Posted on 05/17/2019 7:44 AM

Corn producers: Old- and new-crop sales orders triggered… July corn futures hit our standing order at $3.82 to sell 10% of 2018-crop in cash market. Old-crop cash sales now stand at 50%. December corn futures also hit our standing order at $4.00 to sell an initial 10% of expected 2019-crop via hedge-to-arrive (HTA) contracts for harvest delivery. You still have a standing order at $3.89 in July corn futures to sell another 15% of 2018-crop. We advise you to enter a new standing order to sell another 15% of 2018-crop in the cash market if July futures hit $3.99. We also advise you to enter orders to sell 10% of 2019-crop via HTAs if December futures hit $4.15 and another 10% at $4.30.


Grain Calls

Corn: 2 to 5 cents higher
Soybeans: 3 to 5 cents higher
Winter wheat: 3 to 5 cents higher
Spring wheat: 10 to 12 cents higher

General Comment: World stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. News reports out of China late Thursday painted a bleaker picture of the U.S.-China trade discussions, including questioning whether any further talks are scheduled between the world’s two largest economies. This has helped to pressure world stock markets to end the trading week.


The Chinese yuan continued to depreciate against the U.S. dollar Friday, due to the U.S.-China trade war. Meantime, the U.S. dollar index is near steady in the early going today, but did hit a two-week high overnight and the USDX is not far below the two-year high scored in April.


Overnight demand news: South Korea purchased 69,000 MT of U.S. or South American corn.


Corn: A soggy U.S. Corn Belt continues to support buying interest in corn. Heavy rains are expected to fall across the Corn Belt over the next week, which will limit planting progress. Some areas are expected to get more than five inches of rainfall over the 7-day period based on updated weather maps this morning. There are notions the persistent rains will curb the size of U.S. corn planted acreage, while late seeding increases risk for lower yield potential. With world demand rising, a drop in U.S. production leads to a tighter global supply story.


Soybeans: Futures prices will see early pressure due in part to the latest downbeat tone of the U.S.-China trade negotiations. Argentina is expected to produce a 56 MMT soybean crop this year, according to the latest estimate from the Buenos Aires Grain Exchange. That’s up 1 MMT from its prior forecast. The exchange cited stronger-than-expected yields for the increase. Much of the buying in beans this week is from short covering from large speculative funds that were short a record number of futures and options contracts as of May 7. Wet Midwest weather forecasts remain a supportive feature for soybeans, too, with just 9% of the soybean crop planted as of last Sunday--20 percentage points below the five-year average. This will continue to limit selling interest in the bean market.


Wheat: Spring wheat futures led follow-through gains overnight amid U.S. planting-delay concerns. Excessively wet weather has also raised concerns of increased disease in winter wheat regions of the U.S. European wheat prices are tracking gains in the U.S., but are being capped by prospects of larger crops than last year. Rains in Russia and Ukraine, the main competitor of EU grains on the world market, are keeping a lid on the rise in European wheat prices. Wheat traders will continue to look to the corn market for direction and find support from corn's solid price gains this week.


Livestock Calls:


Cattle:  Steady to higher

Hogs: Steady to lower


Cattle: The futures market on Thursday saw some short-covering and perceived bargain hunting after live cattle prices hit a nine-month low and feeders dropped to a contract low. Some more short-covering is likely today, heading into the weekend. Also, cattle are due for a seasonal low and the market remains technically oversold. Domestic and overseas demand for beef remains good.  Still, buying interest in futures will be limited by lower cash cattle trade this week even though futures are at steep discounts to the cash market. Choice boxed beef values slipped a penny and Select was 16 cents lower Thursday, though that’s a sign the wholesale market may be ready to stabilize after recent, sharp price pressure. Stabilization in the product market is likely needed before the cash cattle market can halt its sharp decline.  


Hogs: Futures on Thursday bounced back from a lower start that was tied to a disappointing export sales report. We expect a lower start this morning as Chinese trade jitters flared up overnight. While there is risk of China cancelling more U.S. pork purchases if a trade deal doesn’t get done, Chinese buyers still need pork. China’s hog herd continues to be reduced at a record clip by African swine fever. Estimated pork cutting margins are near zero, which is limiting packers’ willingness to bid up for supplies, despite seasonally declining market-ready supplies. The average national direct cash hog bids dropped 55 cents yesterday, but the cash market is still around $17 above year-ago.

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