Ahead of the Open: Big Soybean Sale to China and of USDA Acreage and Stocks Reports

Posted on 06/28/2019 7:23 AM


Corn: Up 1 cent to down 1 cent
Soybeans: Up 3 to 6 cents
Wheat: Down 1 to 3 cents

General Comment: Corn and wheat prices are moving little with volume is light overnight. More choppy, light trading expected this morning ahead USDA’s seedings and quarterly stocks report at 11:00 a.m. CST. USDA is widely expected to announce it will resurvey some states for the August Crop Production report as today report came after many final planting decisions were made.

Soybeans firmer on light delivery overnight and fund short covering.

USDA daily export reporting service reported private exporters sold 544,000 metric tons of soybeans to China for delivery in the current marketing year. That’s a major surprise and should add early session gains. It also may boost optimism about U.S./China trade talks tomorrow.

Midwest weather leans price negative with the warmer temperatures and light rainfall. More warm, wet weather will be needed to push crops after the delayed plantings. It may cool some after July 4 and forecasts will be closely watched daily for signs of extended cool weather that may slow development.

The main event is tomorrow when President Donald Trump meets with Chinese leader Xi Jinping as hopes remain high that trade talks can get restarted. China’s top trade negotiator Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer met today in a sign that the two sides are looking to make progress. The key will be how the two sides handle the final 10% the Treasury Secretary Steven Mnuchin said remained earlier this week. The consensus going into Saturday's Trump/Xi meeting is there will be a truce and an announcement of future trade talks. Chinese President Xi Jinping accused developed countries of engaging in protectionist behavior that was “destroying” the global trade system. Trump said there will be “very big” trade deals with India and Japan after meetings with Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi at the G20.

Euro-area inflation remained unchanged at 1.2% in June according to this morning’s flash estimate from Eurostat. U.S. consumer spending rose 0.6% in May and prices fell 0.2%. With both the Fed and the ECB already firmly on the path to more easing, continuing low inflation will only further bolster calls for rate cuts sooner rather than later.  Oil remains on track for its best month since January and gold is heading for the biggest monthly gain since 2016. Fund have been reluctant to jump into the grain markets with both feet but that may change if there are more threats to U.S. crops in July.

Corn:  Futures are little change sitting just above keep support ahead of the USDA reports. Market probably needs a positive report today to improve the near-term outlook. There were 790 contracts delivered against the July futures overnight when none were expected with the first cash markets

Soybeans: Futures seen firming ahead of USDA reports on today's surprise Chinese export business. July soybean deliveries were 5, light as expected. However, 745 contracts delivered against July soymeal overnight when none were expected. Brazilian producers will likely add another 800,000 soybean hectares in 2019-20, pushing planted area to 37 million hectares (91.4 million acres) in 2019-20, projects a U.S. ag attaché in the country. Assuming a return to average yields, this would push production to a record 124 MMT, up from 117 MMT this year. The post maintained its soybean export forecast of 75 MMT for 2019-20, explaining that “subsiding demand from China

Wheat: The wheat complex continues to fragment with winter wheat up about 12 cents this week and spring wheat down 2 cents. SRW has been gaining on both other markets and that reflects more speculative buying interest. European Commission cuts forecasts of wheat output to 142.3 MMT from 143.8 MMT last month.


Cattle: Steady to weak
Hogs: Steady to weak

Cattle: Live cattle will be steady to weak.  Cash cattle prices continue to inch higher in the Iowa/Minnesota market, with steer prices pushing up to $112.50 yesterday, up several bucks from a light test early in the week and in line with last week’s trade. But the standoff continues in other markets. Wholesale beef prices slumped again Thursday with Choice down 67 cents and Select dropping $1.66. Sales were moderate.

Hogs: Futures seen steady to weak after trying to bounce earlier this week. Thursday’s Quarterly Hogs & Pigs Report was a bit more negative than forecast, with the June 1 all hogs number rising 3.6% from year-ago. The lean hog market enjoyed some corrective buying headed into the report but may give it back today. National cash hog price fell $1.56 on Thursday. Fresh pork cutout values rose 22 cents on light to moderate demand. Slaughter so far this week is up 4.9% from a year ago, down from the 13% surge last week.


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