meet EU or U.S. standards. Discussions on the agricultural side will not be part of the trade talks at this point. Chairman of the tax and trade-focused Senate Finance Committee, Chuck Grassley, stated that a trade deal that excluded agriculture would not likely win approval in Congress.
With trade negotiations continuing, comes optimism that China will increase imports of poultry and pork from the U.S. China banned all U.S. poultry in 2015 due to avian influenza. Iowa State University economists expect China to import 4 to 6 million metric tons of pork in the next year due to African swine fever.
The U.S. has been pushing to lift bans, reducing tariffs and overhaul the regulatory process, to help increase market access for agricultural products in China.
That National Oilseed Processors Association (NOPA) released their March crush report today. They estimate that 170 million bushels were crushed in March. This was 2 million bushels more than expected by trade and 15 million higher than last month.
African swine fever continues to spread in China is leading to speculation of more culling and loss of production. One U.S. agricultural financing firm estimates that Chinese pork production will be down 30 percent and that the disease will cause the loss or culling of 150-200 million pigs in China. A 30 percent decrease would put Chinese production the lowest it has been in 20 years and equals 25 ercent of U.S. production. The impact this disease will have on U.S. pork demand as well as corn and soybean demand remains largely unknown.
For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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