In the wheat pits Chicago settled up 3 usc/bu closing at 511usc/bu, Kansas was 6.25 usc/bu higher to settle at 425.75usc/bu, while Minni rallied 4 usc/bu to go out at 552usc/bu. Corn fell 0 usc/bu to go out at 397.75usc/bu while Beans were up 4.5 usc/bu to settle at 940.5usc/bu WCE Canola softened 0 CAD/mt closing at 459.9CAD/mt with Matif Canola finishing lower by -1.25 Eur/mt. In outside markets the Dow Jones fell -29.23 points, Crude was down -1.13 bbl the Aussie was -0.0016 lower to settle at 0.67743, the CAD rallied 0.0034 while the EUR fell -0.0008

US China trade deal trepidation

In the afterglow of the “Phase one” announcement the market stopped and assessed what we actually know about the much lauded trade deal between the US and China.

Not much, was the answer.

There is genuine trepidation around the agreement given the history of these talks – the vague timeline to get this deal in an executable position is 3-5 weeks which is a lifetime given the twists and turns we have already experienced.

It’s hard not to be subjective when assessing Chinese demand.

AFS demand erosion is not simple to calculate – the Chinese Ag minister announced that their hog heard was 41pc smaller than this time last year while pork imports were 76pc higher (along with massive beef imports) meanwhile bean imports were actually higher against the same month last year and implied meal offtake data doesn’t show the demand erosion the hog numbers would suggest.

This could partially be explained via competing protein production such as chicken but it’s not clear.

What is clear is how quickly the US soybean balance sheet can tighten – be it through supply given the lateness of the crop and the latest round of weather damage or a stroke of the pen that moves the needle on export demand.

Is US$9.40/bu high enough to price this risk?

In the meantime, Russian wheat values continue to sneak higher, now trading above the magical $200/t FOB level which seems a long way from sub-$190/t back in Sept.

During this period most of the private analysts have been increasing their crop estimates.

Aust price led by Russia

As we lead into Australian winter crop harvest the spread to international values will be watch closely as the market quickly tries to assess just what is the size of the exportable surplus and when will this relativity matter.

There is lots of fanfare about the US futures markets but, from an Australian perspective the number to watch is Russian FOB – it remains our biggest competition and the market we will be benchmarked against.

Showers west to east

Locally, showers pushed through the Lower Eyre Peninsula with Cummins recording 7.6mm and parts of the SA South East receiving widespread 5-10mm in areas.

With the crops being a touch later in those areas a rain event like that will benefit grain fill.

Scattered showers also hit WA areas with Kojonup recording 4.2mm in past 24hrs.

GIAV crop tour kicks off today with a mix of traders, consumers and university students covering large part of Victoria and SNSW.

Markets remained relatively unchanged locally across the board with the continuing wide bid offer spreads within the market.