Grains are mixed at midday:
Corn – 1 ½ cents/bu (Mar @ 3.75 ¼ )
Soybeans + 6 cents/bu (Jan @ 8.90 ¼ )
Chi Wheat – 2 ¾ cents/bu (Mar @ 5.21)
Cdn $ -0.00495 (75.415 cents)
WTI Crude Oil +0.52/barrel (58.95)
The big story in the market this morning was the USA November jobs report. The US economy in November created 266,000 jobs, beating the average expectation of 180,000 new jobs. In addition, job creation totals for the previous two months were increased upward by another 41,000 jobs. The USA unemployment rate slipped to a 50 year low of 3.5%. Unemployment actually sits at 3.2% for adult men and women, while it sits at 12% for teenagers. At any rate, the job creation numbers reflect an economy that is firing on all cylinders, and had the effect of immediately rallying the American dollar, as well as equity markets (Dow futures are currently up 346 points @ 28,024).
Commodities in general are mixed, as markets wait for further news on USA/China trade negotiations. Grains were buoyed early today by an overnight story that suggested that China had granted additional tariff exemptions on imports of American soybeans and pork. That has since been clarified to show that China is streamlining the process for domestic imports that are bringing in American products – previously, those importers that had tariff waivers still had to provide a 33% deposit on American imports, and that requirement has now been waived. That is not the same as issuing new tariff waivers, and the grain market reacted accordingly by giving up some of it’s gains.
While USA representatives spoke today of the trade talks going well, the strength of the jobs report today has no doubt emboldened President Trump. He might have been more willing to negotiate some of the Chinese demands had the USA economy shown signs of slowing down, but today’s numbers really put Trump in a position of strength. We remain optimistic that a trade deal will happen ahead of the December 15th implementation of new American import tariffs, but always need to be cognizant of the external factors that are in play.
While soybean futures remain strong today, the weakness in corn and wheat simply reflects the poor pace of export sales that was confirmed in yesterday’s export sales reports, and the fact that the USA did not get a sniff of some recent Middle East wheat business this week. We need to see a pick up in export demand for cereals to be able to sustain any rallies in corn and wheat.