Corn: Up 1 to 2 cents
Soybeans: Up 3 to 4 cents
Wheat: Steady to down 2 cents
General Comment: China trade talks gearing up and the best way to measure progress will be if another round of talks a scheduled to reach a final deal by the March 2 deadline for higher U.S. tariffs or soon after that a tariff hike delay can be announced. Both sides are mum as to progress before this week’s high-level negotiations. USTR Ambassador Lighthizer arrived in Beijing for meetings with Chinese Vice Premier Liu He on Thursday/Friday. Optimism remains that US/China trade progress can deepen with late week negotiations and that is proving underlying support to the grain and global stock markets today.
USDA daily export sales report this morning announced the private exporters reported 122,376 metric tons (MT) of corn for delivery to unknown destinations for delivery in the 2018/2019 marketing year.
Brazil’s soybean farmers seen harvesting 115.343 million metric tons (MMT) this year, down from 118.8 MMT forecast last month and 119.281 collected a year ago, official government crop forecaster Conab said today. Exports seen falling to 71.5 MMT from 83.605 MMT last year and below the 75 MMT forecast in January. Both estimates are within trade expectations but did not account for all the damage from dry weather in January, said Eduardo Sampaio, farm policy secretary at the Agriculture Ministry, on Tuesday. Brazil’s corn crop seen at 91.652 MMT, up from 91.190 MMT forecast in January and 80.786 MMT harvested in 2017-18, Conab said. First season crop cut 3.6% to 24.454 MMT from the January estimate and 26.81 MMT collected a year earlier. The second-season crops forecasts at 65.198 MMT, compared with 63.734 MMT projected in January off average yields. Exports this season forecast at 31 MMT, unchanged from January’s estimates and up from 24.767 MMT exported last years.
South American weather leans neutral this morning with few changes from Monday. Argentina has been wet for most of the growing season, but the coverage of 14-day dryness increased sharply in recent days, indicating rain will be needed later this month because little to none falls over the next 10 days, according to T-storm Weather in a report this morning. Frequent storms ease drought in Brazil over the next two weeks, improving soil moisture for second-crop corn, but likely arriving too late for soybeans, the forecaster said.
Corn is seen starting a couple of cents higher after holding above the January lows. That is key support and prices will need to see some improvement in export sales with cold weather likely to maintain strong feed demand. The EPA is considering releasing its draft proposal to expand sales of 15% ethanol blends of gasoline without including simultaneous measures it promised the oil industry to curb biofuel credit speculation, according to three sources familiar with the matter told Reuters. The move will lift the current summertime ban on E15 gasoline by June and before the start of the U.S. driving season. "The EPA has been seriously looking at dropping the RIN reform to speed up the process on E15," one industry source told Reuters. with knowledge of the matter said.
Soybeans seen slightly higher after bouncing off trendline support overnight amid falling Brazil crop forecasts that have further to go.
Wheat prices seen steady to weaker correcting Monday’s gains amid weakness in European futures this morning and waiting on details from two tenders this week. Tunisia tendered to buy 92,000 MT of durum, 100,000 MT of soft wheat and 75,000 MT of feed barley – all optional origin. Algeria tendered to buy 50,000 MT of optional origin soft milling wheat and has been buying much higher quantities in recent tenders. On Monday, Russia plans to create a new wheat group with private exporters by April. Russian grain exporters have a powerful lobby group and may lose independence with a new government-created union. The plan raises question whether the government wants to help with export promotion or just control supplies.
Cattle: Steady to Higher
Hogs: Mixed to Weaker
Cattle futures seen steady to better today. Beef prices jumped on Monday with Choice up $1.53 and Select surging $2.69. However, sales were light. After cash bids firmed on Friday, most look for another steady to higher week for cash cattle prices this week. Cattle futures are rising near recent contract highs and a close above those peaks are needed sooner than later to prevent a more sustained correction. Weather still looks supportive with snow and cold in parts of cattle country.
Hog futures seen on the defensive to start this morning. Yesterday’s small rebound may have been the start of a bigger recovery, but the bulls must prove themselves over the course of this week. Fundamentals are mixed. The national average cash hog prices fell 50 cents as negotiated sales slipped from a week ago but remain well above a year ago. Some of that weakness reflects some schedule maintenance as slaughter fell to 444,000 head on Monday, down from 462,000 a year ago. Wholesale pork carcass value rose 64 cents as gains in butts, picnics and ribs offset continued weakness in loins, hams and bellies. Sales were light.