Trade talks progressing, but no deal yet
China Vice Premier Liu He was in Washington this week to meet with President Donald Trump and continue negotiations on trade. No deal has been reached, but both sides seem optimistic that an agreement can be reached. The timetable remains unclear, with four or five weeks as a possible window to solidify a deal. It appears that intellectual property theft continues to be a sticking point in negotiations.
In the meantime, sales of soybeans continue to lag what is needed to reach the U.S. Department of Agriculture's estimate for the 2018-19 crop year. There have been some sales and promises of more by China, but until those materialize, stocks of old crop soybeans will continue to be burdensome. New supply and demand estimates will be released on Tuesday by the U.S. government and it will be interesting to see if the Department of Agriculture reduces its forecast for soybean exports given lagging sales.
Wheat markets pushed lower, with spring wheat contracts pressing to new lows every day. Domestically, supplies of wheat are more than adequate. Export demand has not eaten into supplies as previously expected, keeping pressure on the market. Now, spring is here and though many areas are very wet, this tends to not be an issue for winter wheat crops. The U.S. Department of Agriculture put out its first ratings of the winter crop for the calendar year. Of the U.S. crop, 56% is rated good or excellent compared to just 32% a year ago at this time. Only 9% of the crop is rated poor or very poor from 30% a year ago.
Globally, supplies of wheat are comfortable, too. Spring weather is very cooperative in the Black Sea Region as well as in most of Europe. Expectations for good crops after issues last year are keeping global markets pressured.
There was no change to the Minneapolis durum market this week. The market is simply holding steady on good supplies and has yet to see any boost from lower planted area expectations in the U.S.
The canola market has suffered tremendously by the lack of Chinese demand. Prices have stopped their freefall from last autumn, but no support can be sustained to get the market going. Sales to China have been curbed by political tensions that have yet to be resolved as well as some quality issues. A third exporter has been issued a complaint by Chinese importers due to quality problems. Until this is resolved, look for pressure to continue.
Pulse output could get a boost in Australia this year, with land dedicated to peas and lentils increasing to 1.82 million hectares from 1.3 million a year ago. This still lags the average planted area, but would clearly give a boost to output if normal yields are achieved. Domestically, the U.S. is planning to plant fewer acres to pulses but support has not come through to prices yet.
Mustard seed prices have been mixed, with little clear direction until spring planting efforts in the U.S. and Canada are under way.