Jack Scoville is an often quoted market analyst in the grain and soft commodities sectors. You will find his commentary throughout the Reuters, Wall Street Journal, Dow Jones, Bloomberg, and Barron's publications. Contact Mr. Scoville at (312) 264-4322
DJ CBOT Delivery Intentions: Totals – May 1
Source: CME Group
Contract Quantity Next Trade
Commodity Month Delivery Day Assigned Today Date Available
SOYBEAN MEAL May. 02, 2019 195 Apr 29, 2019
SOYBEAN OIL May. 02, 2019 477 Apr 26, 2019
ROUGH RICE May. 02, 2019 265 Apr 30, 2019
CORN May. 02, 2019 869 Apr 26, 2019
OATS May. 02, 2019 141 Apr 11, 2019
SOYBEAN May. 02, 2019 451 Apr 29, 2019
WHEAT May. 02, 2019 826 Apr 30, 2019
DJ U.S., China Conclude Productive Trade Talks, but Sticking Points Remain — Update
By Chao Deng in Beijing and Lingling Wei in Washington
Negotiators made headway on thorny issues in the U.S.-China trade dispute, including access to key markets and how to roll back punitive tariffs, though Chinese subsidies and other sticking points remain as both sides prepare for talks they hope will clinch a deal.
A brief trip to Beijing by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin for meetings with Chinese negotiators this week explored ways to bridge the divide on several longstanding issues, according to people close to the talks. That list covers foreign access to China’s cloud computing market and what portion of the tariffs both sides have levied on each other’s goods will remain in place, these people said.
Other issues, particularly Beijing’s support for domestic companies, remain unresolved, leaving negotiators confronting a full agenda for meetings in Washington next week that are expected in part to focus on a draft agreement in Chinese and English. Chinese Vice Premier Liu He is leading more than 100 officials from over a dozen government agencies for the talks, in a sign Beijing thinks final details can be ironed out, these people said.
Getting a final deal, however, may mean accepting terms that are less sweeping than some on the U.S. sides have sought. China hawks in the Trump administration, as well as some businesses, have urged President Trump to stand firm for an agreement that would force Beijing to make fundamental changes to policies that have protected markets and domestic companies — and the Chinese side is resisting.
“There are no game-changers out there,” said Jeff Moon, a China trade consultant and former assistant U.S. trade representative.
Messrs. Lighthizer and Mnuchin left Beijing on Wednesday evening, having spent less than 24 hours with Vice Premier Liu and other negotiators. Mr. Mnuchin, in a tweet, described the meetings as productive. White House press secretary Sarah Sanders said that talks “remain focused toward making substantial progress on important structural issues and rebalancing the US-China trade relationship.” She said the negotiations will resume on May 8.
Business groups are hoping U.S. and Chinese officials have enough momentum to outline a deal as soon as the end of next week, with the governments working out final details in the following weeks ahead of a signing. Financial-market investors and most business leaders are eager to see a rollback in tariffs and greater certainty in U.S.-Chinese ties. Still, some industries would rather the U.S. continue negotiating toward something better if their priorities aren’t fully addressed in the emerging deal.
China and the U.S. have wrangled over a range of issues in the yearlong trade fight that has seen the governments slap escalating rounds of tariffs on each other’s goods.
Negotiators have tussled over whether the U.S. would keep in place some of the tariffs on $250 billion in Chinese goods as leverage to enforce compliance with any agreement. Beijing wants their full removal, while President Trump and other U.S. officials have suggested that $50 billion, the amount of the first tranche of tariffs, could remain.
One option being explored would be to calibrate the tariffs based on the percentage of trade between the countries, a person close to the talks said. The $50 billion represents about 10% of the Chinese exports to the U.S., so China, which buys far less from the U.S., would then leave in place tariffs covering 10% of its imports, about $13 billion.
Among the most nettlesome issues remaining are the changes the U.S. is seeking to address more deep-seated structural issues, particularly the web of Chinese industrial policies that support local companies. The U.S. side wants more than the broad pledge that China has thus far offered to treat all firms equally in government procurement and other matters, according to the people briefed on the talks.
“An agreement has not been reached, nor whether to do a deal without an agreement on subsidies,” said one of the people.
The U.S. has complained for years that China’s subsidies create an unfair advantage for domestic companies and have led to excess capacity, with Chinese products then dumped on overseas markets. Beijing has said that the bulk of such subsidies comes from provincial and local governments, making it difficult for the central government to track.
Chinese economists and policy advisers have warned about a sharp, sudden cut off in subsidies, saying that such a move now would undermine China’s state-led economic model and risk bankrupting some state enterprises.
Subsidies to nurture high-tech industries, from biotech to next-generation telecommunications, have been supported by President Xi Jinping’s government to make China a technology leader but have drawn criticism from the Trump administration.
Chinese negotiators have tried to address some of those concerns. For the fast-growing cloud-computing sector, for example, China has agreed to ease access, eliminating the 50% ownership cap on foreign firms for certain cloud services involving software. In other parts of the cloud market, foreigners are prohibited from owning any stake and must license their technology to Chinese firms.
Beijing, however, wants to remove the ownership cap gradually, according to a person close to the talks. The issue is important as Amazon.com Inc., Microsoft Corp., and Apple Inc. and others have invested millions of dollars or more to provide cloud services in China but remain hampered by regulations.
Chinese negotiators have also agreed recently to not confine the ventures to set geographical limitations, according to the person. A previous offer by China was limited to free-trade zones.
Still, unresolved are licensing and data transfer issues. Licensing requirements are different depending on the type of cloud-computing services, and Beijing is still insisting on withholding some licenses, according to the person. Also uncertain is a U.S. demand that Beijing loosen a stringent cybersecurity law, which requires companies in sectors deemed critical to store sensitive data within the country’s borders and not transfer the information abroad.
Outside of the talks, Beijing signaled more liberal access for foreigners to its banking sector. The chief banking regulator in comments on the agency’s website said it plans to remove requirements that foreign banks have $10 billion in assets before being allowed to set up a legal entity in China and $20 billion in assets before being able to set up a branch. The regulator also plans to scrap separate approval procedures for foreign banks to conduct yuan business.
–William Mauldin contributed to this article.
General Comments: Winter Wheat markets were lower yesterday and trends are down. The weekly charts show eventual swing targets near 292 for Chicago SRW and 364 in Chicago HRW. Minneapolis could move as low as 450 basis the nearest futures. Minneapolis remained weak on fears of a dramatic increase in planted area to Spring Wheat in Canada. StatsCan confirmed the possibility last week in its planting intentions report that showed Canadian farmers are planning on planting more Wheat this year at the expense of other crops, including a sizable cut in Canola area. Canada and China continue to have weaker trade relations and Canola demand from China has been decimated. Spring Wheat prices have lost a lot and could go lower in the short-term to price in the potential increase in planted area. The US Spring Wheat planted area was projected to be significantly down in the coming year, but increased area in Canada is bigger and more important overall for prices. Demand remains a problem as export sales remain weaker. Sales have improved over the last month, but still are not at levels to create any kind of bullish enthusiasm. Funds and other speculators remain very short in all three markets.
Overnight News: The southern Great Plains should get rains late today and again over the weekend. Temperatures should be near normal. Northern areas should see mostly dry conditions. Temperatures should be near normal. The Canadian Prairies should see light precipitation today and tomorrow and in the northeast on Friday, then a dry weekend. Temperatures should be below normal.
Chart Analysis: Trends in Chicago are mixed to down with objectives of 418 July. Support is at 425, 422, and 419 July, with resistance at 434, 447, and 454 July. Trends in Kansas City are down with objectives of 366 July. Support is at 390, 387, and 384 July, with resistance at 407, 415, and 421 July. Trends in Minneapolis are down with objectives of 488 July. Support is at 505, 502, and 500 May, and resistance is at 511, 517, and 519 July.
General Comments: Rice was a little lower yesterday in moderate volume trading. The market did not really react to news from USDA that planting is falling well behind the five-year average. Flat prices in Asia have kept speculators trading from the sell side. Ideas of planting delays in Rice and continued good export demand have been reasons to support futures. Initial reports from Texas and Louisiana show that crops there are in good condition. Planting progress has been more sporadic to the north due to cool and wet conditions, but some planting has been done. The market seems content to trade in a wide trading range for now and this implies that somewhat higher prices are possible over the next couple of weeks. The domestic market is using price breaks to extend forward coverage as the mills push to own Rice into the next harvest. Prices have been firm in Texas due to good demand for limited supplies. Much of the Rice is moving to Mexico. Prices have been firm in Arkansas due to a lack of producer selling as they wait to get the next crop planted.
Overnight News: The Delta should get mostly dry conditions this weekend, but more precipitation by early next week. Temperatures should near normal.
Chart Analysis: Trends are mixed. Support is at 1047, 1044, and 1040 July, with resistance at 1066, 1070, and 1074 July.
DJ USDA World Market Rice Prices – May 1
USDA today announced the prevailing world market prices
of milled and rough rice, adjusted for U.S. milling yields
and location, and the resulting marketing loan gain (MLG)
and loan deficiency payment LDP) rates. Source: USDA
—-World Price—– MLG/LDP Rate
Milled Value Rough
($/cwt) ($/cwt) ($/cwt)
Long Grain 13.44 8.34 0.00
Medium/Short Grain 12.94 8.93 0.00
Brokens 8.11 —- —-
CORN AND OATS
General Comments: Corn was a little higher yesterday as bad weather for planting moved through the Midwest. Funds were sellers and prices were lower early, but prices rebounded once the selling was done. There is enough supply out there for current demand and ideas of big supplies have kept prices on the defensive. Fieldwork and planting remain slow, with only Iowa in the Midwest and some southern states making good progress. Many Midwest areas got more rain and some very cool temperatures in the north, but warmer temperatures in the south yesterday. More precipitation, this time mostly big rains, are expected for much of the Great Plains and Midwest this week to keep any planting progress slow. It is more and more likely that the crop overall will be planted late, and this fact increases the likelihood that there could be a little yield loss and that some area could be switched to Soybeans. The weekly charts show that Corn is in a down trend, but the market has already come close to many objectives. Swing targets for the weekly charts are near 335 May. Brazil Winter Corn appears to be in good condition as the crop develops and moves to pollination. Crop estimates are high and have shown a tendency to increase as the crop develops. Most areas have seen enough rain for now. Corn prices are reported to be weakening in South America as the summer production from both Brazil and Argentina is now available. US demand has held well given the potential competition and Gulf basis levels have been steady. Oats were lower in response to big deliveries on First Notice Day for May contracts.
Chart Analysis: Trends in Corn are mixed. Support is at 359, 355, and 351 July, and resistance is at 366, 369, and 373 July. Trends in Oats are mixed to up with objectives of 303 and 326 July. Support is at 286, 283, and 282 July, and resistance is at 294, 301, and 304 July.
SOYBEANS AND PRODUCTS
General Comments: Soybeans and products were lower again yesterday. Soybeans and products trends are down. The weekly charts for Soybeans show the potential for futures to move to about 823 and 770 bases the nearest futures contract. The market is waiting for the trade deal with China, but worried about overall Chinese Soybeans demand due to the Asian Swine Flu that has decimated the hog herd there. The government reports that at least 18% of its hog herd has been lost and private estimates show much higher loss potential, so the need for feed products is less. Export differentials from the US and South America have been under pressure as the South American crop is now available. Prices are a little lower in Brazil than in the US despite a lack of farmer selling in Brazil. They are unhappy with the price and nervous over economic changes going on in Brazil as the new president works to overhaul the public pension system and other areas of public finance. The Real has been lower against the US Dollar in part due to the economic uncertainty.
Chart Analysis: Trends in Soybeans are down with no objectives. Support is at 848, 842, and 836 July, and resistance is at 864, 868, and 876 July. Trends in Soybean Meal are down with objectives of 296.00 and 289.00 July. Support is at 297.00, 294.00, and 291.00 July, and resistance is at 304.00, 306.00, and 308.00 July. Trends in Soybean Oil are mixed to down with no objectives. Support is at 2750, 2730, and 2700 July, with resistance at 2830, 2870, and 2910 July.
CANOLA AND PALM OIL
General Comments: Canola was lower and made new contract lows on demand concerns with China and the price action in Chicago. A firm Canadian Dollar was bad for Canola prices. Trends are still down as the market is still pressured by the lack of demand from China. Demand remains light in the domestic market and the export market as fieldwork and planting are underway. Palm Oil was closed for a holiday. Short term trends are now down.
Chart Analysis: Trends in Canola are down with no objectives. Support is at 439.00, 436.00, and 433.00 July, with resistance at 452.00, 457.00, and 462.00 July. Trends in Palm Oil are down with objectives of 2050 and 1940 July. Support is at 2070, 2040, and 2010 July, with resistance at 2140, 2180, and 2200 July.
Midwest Weather Forecast: Some significant precipitation is likely today and tomorrow, then a dry weekend. More precipitation next week. Temperatures should be below normal today, then near to below normal.
US Gulf Cash Basis
Corn HRW SRW Soybeans Soybean Meal Soybean Oil
May +49 July +161 May +83 May +39 May +1 May
June +43 July +65 July +26 July
July +43 July +65 July +26 July
All basis levels are positive unless noted as negative
Brazil Premiums Soybeans Soybean Meal Soybean Oil Corn
Paraguay Paraguay Paraguay Santos
DJ ICE Canada Cash Grain Close – Apr 30
WINNIPEG, April 30 (MarketsFarm) – The following are the
closing cash canola prices from ICE Futures.
Source: ICE Futures
*Par Region 420.90 dn 1.30
Track Thunder Bay 448.20 dn 3.70
Track Vancouver 456.20 dn 3.70
All prices in Canadian dollars per metric ton.