Fund Short Covering Fuels Rebound in Grain Markets
Good Morning from Allendale, Inc. with the early morning commentary for December 2, 2019.

Grain markets rose with corn and wheat futures higher on technical buying, improved export demand and signs of snowfall in the Northern Plains and Midwest this week expecting to slow late harvest efforts. Gains are capped by improvement in South American crop weather.

China's top priority in any phase one trade deal with the U.S. is the removal of existing tariffs on Chinese goods, China's Global Times newspaper reported. "Sources with direct knowledge of the trade talks told the Global Times on Saturday that the U.S. must remove existing tariffs, not planned tariffs, as part of the deal," according to the report.

Weekly export sales showed corn sales of 806,800 tonnes (expecting 400,000 to 900,000 tonnes), soybean sales of 1,664,000 tonnes (expecting 600,000 to 1,200,000 tonnes), wheat sales of 612,700 tonnes (expecting 300,000 to 600,000), soymeal of 93,200 tonnes (expecting 150,000 to 300,000), and soyoil of 14,800 tonnes (expecting 5,000 too 30,000).

China's Securities Times newspaper reported that Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), said China will launch a new pig futures contract as soon as possible given the importance of pork to the Chinese diet. The report did not give a target date for launching the futures. (Reuters)

Heavy rain is expected to lead to a fall in wheat sowings in France and Britain, raising early doubts over prospects for next year's harvest in Europe. Nationwide rainfall in France during October and November is expected to be 70% above the seasonal average, according to public weather service Meteo France.

OPEC and allied oil producers will consider deepening their existing oil output cuts by roughly 400,000 barrels per day (down to a total of 1.6 million bpd), Iraq's oil minister said. Iraq, OPEC's second-biggest oil producer, exported crude at an average rate of 3.5 million bpd in November (total oil output averaged 4.62 million bpd), a Reuters survey showed.

Chinese Vice Premier, Hu Chunhua said the country must resolutely work to achieve the target of recovering pig production numbers, and stabilize pork supply for the upcoming holidays, the official Xinhua News Agency reported.

Weekly beef export sales for 2019 delivery, came to 17,584 metric tonnes (94% over last year in the same week). Year-to-date export sales of 868,396 tonnes (2.1% under last year).

Weekly pork export sales for 2019 delivery, came to 25,609 metric tonnes (22% over last year in the same week). Year to date sales of 1,674,377 tonnes (38% over last year). China was a minimal buyer of 5,366 tonnes (six weeks in a row). Year-to-date sales to China (for 2019 delivery) total 419,651 tonnes. For 2020, China was an active buyer of 17,742 tonnes last week. Year-to-date numbers for 2020 delivery are strong at 250,382 tonnes.

Dressed beef values were lower with choice down .12 and select down 0.30. The CME feeder index is 145.11. Pork cut-out values were up 1.87.