Action needed on trade talks, supply/demand report out Friday

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MarketsFarm – There needs to be some kind of firm, tangible action when it comes to the partial trade agreement between the United States and China, said Steve Georgy of Allendale Inc. in McHenry, Ill.

He pointed to China, which recently said it wants some of the tariffs the U.S. has on its imports to be removed.

“There’s been nothing said from Washington,” Georgy lamented.

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That inaction has fuelled speculation the agreement, known as Phase One, isn’t as strong as the public has been led to believe. That has generated a back and forth effect in prices at the Chicago Board of Trade, he said.

“The China trade talk thing has become stale,” Georgy commented, noting the overwhelming need for fresh news.

As for the U.S. Department of Agriculture’s World Agriculture Supply and Demand Estimates (WASDE), Georgy explained there are two camps when it comes to corn. The analysts believe the 2019/20 carryover will come in at about 1.8 billion bushels, for a 112 million bushel decline from October’s supply and demand report. However, traders have questioned why such a bullish report would suddenly come out now after a series of bearish reports since June.

“The carryover guess is likely wrong,” he stated.

As for soybeans, Georgy expects prices to rise prior to the WASDE being released at 11 am central on Friday.

When it came to wheat, he pointed to the lack of sales U.S. wheat has been experiencing.

“We’re still not the cheapest wheat around. I don’t foresee us getting any sales,” Georgy said.

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Glen Hallick writes for MarketsFarm specializing in grain and commodity market reporting.

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