Corn: Steady to down 1 cent
Soybeans: Down 1 to 3 cents
Wheat: Down 3 to 5 cents
General Comment: U.S. grain and global stock markets are uncertain about the outcome of this week’s trade talks in Washington with new tariff hikes looming by week’s end. Most of the remaining hopes for a speedy conclusion to the U.S.-China trade fight were crushed on Sunday when President Donald Trump accused Beijing of reneging on its promises and vowed to raise tariffs this week and implement new ones quickly on Chinese imports if a deal is not concluded. U.S. Trade Representative Robert Lighthizer said Monday after the markets closed, “Over the course of the last week or so, we've seen an erosion in commitments by China, I would say retreating from commitments that have already been made, in our judgment.” Trump's threat rattled financial and commodity markets around the world. But the markets erased part or all of their early Monday losses before Monday’s close on speculation that the tariff hike warnings might be a negotiating tactic aimed at getting the best deal out of Beijing.
Despite Trump upping the pressure and Lighthizer confirming the U.S. would increase duties on China production at 12:01 a.m. on Friday, Beijing will still send trade negotiators to Washington the delegation will be led by Vice Premier Liu He, a sign that China remains serious about find a compromise.Trump wants to see a deal with substantial structural changes but that is not where the two sides are at the moment, Lighthizer said yesterday.
Stock and commodity markets are weaker this morning as China is putting together its own list of goods that it will hit with additional tariffs if the US follows through on its threat to hike tariffs on Chinese goods as of Friday. Bloomberg is reporting that the tariffs by China would become effective one minute after the U.S. in the event that the U.S. ups tariffs to 25% on $200 billion in Chinese goods. However, Chinese government agencies did not confirm the potential action.
A strong low-pressure center will slowly advance across North America into late-week. Rain and scattered thunderstorms will be associated with the system which began developing overnight in the Plains and is moving into the Midwest today through Thursday Wednesday and Thursday. Much of the rain will be restricted to eastern North America Friday as the disturbance shifts into eastern Canada. A follow-up disturbance will bring erratic rain to portions of the Midwest Friday and this weekend, though much of the precipitation that occurs during this time will be light. An upper air weather pattern shift will place a cooler and drier airmass over the eastern United States for a while. The change offers a short-term break from rainy weather and will call for some temporary drying. Farmers will have to wait a few days for the topsoil to firm enough to support fieldwork and then they will likely go strongly with planting. Western Corn Belt weather may deteriorate faster than that in the eastern Midwest. If the forecast verifies there is a good chance that next week will be the best week for planting so far this spring.
The daily USDA export report for large sales did not report any new business this morning.
Corn market rallied up to close the downside gap left at Monday’s opening and retreated, keeping the chart picture negative. U.S. corn planting was 23% completed on May 5, compared with the 46% average and the slowest since 2013, USDA reported Monday. Illinois is farthest behind with just 10% of its crop planted versus 66% on average. Next up is Minnesota at 6% planted versus 42% on average for this week. Indiana farmers are 3% complete, also well behind the 35% average. Iowa producers are 36% planted versus 51% on average. Nebraska growers have planted 35% of their intended acres compared with 47% on average. Next weeks’ forecast is for drier but cool conditions starting this Friday through the 7-day period. The market may have to wait to see whether the forecast verifies and how soon the next storm moves into the Midwest by late next week.
Soybeans tried to rally overnight but could not rise above yesterday’s highs, keeping the downside gap open from Monday’s opening. Brazilian soy industry group Abiove raised its estimate for the soybean crop on Monday to 117.6 million metric tons, (MMT), up from a March forecast of 116.9 MMT, as late maturing fields show better productivity. Abiove cut its estimate for Brazilian soybean exports in 2019 to 68.1 MMT from the 70.1 MMT projected in March, saying the African swine fever outbreak in China will reduce demand from its largest client. Soybean carryover estimate was raised to 5.63 MMT from 2.95 MMT previously. Soybeans were 6% planted as of Sunday, behind the 14% average of the past five years. Illinois has seeded 3% of its crop, down from 6% on average, with Indiana at 1% planted, compared with 12% on average, Iowa at 8% versus an average of 11%, Minnesota at 2% planted, down from 6% average and Nebraska was14% planted, up from 13% on average.
Wheat futures also failed to rise above Monday’s high and turn back to the downside. France exported 2.15 MMT of soft wheat during March, the largest monthly volume this marketing year. That’s up 750,000 MT from February. So far this marketing year, the country has exported a total of 12.4 MMT of wheat, which is 400,000 MT ahead of last year at this point. U.S. winter wheat condition was estimated at 64% in “good” and “excellent” condition as of Sunday. While unchanged from a week earlier, it masked a three-percentage point drop from “excellent” to the “good” category. Spring wheat planting was 22% completed on May 5, behind the 49% average. North Dakota has planted just 13% of its crop, which compares with the five-year average of 37%.
Cattle futures seen weaker to start today, following hogs. Wholesale beef trade was mixed Monday with Choice down 36 cents and Select up 69 cents. Sales were light. Still, weight data and slaughter numbers continue to signal marketings are current and feedlots could dig in and push for higher prices this week after cash prices tumbled to an average price of $123.76 last week
Hog futures were locked limit down all day on Monday and will trade with expanded limits Tuesday. The escalated trade war concerns will continue to weigh on futures today. Some underlying support should surface after the national average cash hog prices rose 35 cents on Monday and the pork cutout value gained 88 cents. However, pork sales were sluggish as slaughter remains elevated with 470,000 head processed Monday, up from 447,000 a year ago. African swine fever has spread to Vietnam’s northern Yen Bai province, according to a Vietnam news agency on Tuesday. Noel White, Tyson’s chief executive officer, warned on Monday that the “threat is real” that African swine fever could enter the U.S. for the first time, a nightmare scenario for pork exporters. White estimated about 150 million to 200 million hogs have died in China because of the disease, reducing global protein supplies by about 5%.