Good Morning,
China and the US are scheduled to sign phase one tomorrow which is becoming old news, but the psychological implications of this may be more than enough to move the markets higher tomorrow or Thursday for a short period of time. How they are planning to divvy up the money will be the biggest takeaway from tomorrows deal.
Many question the ability of China to be able to meet the obligation to purchase 50 billion in energy supplies and raise ag purchases to 32 billion, over the 24 billion previously spent. China would also need to buy 80 billion is manufactured goods. Energy exports to China were about 8 billion in 2017 and 2018. US Crude, liquefied natural gas and ethanol will have to play a major part to jump imports from the 25 billion a year, two year commitment, but it is doable. The private companies are worried that such a massive change in in flow would disrupt domestic markets. The farm and energy program in China is a subsidized mess, that is continually changing in policy. More changes will be coming again, probably a whole new price support or something along those lines. Right now they have an inflation problem, so that needs fixed first. China imported almost 10 mmts of beans last month, which is a huge amount.
The weather in Southern Brazil and Argentina is much different than yesterday. There is a split in the forecast that takes rain out of Southern Brazil and puts it in Southern Argentina. Rain totals increases to 1.5 inches for Argentina. Temps are in the lower 90’s which is normal for this time of year.
Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com