Ahead of the Open: Grains, Soy Try to Build on Last Week's Rebound; Livestock Firmer

Posted on 03/19/2019 7:48 AM

Grain Calls

Corn: Steady to firm

Soybeans: Mixed to firm

Wheat: Up 3 to 5 cents

General Comment: The global equity screen is green, pulling crude oil to new 2019 highs as the dollar is weaker ahead of the two-day U.S. Federal Reserve meeting. Investors are anticipating a more accommodative monetary policy to emerge. A vote for patient, steady policy may upset markets. Grains are struggling to build upside momentum waiting on more concrete news about a China trade deal after reports Monday said the deal won’t get done before June.  U.S. Agriculture Secretary Sonny Perdue described negotiations as “dynamic,” saying China could triple its 2017 purchases of U.S. farm goods in the next five years. Perdue also confirmed that there would have to be an agriculture deal as part of any trade deal with the EU. USDA’s Trade Undersecretary Ted McKinney stated late Monday that negotiations between the US and China continue to make progress but he said the negotiations may go past March 30 before a deal can be announced. 

Seasonable temperatures begin to melt deep and extensive snowpack within the northern thirds of the Corn Belt and Plains.  Scattered rains affect a much of the central U.S. from March 22 through March 25 and followed by better-organized rains next with two strong storm systems, according to T-storm Weather. Rain next week will maintain soggy or saturated fields across a wide area into early April. September through March is headed for the wettest seven-month period in more than 125 years across the Corn Belt—by a wide margin, T-storm says.

Finally. U.S. Vice President Mike Pence is headed to Nebraska today to tour the flooding devastation. The state has declared emergencies in 74 of Nebraska’s 93 counties. "This is clearly the most widespread disaster we have had in our state's history," in terms of sheer size, Nebraska Governor Pete Ricketts told reporters on Monday afternoon. The Missouri River, the longest in North America, has flooded much of Nebraska between Omaha and Kansas City at the Missouri state line. Damage to the state's livestock sector was estimated at about $400 million, while the full impact on the spring planting season was not yet clear, said Steve Wellman, director of the Nebraska Department of Agriculture. The state's highway system suffered hundreds of millions of dollars in damage, said Kyle Schneweis, director of the state Department of Transportation.

USDA daily export sales reporting service said private exporters did not report any large new sales of U.S. commodities.

Corn market is seen steady to firm on worries about a delayed U.S. planting season leading to lower acres. Wet weather and flooding in northwestern parts of the Midwest Corn Belt and the Mississippi River Delta threaten to delay corn planting and encourage farmers to switch some acres to soybeans, which can be seeded later in the season. We have yet to see the peak in flooding.

Soybean futures are finding light support from carryover short-covering buying after last week’s rally. Brazilian soybean exports are expected to fall almost 20% this year from a record above 80 MMT in 2018, but official trade data released on Monday shows strong outflows of beans to foreign destinations. The Safras & Mercado consultancy on Monday forecast that total soybean exports from the world's leading seller would reach 70 MMT compared with 83.86 MMT in 2018.

Wheat futures rose overnight, heading for the third gain in four session. Prices supported by fund short covering as demand for U.S. supplies continues to be lackluster with focus on several upcoming tenders.  USDA said Monday that exporters had 353,727 MT inspected for exports last week, below a range of trade expectations for 400,000 to 700,000 MT. Kazakhstan projected the grain harvest this year will fall 14.5% to 19.5 MMT from 22.8 MMT last year, the Ministry of Agriculture told Interfax. Most of Ukraine's winter grain crops are in good, or satisfactory, condition as of mid-March, the agriculture ministry's data showed; the data showed that 53 percent of crops are in a good state, another 37 percent are in satisfactory condition and 10 percent are weak. Rains boost U>S. winter wheat crop conditions this past week, according to USDA. Oklahoma now rates 60% of its crop in “good” to “excellent” condition, a four-point gain from last week. The amount of top-rated crop in Texas climbed five points to 33%. And in the top-producing state of Kansas, ratings held steady at 51% “good” to “excellent.”

Livestock Calls:

Cattle: Steady to firm

Hogs: Steady to higher

Cattle futures seen steady to firm.  Wholesale beef prices rose Monday on light sales with Choice up $1.34 and Select rising 87 cents. Slaughter fell to 115,000 head on Monday from 119,000 a week earlier and 118,000 a year ago. when looking at the USDA composite cutout, have traded at or above year-ago levels for all but one week so far in 2019. 

Hog futures are steady to higher, extending new highs set in deferred futures on Monday when traders absorbed news Customs officials sized about 1 million lbs. of smuggled Chinese pork in New Jersey. The national average cash hog price rose $1.81 to $55.73, up $8.73 in the past week. Pork carcass values jumped $3.50 to $72.39, the highest since Dec. 12 and up $5.79 in the past week. The sales were moderate to slow. Slaughter slowed to 463,000 on Monday from 475,000 a week ago and equal to a year ago.


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