About The Author

Jack Scoville

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

UPDATE 4-Trump administration announces $16 bln farm aid plan to offset trade war losses – Reuters
23-May-2019 03:46:55 PM
To view this story on Eikon, click here
• Trump’s total aid package $16 bln, $14.5 in direct payments
• First tranche of payments expected by early August
• Trump says farmers are “attacked by China”
• Aid package designed to help offset farmer losses on trade
• Trade row between Washington, Beijing shows no sign of easing
• Total of up to $28 bln for farmers authorized since last July
Adds comments from Trump, reaction from Democrats
By Humeyra Pamuk
WASHINGTON, May 23 (Reuters) – The Trump administration on Thursday unveiled a $16 billion farm aid package to offset losses from a 10-month trade war with China and said payment rates to farmers would be determined by where they farm rather than what crops they grow.
The package, the bulk of which will be spent on direct payments, surprised growers and traders who had expected to learn separate payment rates for soybeans, hogs, corn and other crops in the Department of Agriculture (USDA) briefing.
Many farm groups welcomed the move, but called for a trade deal with China as soon as possible. Some Democrats have slammed the plan, calling it a ‘band-aid’ and said the county-based payment system could leave some farmers with reduced aid.
Farmers, a key constituency that helped carry U.S. President Donald Trump to his 2016 electoral win, have been among the hardest hit from a trade dispute with China, once a destination for more than 60 percent of U.S. soybean exports.
“The farmers have been attacked by China,” Trump said in a press conference about the aid package. “But the $16 billion of funds will … make clear that no country has veto on America’s economic and national security,” he said.
The trade dispute, which escalated this month after Washington and Beijing hiked tariffs on imports of each other’s goods, has left U.S. farmers sitting on record volumes of soybeans with China halting purchases.
USDA officials said on Thursday they will roll out $14.5 billion in direct payments in three separate tranches with the first one planned for late July.
“The package we are announcing today ensures that farmers will not bear the brunt of those trade practices by China or any other nations,” Secretary of Agriculture Sonny Perdue said. “While farmers would tell you they’d rather have trade not aid, without the trade … they’re going to need some support.”
China, the world’s top soybean importer, curbed purchases of U.S. soy last year when Trump imposed tariffs on Chinese goods, prompting China to retaliate with tariffs on U.S. soy, pork, corn and other products.
An imminent trade deal between Washington and Beijing seems unlikely as the trade tensions between the world’s top two economies rose after U.S. placed China’s Huawei Technologies on a trade blacklist last week, triggering sharp protest from China. (Full Story)
Perdue also said the second and third tranches, with exact amounts yet to be decided, will be dependant on the progress in the trade talks and whether the U.S. will get a deal with China. The total package also includes $1.4 billion of support through food purchases and $100 million allocated to development of foreign markets.
PLANTING DECISIONS
Perdue said the USDA has redesigned last year’s aid program of up to $12 billion based on feedback. The new package therefore will have a single payment rate per county, calculated by the damages in that area, instead of a rate for every commodity across the nation.
“Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions,” USDA said in a statement.
Chicago Board of Trade corn futures Cv1 turned lower and soybean futures Sv1 extended earlier losses after the announcement.
The county-based mechanism for the aid payments have triggered a heated debate on whether it would impact planting decisions. Some analysts said the trade aid package could encourage farmers to try to seed their crops in order to qualify for the relief despite overly wet fields that have stalled planting this spring.
Jim Hefner, an Ohio farmer who has not been able to start planting due to heavy rain, said the plan could cause him to alter his initial acreage plans, however.
“I guess we would make more of an effort to get something planted,” Hefner said. “We may forgo corn and plant soybeans.”
Some farmers remain skeptical.
Dan Henebry, a corn and soybean farmer in Buffalo, Illinois, said the payments are directed at rural areas that helped propel Trump into office. Henebry, who voted for a third-party candidate in 2016, said he wants the president to end the trade war with China.
“If we solve the issue, we wouldn’t need this,” he said about the aid package.
(Additional reporting by Jeff Mason and Susan Heavey and Tom Polansek, Mark Weinraub, P.J. Huffstutter, Karl Plume in Chicago, Editing by Chizu Nomiyama, Jeffrey Benkoe and Susan Thomas)
(( humeyra.pamuk@thomsonreuters.com ; +1 202 3105694; Reuters Messaging: Twitter: https://twitter.com/humeyra_pamuk) )

WHEAT
General Comments: Wheat markets were lower yesterday on generally weak export sales and in reaction to the USDA announcement on aid to farmers due to the trade wars. Ideas are that longs were taking some money off the table by selling some contracts in Chicago. Minneapolis Spring Wheat markets were down less on uncertain weather conditions in the region although the planting has been catching up. It has been dry in the Canadian Prairies and some concern has been expressed about crop condition, but some rains are being reported now. There is also concern about dry weather in parts of central Russia and Kazakhstan. Demand has been the big problem for any bullish traders for the last year and demand has been better for the last few weeks. The demand is the past year has been disappointing as weaker prices have not improved sales. The outlook is for improved production this year from competing producers so the chances for the US to sell a lot more Wheat into the world markets are fading.
Overnight News: The southern Great Plains should get dry conditions or light precipitation. Temperatures should be above normal. Northern areas should see mostly dry conditions or light precipitation. Temperatures should be near o above normal. The Canadian Prairies should see light precipitation or dry conditions. Temperatures should be near to above normal.
Chart Analysis: Trends in Chicago are mixed. Support is at 465, 460, and 454 July, with resistance at 474, 481, and 485 July. Trends in Kansas City are mixed. Support is at 42, 420, and 415 July, with resistance at 431, 439, and 442 July. Trends in Minneapolis are mixed. Support is at 529, 524, and 520 July, and resistance is at 545, 547, and 549 July.

RICE
General Comments: Rice was higher again yesterday as delayed planting and emergence continued. Futures traders ignored the bad weekly export sales report as Iraq is tendering for US Rice over the weekend. The market also did not react much to the news of the USDA trade aid support program although Rice producers will be able to participate. Reports of planting delays in Rice and continued good export demand have been reasons to support futures. Growing areas near the Gulf Coast and in Texas report that crop development has been reported to be uneven due to all of the rain. Planting progress remains more sporadic to the north due to cool and wet conditions, but there is good progress now as conditions have turned drier this week. There are some areas that might not get planted this year as producers are starting to run out of time to get the crops in and up and then to expect good yields. The funds and other speculators have been buying to cover some huge short positions.
Overnight News: The Delta should get a mostly dry week. Temperatures should above normal.
Chart Analysis: Trends are up with objectives of 1174 and 1185 July. Support is at 1136, 1121, and 1116 July, with resistance at 1165, 1168, and 1171 July.

CORN AND OATS
General Comments: Corn closed lower on what appeared to be speculative long liquidation before the long weekend. Some are afraid that the forecasts trends can change over the weekend. Additional selling was seen after USDA announced its aid package to farmers to counter the effects of the trade wars. The weather market continues although it has turned warmer in the Midwest. It is still very wet with frequent chances for more precipitation in the forecast for the next week. Most affected by the new rains will be areas west of Chicago. It has been too cold and wet for most producers to consider planting. Some producers have not even been able to do initial fieldwork to prepare the soils for planting, and soils in many cases are too cold for seeds to germinate properly. The slow planting progress means that lower yields are a certainty and there are increasing ideas that not all of the intended area will get planted. USDA will need to reduce production estimates at some point this Summer, although that might not happen for a couple of months. Reduced production and static demand will lead to lower ending stocks for the US, and that implies higher prices at some point down the road.
Overnight News: Mexico bought 113,000 tons of US Corn.
Chart Analysis: Trends in Corn are mixed to up with objectives of 410 July. Support is at 386, 384, and 380 July, and resistance is at 396, 399, and 400 July. Trends in Oats are up with objectives of 326 July. Support is at 304, 301, and 298 July, and resistance is at 314, 323, and 326 July.

SOYBEANS AND PRODUCTS
General Comments: Soybeans and products were lower on what appeared to be speculative long liquidation before the long weekend. Some selling was tied to fears that US weather forecasts can change over the long weekend, others noted some selling started in response to the USDA trade aid announcement. The planting pace remains very slow and has not improved much this week as there is more rain in the forecast. 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 20% of its hog herd has been lost and private estimates show much higher loss potential. In addition, hopes for a trade deal in the near term faded last week as the Trump administration accused China of trying to cancel already agreed terms and imposed new sanctions. A new trade deal with China might now have to wait until the presidential elections in 2020 are over. That is very bad news for US Soybeans producers and good news for producers in other countries around the world The aid package announced by USDA will not change that fact.
Overnight News:
Chart Analysis: Trends in Soybeans are mixed. Support is at 816, 807, and 791 July, and resistance is at 834, 844, and 846 July. Trends in Soybean Meal are mixed. Support is at 293.00, 288.00, and 283.00 July, and resistance is at 300.00, 302.00, and 304.00 July. Trends in Soybean Oil are mixed to down with objectives of 2540, 2600, and 2570 July. Support is at 2670, 2620, and 2600 July, with resistance at 2730, 2750, and 2780 July.

CANOLA AND PALM OIL
General Comments: Canola was lower but held the trading range of the last few days. Support came early from the rally in Chicago and also from more reports of dry weather in Canada. The dry weather has allowed for rapid planting but poor initial growth. There are also forecasts for frost in western growing areas over the weekend. Prices have consolidated the losses in the last few days since the StatsCan stocks reports that were no worse for prices than expected. Demand remains light in the domestic market and the export market as fieldwork and planting are underway. Palm Oil was lower on ideas supplies are big enough to meet any demand. It was a lower volume day as there was not much trading interest. Demand ideas are improving, but ideas are that production remains high. Weakness in Soybean Oil in Chicago added selling interest. Short term trends are trying to turn up.
Overnight News:
Chart Analysis: Trends in Canola are mixed. Support is at 441.00, 437.00, and 434.00 July, with resistance at 449.00, 452.00, and 457.00 July. Trends in Palm Oil are mixed. Support is at 2010, 1990, and 1960 August, with resistance at 2050, 2080, and 2110 August.

DJ Canadian Grain Handling Summary – May 24
WINNIPEG – The following are Canadian grain handling summary statistics
for the week ended May 19, 2019. Figures in thousands of metric tons.
Source: Canadian Grain Commission.
Durum
Wheat Wheat Oats Barley Flax Canola Peas Corn Total*
COMMERCIAL STOCKS
This Week 2153.4 525.0 187.5 261.1 70.7 841.8 268.1 334.3 5331.3
Week Ago 2302.0 506.8 204.9 256.6 71.1 916.1 273.5 397.6 5623.5
Year Ago 1998.9 377.1 145.5 255.6 42.4 991.4 264.0 209.9 4869.9
PRODUCER DELIVERIES
This Week 198.9 47.2 30.4 35.8 3.8 229.1 29.2 7.1 609.8
Week Ago 327.5 66.2 22.9 38.5 9.1 244.2 40.2 8.9 799.7
To Date 17304.4 3566.4 1820.3 2976.5 330.0 14606.1 2752.0 460.5 47047.3
Year Ago 14542.8 3034.7 1800.9 2652.5 355.9 15559.2 2434.2 515.6 44358.8
TERMINAL RECEIPTS
This Week 363.8 111.8 3.5 4.1 6.3 195.0 35.0 54.9 833.7
Week Ago 468.1 100.8 16.7 17.9 3.2 204.4 29.7 57.5 950.8
To Date 16523.4 4001.8 339.3 1832.6 113.1 8128.1 1591.2 1165.3 39424.6
Year Ago 14238.2 3675.2 192.1 1570.0 181.6 8908.6 1527.3 907.8 36361.3
EXPORTS
This Week 531.4 45.2 27.7 1.2 1.2 275.2 12.8 92.0 1026.2
Week Ago 288.5 70.9 22.6 18.1 3.2 190.7 30.5 171.8 817.9
To Date 14781.1 3557.2 1278.7 1994.4 194.2 7646.1 1608.2 1424.1 36554.9
Year Ago 12973.7 3295.8 1300.5 1710.5 262.5 8477.2 1642.4 786.9 34201.1
DOMESTIC DISAPPEARANCE
This Week 45.9 3.6 10.1 23.4 0.6 190.6 3.6 22.0 330.8
Week Ago 133.2 14.6 5.9 23.9 1.0 231.5 3.2 23.7 456.5
To Date 3264.8 283.6 250.5 932.0 47.2 7591.2 173.9 931.9 15329.3
Year Ago 3797.3 626.7 246.4 996.1 46.2 7544.0 192.8 663.8 16211.0
*Totals include data from other crops not shown including rye, soybeans,
canaryseed, mustard seed, beans, lentils and chickpeas.
Source: Commodity News Service Canada (cnscanada@shaw.ca, or 204-414-9084)

Midwest Weather Forecast: More precipitation today in the east and into next week in all areas as the rain pattern continues. Temperatures should be near o above normal.

US Gulf Cash Basis
Corn HRW SRW Soybeans Soybean Meal Soybean Oil
May +55 July +154 July +105 July +50 July +1 July
June +45 July +80 July +34 July
July +40 July +80 July +32 July
All basis levels are positive unless noted as negative

Brazil Premiums Soybeans Soybean Meal Soybean Oil Corn
Paranagua Paranagua Paranagua Santos
May
June -16 July 40 July
July -14 July 35 July

DJ ICE Canada Cash Grain Close – May 23
By MarketsFarm
WINNIPEG, May 23 (MarketsFarm) – The following are the
closing cash canola prices from ICE Futures.
Source: ICE Futures
Price Change
CANOLA
*Par Region 432.40 up 3.40
Track Thunder Bay 455.80 dn 4.00
Track Vancouver 465.80 dn 4.00
All prices in Canadian dollars per metric ton.

DJ Malaysian PM Cash Market Prices for Palm Oil – May 24
The following are prices for Malaysian palm oil in the cash market at 1000 GMT Friday applied by commodity broker Matthes & Porton Bhd.
Prices are quoted in U.S. dollars a metric ton, except for crude palm oil and palm kernel oil, which are in ringgit a ton. Palm kernel oil prices are in ringgit a pikul, a Malaysian measurement equivalent to 60 kilograms.
Refined, bleached and deodorized palm oil, FOB, Malaysian ports
Offer Change Bid Change Traded
Jun 502.50 00.00 Unquoted – –
July 507.50 -02.50 Unquoted – –
Aug/Sep 512.50 00.00 Unquoted – –
Oct/Nov/Dec 522.50 +02.50 Unquoted – –
RBD palm olein, FOB, Malaysian ports
Jun 507.50 00.00 Unquoted – –
July 512.50 -02.50 Unquoted – –
Aug/Sep 517.50 00.00 Unquoted – –
Oct/Nov/Dec 527.50 +02.50 Unquoted – –
RBD palm stearin, FOB, Malaysian ports
Offer Change Bid Change Traded
Jun 467.50 00.00 Unquoted – –
Palm Fatty Acid Distillate, FOB Malaysian ports
Offer Change Bid Change Traded
Jun 410.00 00.00 Unquoted – –
Crude palm oil, Delivered Basis, South Malaysia
Offer Change Bid Change Traded
Jun 1,990 00.00 Unuoted – –
Palm kernel oil, Delivered Basis, South Malaysia
Offer Change Bid Change Traded
Jun 142 00.00 Unquoted – –
($1=MYR 4.1895)

DJ China Dalian Grain Futures Closing Prices, Volume – May 24
Soybean No. 1
Turnover: 108,450 lots, or 3.87 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Jul-19 3,507 3,541 3,507 3,527 3,527 3,528 1 18 910
Sep-19 3,580 3,587 3,552 3,577 3,576 3,572 -4 96,716 114,668
Nov-19 3,490 3,492 3,475 3,475 3,481 3,485 4 6 124
Jan-20 3,511 3,524 3,491 3,502 3,520 3,506 -14 10,534 39,954
Mar-20 3,504 3,521 3,504 3,521 3,529 3,512 -17 4 38
May-20 3,580 3,596 3,571 3,585 3,604 3,585 -19 1,172 11,062
Corn
Turnover: 924,230 lots, or 18.40 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Jul-19 1,951 1,965 1,951 1,960 1,966 1,960 -6 72,846 262,490
Sep-19 1,984 1,991 1,978 1,985 1,989 1,983 -6 673,634 1,093,056
Nov-19 2,007 2,012 2,001 2,008 2,011 2,006 -5 948 1,380
Jan-20 2,025 2,037 2,017 2,030 2,031 2,027 -4 169,034 395,814
Mar-20 2,041 2,053 2,039 2,048 2,051 2,047 -4 1,364 10,066
May-20 2,071 2,083 2,068 2,082 2,082 2,076 -6 6,404 16,180
Soymeal
Turnover: 2,053,886 lots, or 56.75 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Jul-19 2,794 2,810 2,781 2,796 2,819 2,796 -23 54,970 200,298
Aug-19 2,748 2,786 2,748 2,785 2,785 2,774 -11 9,984 4,726
Sep-19 2,769 2,780 2,747 2,770 2,786 2,766 -20 1,628,752 2,301,650
Nov-19 2,758 2,777 2,749 2,762 2,789 2,763 -26 56,304 2,598
Dec-19 2,758 2,773 2,743 2,764 2,782 2,762 -20 150,916 520
Jan-20 2,747 2,764 2,736 2,755 2,769 2,751 -18 115,222 287,540
Mar-20 2,653 2,677 2,651 2,666 2,677 2,671 -6 700 1,564
May-20 2,592 2,605 2,585 2,599 2,609 2,595 -14 37,038 121,602
Palm Oil
Turnover: 393,680 lots, or 17.26 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Jun-19 – – – 4,188 4,188 4,188 0 0 4
Jul-19 – – – 4,384 4,384 4,384 0 0 22
Aug-19 – – – 4,460 4,460 4,460 0 0 2
Sep-19 4,360 4,380 4,348 4,368 4,394 4,364 -30 356,998 537,506
Oct-19 – – – 4,516 4,516 4,516 0 0 14
Nov-19 – – – 4,530 4,530 4,530 0 0 20
Dec-19 – – – 4,648 4,678 4,648 -30 0 14
Jan-20 4,550 4,568 4,540 4,554 4,584 4,552 -32 35,660 99,514
Feb-20 – – – 4,596 4,596 4,596 0 0 4
Mar-20 – – – 4,748 4,748 4,748 0 0 16
Apr-20 – – – 4,582 4,614 4,582 -32 0 0
May-20 4,728 4,742 4,716 4,722 4,764 4,720 -44 1,022 3,330
Soybean Oil
Turnover: 298,228 lots, or 16.02 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Jul-19 – – – 5,334 5,334 5,334 0 0 2
Aug-19 – – – 5,312 5,312 5,312 0 0 32
Sep-19 5,340 5,368 5,332 5,356 5,382 5,354 -28 264,082 773,646
Nov-19 – – – 5,464 5,464 5,464 0 0 2
Dec-19 – – – 5,558 5,558 5,558 0 0 10
Jan-20 5,502 5,522 5,490 5,512 5,538 5,510 -28 33,744 116,822
Mar-20 – – – 5,608 5,608 5,608 0 0 20
May-20 5,584 5,614 5,578 5,600 5,624 5,602 -22 402 2,508
Notes:
1) Unit is Chinese yuan a metric ton;
2) Ch. is day’s settlement minus previous settlement;
3) Volume and open interest are in lots;
4) One lot is equivalent to 10 metric tons.

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