Ahead of the Open: Mixed Grain, Soy Trade; Livestock Continue to Rebound

Posted on 09/13/2018 8:07 AM

Grain Calls 

Corn:  Steady to up a penny

Soybeans: Mixed

Wheat: Down 1 to 3 cents

 

General Comment: Asian stock prices got a boost today when Chinese Foreign Ministry spokesman Geng Shuang said that the country welcomed a White House invitation to hold new trade talks and is working on the details of a new round of negotiations. Larry Kudlow, director of Trump’s National Economic Council, called it a “positive thing.” President Donald Trump has not yet imposed the extra tariffs on $200 billion of Chinese goods, something he is free to do since the public comment period on that measure expired last week. Meanwhile, negotiations between the U.S. and the European Union appear to be making progress and Canadian Foreign Minister Chrystia Freeland plans to return to Washington for more talks on NAFTA on Thursday.  Hurricane Florence makes landfall as a weakening system in southeast North Carolina in 18 to 24 hours. It can and will impact large parts of the Carolinas coastline, where the hurricane is expected to dump heavy rain when it makes landfall early on Friday. Meanwhile, dry and mild weather further improve conditions for Midwest corn and soybean harvest and winter wheat planting for at least the next week.

 

 

 

Corn futures are likely to trader firmer today, rebounding from the biggest one-day decline in more than a year yesterday after the USDA raised its yield forecast and projected U.S. farmers would harvest the second-biggest crop ever. Prices failed to make new contract lows on the bearish supply news, a small positive technical development and a sign of record demand for U.S. supplies. Rallies will be tough to sustain. The USDA weekly export sales report this morning showed new sales of 774,200 metric tons, down from 1.033 MMT last week and trade estimates.  The daily USDA export sales reporting service showed 142,876 MT sold to Costa Rica after yesterday’s drop.

  

Soybeans market trading mostly weaker overnight but showed some recovery late in the session. Look for a mixed trade today with bearish USDA supply forecasts lingering from Wednesday and talk about U.S./China trade negotiations lending support. Additional support may develop after USDA certified acreage data on Wednesday suggested U.S. soybean planted acreage may be 700,000 acres smaller than currently estimated. That may show up in the agency’s  October update.  Weekly export sales of 693,500 MT this morning were in the middle of trade estimates for new sales of 500,000 MT to 1.0 MMT. USDA daily sales announced of 108,000 MT sold to Mexico with another 120,000 MT sold to unknown with 40,000 MT for 2018-19 and 80,000 for 2019-20.

 

 

Wheat futures seen on the defensive for a second straight session after USDA unexpected raised  Russia’s crop forecast yesterday. Asian flour millers are expected to seek rare wheat shipments from Argentina in coming months as a second year of drought in traditional supplier Australia curbs supplies. Asian wheat importers, including the world's biggest buyer Indonesia, are buying most of their wheat from the Black Sea region. Strategie Grains cut its estimate for this year’s EU soft wheat crop for the seventh month in a row, dropping its production peg another 900,000 MT to 126.8 MMT. Still no signs of an increase in U.S. exports with USDA reporting this morning that sales fell 16% below the 4-week average.

 

Livestock Calls

Cattle: Steady-firm
Hogs: Steady-higher

 

Cattle seen opening steady to slightly higher on follow through buying from Wednesday’s strong futures rally. Gains may be curtailed by lower wholesale beef prices, with Choice cutout down $1.28 and Select falling $1.04 on Wednesday. Movement was good as grocers jump in to feature more beef into the fall. Slaughter the first three days of this week is up 7,000 head from a year ago.

 

Hogs seen steady to higher after the cash hog market rose again on Wednesday, up  another $1.46 to $47.48 and up more than $10 from a week ago.  Wholesale pork carcass values rose for a second session to the highest since Aug. 13 and up 9.6% from a multi-year low on Aug. 29. No new African swine fever outbreaks reported today in China. The country China has banned the use of food waste as pig feed in provinces that have reported disease as well as neighboring regions, the agriculture ministry said on Thursday, the latest measure to try to halt the spread of the disease.

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