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3 Big Things Today, December 6

Soybean Futures Decline Overnight; Fed Says Agricultural Conditions Mixed by District.

1. Soybeans Lower Overnight on Further Trade Concerns

Soybeans futures were lower in overnight trading on concerns about a trade deal between the U.S. and China.

Beijing has thus far not confirmed President Trump’s assertion that the Asian country will “immediately” begin buying U.S. agricultural products.

Tensions are also higher this morning after an executive with technology company Huawei was arrested in Canada, reportedly at the request of the U.S. The Associated Press reported that the company’s chief financial officer, Meng Wanzhou, faces possible extradition to the U.S. for allegedly trying to evade curbs on trade with Iran.

China has demanded her release.

China’s Ministry of Commerce on Wednesday said in a vague statement on its website that Beijing would begin “implementing specific issues on which consensus has been reached, and the sooner, the better.”

Soybeans for January delivery fell 5½¢ to $9.08 a bushel overnight on the Chicago Board of Trade. Soy meal declined 30¢ to $313.60 a short ton, and soy oil lost 0.16¢ to 28.68¢ a pound. 

Corn futures for December delivery fell 1¼¢ to $3.83 a bushel.

Wheat for March delivery fell 3¢ to $5.15 a bushel overnight, and Kansas City futures lost 2¢ to $4.96 a bushel.

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2. Ag Industry Economic Conditions Vary by U.S. District, Federal Reserve Says

Agricultural conditions in the U.S. overall are mixed, with some districts showing impacts from excessive rainfall and some from tariffs, which have curbed demand, the Federal Reserve said in its Beige Book report on Wednesday.

The U.S. is made up of 12 Federal districts: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

In the Chicago district, harvest took longer than normal, but corn and soybean yields were “quite large,” the Fed said. Despite low crop prices, producer incomes were better than forecast earlier this year. Still, crop sales were below normal and a record amount of the harvest was put into storage, the Fed said.

“Logistical challenges continued as soybeans that would usually be exported to China were being sent to other markets,” the agency said in its report. “Farm equipment dealers reported giving large discounts in order to make sales as many crop farmers continued to face financial challenges.”

Hog and cattle prices in the district were higher during the reporting period, but milk prices were lower, in part, due to weak exports.

In the St. Louis district, conditions in the industry declined “modestly” from the prior reporting period. Corn, cotton, and soybean yields were all expected to top 2017, but rice yields are seen lower this year, the Fed said.

Unusually wet weather was reported, which impacted crop quality and led to a deterioration in cash prices. The report also said producers expressed concern about the ongoing tariffs on U.S. agricultural products.

“There are reports of storage shortages as soybeans that are normally exported to China are being stored in large quantities rather than exported,” the agency said.

In the Minneapolis district, agricultural conditions remained “weak” as three in five lenders surveyed said farm incomes decreased in the third quarter versus the previous year.  A similar percentage said capital spending decreased.

“While early indications were for very strong production in much of the district, in some areas heavy rains and unseasonably cold weather were complicating harvests,” the Fed said

In the Kansas City district, the outlook also remained weak due to lower soybean prices, weakness in dairy and hog markets, deteriorating farm income, and concerns about international trade, the report said.

Agricultural conditions in the Dallas district bucked the negative trend, improving as less than 1% of Texas was in drought as of mid-November. Heavy rainfall built ground moisture reserves, boosting crop prospects for 2019, the Fed said. Precipitation in some areas delayed planting of winter wheat, however, and caused some quality issues for cotton.

“Overall, agricultural producers were quite optimistic, although some continued to experience financial difficulty from drought conditions earlier in the year,” the agency said.  

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3. Winter Storm Watch in Effect For Much of Oklahoma as Snow, Ice Forecast

A winter storm watch is in effect for much of Oklahoma, as a major weather event is expected to hit the state on Friday.

Patchy freezing drizzle and light rain likely will fall in the region, according to the National Weather Service.

“A winter storm is expected to impact the region late Friday, especially Friday night,” the NWS said in a report early this morning. “Snow, sleet, and freezing rain are all expected.”

Snow will begin accumulating across northern and western Oklahoma Friday night, and ice accumulations will begin in southwestern Oklahoma and north Texas, which may begin to affect the power grid by Saturday morning, the NWS said.

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