Ahead of the Open: Weaker to Start as Traders Wait for Trump's Speech at AFBF Meeting Today

Posted on 01/14/2019 7:55 AM

Grain Calls

Corn:  Steady-mixed
Soybeans: Down 4 to 6 cents 
Wheat: Down 2 to 4 cents

General Comment: President Trump speaks today in New Orleans at Farm Bureau's annual convention. USDA Secretary Sonny Perdue will also speak at the Farm Bureau meeting. Both will likely address Trump's trade policy, its impact on the U.S. ag sector but no major announcements are expected.

Global stock markets are in retreat and oil prices are softer, after weaker economic data from China and Europe increased fears of sharper global growth slowdown. The latest trade data from China showed worse-than expected numbers. China's exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world's second-largest economy in 2019 and deteriorating global demand. China's politically-sensitive surplus with the U.S. widened by 17.2 percent to $323.32 billion last year, the highest on record going back to 2006, likely to increase tensions ahead of U.S./China trade talks for Jan. 30-31 in Washington The European Union's statistics office Eurostat estimated that industrial production in the 19-nation euro zone tumbled by 1.7 percent in November month-on-month, its worst reading since February 2016. The U.S. Federal Reserve is set to release its Beige Book on Wednesday, highlighting economic conditions in the 12 Fed districts.

In Brazil, showers were scattered during the weekend but did reach parts of center-west and center-south with the northeast the driest. Deficits will rebuild this week with better chance for rain late next weekend.  Lighter rain and showers continue to maintain generally favorable conditions in Argentina with a drier period next weeks. Still, forecasters have lower confidence in the South America pattern change. No clear end in the partial government shutdown, leaving the ag markets still waiting for key data releases that were scheduled for last Friday.

Corn is seen little changed after falling 4-cents last week amid little fresh news.  Underlying support continues from tightening world inventories. Higher prices probably needed to encourage farmers to plant more this year with the current price relationships to soybeans and spring wheat.  

Soybeans seen increasing last week’s drop of 11 cents at the start of day trading today after falling to the lowest since Jan. 2 overnight. Soybean prices fell last week on fears China has completed all the soybean buying until after a deal is completed or China agrees to cut its 25% import tariff. China will be sending its Vice Premier Liu He to the U.S. during the closing days of January. The big question is whether China will secure additional US ag goods ahead of this meeting? On Friday, Safras e Mercado cut its forecast for Brazil soy crop 6.5 million metric tons (MMT) to 115.7 MMT, compared with AgroConsult at 117.6 MMT and the government’s estimate of 118.8 MMT.  Brazil soy harvest was 2.1% done last week, up from 0;.4% on average for the date. German forecaster Oil World says Argentina soybean carryover stocks will fall to just 4.25 MMT, compared with USDA at 16.8 MMT.

Wheat futures seen on the defensive to start today this morning after failing to push above Friday’s highs overnight. With domestic Russian wheat prices on the rise the market is on alert for a possible new meeting between the ag ministry and exporters on possible limits on shipments before the new-crop in June.

Livestock Calls

Cattle: Steady-lower

Hogs: Steady-weak

Cattle futures seen steady to lower. Both Choice and Select fell $1.50 on Friday, with choice dropping to the lowest since Dec. 19. Movement slowed as the weak progressed as slaughter rose to 14,000 head to 626,000 head. Estimate dressed weights rose 3 pounds despite talk about poor feedlots conditions leading to increased beef supplies. Average steer prices quoted at $121.94, down from $122.84 but still up from $120.07 a year ago. Packer beef margins for the week were a positive $49.39 per head, versus $92.88 the week before, according to HedgersEdge.com.

Hog futures seen opening steady to weak given premium market is trading to cash trade. Cash hog prices fell for a second day on Friday after 10 straight advances. Wholesale pork rose 50 cents on Friday to the highest since Dec. 21. Pork margins were positive by $33.18 per head, versus a positive $40.85 per head the week before. China’s ag ministry confirmed three new cases of African swine fever (ASF) over the weekend. Two were in Jiangsu province and the other in Gansu province.

Add new comment