There’s a lot of international news out overnight. Egypt confirmed they paid about US$4.00 per tonne more for wheat in Tuesday’s tender. Russia toy’s with the idea of wheat export restrictions and there is more trade analysis (WAG) over the US / China trade deal.

The big loser in overnight futures trade was soybeans whose weakness rolled, rather severely, across both the canola and the rapeseed futures markets. Soybeans are finding weakness on two fronts, firstly the lack of raw numbers in the US / China phase one trade deal and secondly from the weakness in Malaysian palm oil. Last week India announced that palm oil would now need to be imported under permit. This is being interpreted as a means to restrict imports. Some simply see this as a retaliation to claims by Malaysian Prime Minister Mahathir bin Mohamad that India was making life a little hard for muslims. It’s probably more of a market ploy to build stocks.
In the end if India restricts palmolein imports it will result in an increase in vege oil stocks. Longer term it may hurt oilseed values. At present the decline in canola values does actually increase canola oils competitive advantage. So it could actually see an increase in canola oil sales in the short term but this may depend on how sharply India can cause palmolein to fall.

The US / China trade deal, it sounds great, but who knows the details. The additional US$200Bn in purchases of US goods and services is a big number but when you start involving financial services it may start to look small in time. In 2017 China was buying US$130Bn from the USA. China have “agreed” to buy an additional $US32Bn in ag products over 2 years. That would amount to a US$12.5Bn increase over 2017 values.