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Turner’s Take | Latest Phase One Trade Agreement Details

 

 Wyffels Hybrids

I spoke at a Wyffels Hybrids event last night and had a great time. Thanks to Rod Parkinson and Cole Cunningham for making it happen. The seed technology these days is mind blowing. I can’t get over how some of the June planted corn and soybeans did this year.

Phase One Trade Deal

According to USTR Lighthizer the trade deal between the US and China will be signed in the first week of January.  Phase One will include China buying additional $16 billion in US farm goods per year for the next two years. We believe this is for 2020 and 2021.  Before the trade war China bought about $24 billion in US farm goods.  The addition of $16 billion brings the total to $40 billion per year.  China does not want to list the commodities and amounts because that would distort market prices (everyone and their brother would front run the Chinese).  The agreement will reduce some of the US tariffs on Chinese goods and eliminates the new tariffs planned to go into effect on Sunday.

Grain & Oilseeds

News of this deal broker yesterday after the close. At the highs soybeans were up 19 cents and corn 8 cents.  We finished the day with Jan Beans 8 higher $9.06 and corn 3 higher to $3.81.  As details come out over the weekend we expect the markets to open higher on Sunday night. As with any trade deal, the devil is in the details. The funds are short corn and soybeans and I bet they look to cover next week with a deal on the horizon and the details still unknown.

We are only 50% sold for 2019-2020 soybeans at $9.31 and 10% sold for 2020-21 at an average price of $9.73 basis Nov 2020.  We want to have the following orders working

2019-2020: Sell 10% old crop soybeans basis Jan futures at $9.40

2020-2021: Sell 10% new crop soybeans basis Nov futures at $9.80

Continuous Soybeans

Nov 2020 Soybeans

Livestock

Cattle broke out today after consolidating for a few weeks.  Cash traded Thursday between $118 and $119 but nothing today.  The US-China Phase One deal could include US beef to China.  Next target is $130 for fats as funds add to their large net long position. Seasonally this is a time to be long cattle and the trade deal is a good push too.

Hogs opened up over 2 pts higher but came back down towards the end of the day.  Dec hogs came off the board today and now Feb is at a $9 premium to cash. This spread is large but if a trade deal is done we expect cash prices to start to catch up to futures.

Feb 2020 Live Cattle

 

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Craig Turner – Commodity Futures Broker
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About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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