US equities and agricultural commodities markets surged higher Tuesday amid news reports that trade deals may be coming.
Various reports indicate that the US and China may be in very preliminary talks that don’t even rise to the level of negotiations, but traders took heart that at least the phone lines are still connected. And “Reuters” reports that Mexico’s president-elect Andres Manual Lopez Obrador said Tuesday that he expected there could be an agreement in the renegotiation of the North American Free Trade Agreement in the coming days.
In addition, “CBS” reports that Senator Ron Johnson (R-Wis.) was “encouraged” by President Trump’s latest talks with the European Union. He said the talks show the President is “moving forward.”
“CBS” quoted Johnson as saying, “President Trump is trying to shock the world trading system because ever since World War II America has been very generous. Our trading partners have taken advantage of our generosity.” He said he welcomed a tariff truce among the US and the EU while negotiations for new trade deals are in the works.
HOPE FOR CROPS
Soybeans rallied sharply Tuesday as hopes for renewed sales to China brought out speculative buyers. Corn also settled higher, although the buying fervor was lower.
Predictably, live cattle and feeder cattle futures closed lower as potential feed costs rose with the futures prices. Hogs settled mixed in spite of Mexican President-Elect Obrador’s comments about NAFTA.
Market analysts said they thought many US farmers were reluctant to book new-crop grains or soybeans at current prices, particularly if the Trump Administration and US trade partners are picking up the phone to talk about a resolution to the trade war.
News of actual trade negotiations with China could send grain and soybean futures much higher very quickly, a market analyst said. The potential market for both is a big deal.
Some trade sources also have mentioned support for US beef if a Chinese tariff reduction is possible, but Oklahoma State University Agricultural Economist Derrell Peel said in a report to Extension agents that a recent trip to China convinced him that while beef demand is growing, muscle cuts remain too expensive for the vast majority.
FARM AID PACKAGE UNPOPULAR
Many lawmakers and even crop producer organizations have come out against President Trump’s $12-billion bailout for US farmers hurt by tariffs. They’d rather have the markets they had before the imposition of tariffs.
Johnson told “CBS” the President’s bailout package would be a “mess” to implement and that he hoped it would not be necessary.
Obrador told “Reuters” he hoped a deal could be hammered out by August, which would be a boon for US pork exports as they take about 23% of US pork production.
There was no report on how Obrador’s expectation of an August conclusion meshed with Trumps statements that a post-November-election timeline was preferable.
CATTLE, BEEF RECAP
No cattle sold Wednesday on the Livestock Exchange Video Auction. One pen sold the previous Wednesday at $112 per cwt.
Cash cattle traded last week at $112 per cwt on a live basis, steady to down $1 from the previous week. Cattle traded on a dressed basis at $176 to $178 per cwt, down $2.
The USDA choice cutout Tuesday was down $0.45 per cwt at $204.27, while select was up $0.40 at $198.38. The choice/select spread narrowed to $5.89 from $6.74 with 83 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday, was $149.04 per cwt, down $0.16. This compares with Tuesday’s Aug settlement of $149.32, down $2.17.