8:14 AM 1/24/2019

Thursday, January 24, 2019, Commerce Secretary Wilbur Ross says the U.S. is still "miles and miles" from a trade deal with China. The issues include America's big trade deficit with China. This deficit grew to $323.3 billion in 2018, according to Chinese government figures released earlier this month. It is the worst imbalance on record dating to 2006. The other problem is the future. China has what they call the 2025 plan, where they have to try to dominate world high tech industries. The U.S. wants to protect that. The third area is American companies doing business in China should have market access. According to recent reports, China has offered to buy more U.S. goods in coming years to reduce the imbalance of goods. Under the offer, China would increase its annual import of U.S. goods by a combined value of over $1 trillion over six years. This information was reported by Bloomberg.

There has been a general lack of information due to the government shutdown. This has many traders in the market uneasy about their corn and bean positions. The partial U.S. government shutdown could not have come at a worse time for the agricultural markets. Market participants are missing key pieces of U.S. government data they need to market and trade crops, just when China has resumed at least some purchases of U.S. ag products. U.S. government issued agriculatural reports are the gold standard by traders throughout the world. The longer the shutdown lasts, the more data will have to catch up when these reports are finally released.

Basis levels for corn have held fairly steady this week. In a comparison with last year at this time, Pacific Northwest export corn is trading 13 cents lower than last year, 15 cents lower than the 3 year average. Soybean basis levels are 24 cents lower than Pacific Northwest values last year at this time. Beans are 41 cents below the 3 year average, delivered to the Pacific Northwest. 

Wheat markets are benefiting from rising global values. Wheat prices are hopeful that U.S. wheat exports can take advantage of dwindling Russian supplies in the last half of this marketing season. Reuters data today showed the gap between U.S. and Russian wheat export prices have narrowed to approximately $15 per tonne FOB, compared to $50 per tonne as recently as August, due to tightening Russian supplies.

Jim Gallagher
Grain Division Merchandising Manager

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