Corn: Steady to mixed.
Soybeans: Up 1 to 3 cents.
Wheat: Down 2 to 5 cents.
GENERAL COMMENTS: Corn and soybeans are quietly mixed awaiting the 11 a.m. CT USDA supply and demand updates for old-crop and first projections for new-crop with plenty of questions swirling about the impact of Covid-19 on demand and future of the U.S.-China trade deal. The soybean market has been underpinned in recent sessions by Chinese demand. China announced a new list of 79 U.S. products eligible for waivers from retaliatory tariffs imposed at the height of the bilateral trade war, amid continued pressure on Beijing to boost imports from the United States. China's move to waive off tariffs on some U.S. imports supported rebounds in global stocks and crude oil prices. Wheat futures seen falling for a third session as improved weather across the Northern Hemisphere boosted expectation for ample global supplies. While recent rains have eased some concerns about dry soils in Europe and the Black Sea region, forecasts still show net drying in the Balkan Countries, far southern Ukraine, portions of Russia’s Southern Region and western Kazakhstan. USDA said U.S. winter wheat conditions slipped a little more than expected last week.
Earlier this morning Brazil’s forecasting agency raised its corn crop forecast and cut soybeans slightly. Brazil's total soy harvest seen at 120.3 MMT compared with 122 MMT estimated in April. Corn production forecast at 102.3 MMT, up from 101.9 MMT projected in April. The agency said corn export have room to expand with the cheap currency relative to the dollar.
The daily USDA export sales reporting service said private exporters sold 136,000 metric tons (MT) of soybeans for delivery to China for delivery before Sept. 1. That confirms some of the market talk on Monday that China bought 240,000 MT of soybeans on Monday and was shopping for another 800,000 MT. The purchases were the latest in a recent string by China, which U.S. officials say has also begun implementing other parts of the trade deal regarding intellectual property protections.
U.S. President Donald Trump said on Monday he opposed renegotiating the U.S.-China "Phase 1" trade deal after a Chinese state-run newspaper reported some government advisers in Beijing were urging fresh talks and possibly invalidating the agreement. Trump, who himself has considered abandoning the pact signed in January, told a White House press briefing he wanted to see if Beijing lived up to the deal to massively increase purchases of U.S. goods. The Global Times reported on Monday that unidentified advisers close to the talks have suggested that Chinese officials revive the possibility of invalidating the trade pact and negotiate a new one to tilt the scales more to the Chinese side. The Global Times is published by the People's Daily, the official newspaper of China's ruling Communist Party. While not an official party mouthpiece, the Global Times' views are believed at times to reflect those of its leaders.
Meanwhile, China also updated its balance sheet today. Of note, it expects attractive import prices and the Phase 1 trade deal with the U.S. to result in corn imports of 5 MMT in 2020-21, a 25% increase from imports of 4 MMT the year prior. Continued efforts to rebuild its hog herd and other domestic sources of protein should lift the country’s feed needs. Soybean imports are expected to climb from 91 MMT in 2019-20 to 93.6 MMT in 2020-21, nearly a 3% increase. China’s corn production is expected to climb 2% to 266.51 MMT in 2020-21, while its soybean output is expected to rise 4% to 18.82 MMT. China’s cotton imports are expected to hold steady at 2 MMT in 2020-21, with domestic production sliding and consumption rising modestly.
China is also fighting a new trade battle with Australia. China has suspended imports of beef from four of Australia’s largest meat processors, citing issues with labeling and health certificates. This comes amid a push by Australia for an independent inquiry into the origins of the coronavirus. China has also proposed hitting Australian barley shipments with 80% tariffs regarding allegations of dumping the grain. Australia’s trade minister Simon Birmingham said the suspension of beef imports was “disappointing,” but denied this was any sort of retribution by China regarding Australia’s coronavirus inquiry. The four companies account for roughly 20% of Aussie beef exports to China. Australia was China’s third largest supplier of beef in 2019, after Brazil and Argentina.
U.S. weather leans negative with warmer temperatures and regular rains forecasts the next few weeks, aiding early corn and soybean development and winter wheat grain fill.
Corn planting advanced 16 percentage points over the past week to 67% complete. While that’s 11 percentage points more advanced than the five-year average, it fell short of the 71% completion rate analysts surveyed by Reuters anticipated. USDA said as of Sunday, 24% of the crop had emerged, which was two points ahead of the five-year average. Soybean planting also advanced less than the market anticipated over the past week, with showers in some areas of the Corn Belt. As of Sunday, USDA reports 38% of the U.S. bean crop had been seeded, which was a 15-point gain from last week but four points slower than analysts surveyed by Reuters anticipated. Progress is faster than normal in nearly every top-producing state, with the western Corn Belt leading the charge. Just 7% of the crop was emerged as of Sunday, which was fortunate given the weekend cold snap.
Spring wheat planting progress advanced just 13 percentage points over the past week to 42% complete, with cold temperatures and snow slowing efforts. Analysts surveyed by Reuters expected a 20-point jump to 49% planted. Progress now lags the five-year average by 21 percentage points. USDA cut the amount of winter wheat it rated “good” to “excellent” by two percentage points, with 53% of the crop falling in those categories. Analysts had expected a one-point slide on average, though there was a pretty wide range of estimates. USDA now rates 16% of the crop in “poor” to “very poor” condition, which is up two points from last week and double last year at this time. Forty-four percent of the U.S. winter wheat crop was headed as of Sunday, which is six points behind the average pace. The slower development of the crop likely helped it to skirt even more damage from freezing temperatures over the weekend. It will take time to assess the impact of the latest freeze.
U.S. small businesses know the economy is going to be terrible in the short run and that their own sales might suffer a record drop, but they are more hopeful the corner will start to turn in the next several months, a closely followed survey shows. The optimism of small companies in the U.S. economy fell 5.5 points to 90.9 in April, the National Federation of Independent Business said Tuesday. The drop in April was not nearly as bad as Wall Street expected. Economists had expected a reading of 84.8. The index had posted an even bigger decline in March that was the largest ever recorded.
CORN: July corn are sitting on short-term support to reopen this morning. A lot of the bearish supply news in today’s WASDE report may already be reflected in current low prices. That means the focus will be on shifts in USDA demand projections. Meanwhile a round of beneficial rain is expected in Mato Grosso do Sul, Parana, Sao Paulo, and southwestern Mato Grosso, Brazil Tuesday through Thursday. The rain will be good for some improvement of soil moisture for Safrinha corn. Another round of rain in this area is likely May 19 – 22, Maize plantings in France are expected to jump by nearly 11% this year as farmers switch to spring crops after adverse weather hit sowing of winter varieties, the French farm ministry said;
SOYBEANS: July beans will need to get out above Monday’s high at $8.61 1/4 to build on recent price strength. Malaysia's palm oil inventories jumped 18.3% to more than 2 MMT in April, well above expectations, as production surged to a six-month high and coronavirus lockdowns led to a slump in demand, industry data showed on Tuesday. Palm oil futures fell 1.3% falling to the lowest since last July and dragging on CBOT soyoil futures this morning.
WHEAT: Wheat is waiting for USDA first estimates of the 2020-21 U.S. and world crops later this morning. Ukraine's 2020 grain harvest is likely to fall by 3.5% to 72.52 MMT because of a smaller yield caused by poor weather despite a larger sowing area, analyst ProAgro said on Tuesday. The consultancy forecast in a report that the 2020 wheat harvest down by about 11% to 25.4 MMT while corn output could rise by 4% to 37.3 MMT. ProAgro said wheat export was likely to fall to 17 MMT in the 2020-21 July-June season from 20.2 MMT this past season. Russia's wheat crop is seen at 81.2 MMT in 2020, down from the previous estimate of 84.4 MMT, due to dry weather in the south of the country, the agricultural consultancy SovEcon said.
CATTLE: Steady to mixed
HOGS: Steady to firm
Cattle: Futures seen mixed to opening with underlying support from stronger beef prices on Monday. Choice gained another $7.70 and Select rose $3.98 on moderate sales. This adds to ideas cash action will get underway at steady to higher prices this week. Last week, sales took place in a wide range stretching from $95 to $115, for a weighted average price of $104.50, up more than $6 from the week prior and sharply above June live cattle. Some friendly adjustments could also come from USDA today. The department may cut its beef production forecast given processing disruptions of recent months; exports could also rise. Monday’s kill of 86,000 head was up 11,000 head from last week, but still 33,000-head (27.7%) under year-ago.
Hogs: Futures seen steady to firmer as hog processing picked up notably as more plants reopened after Covid-19-related closures. Monday’s slaughter was estimated at 357,000 head, an 82,000-head surge from last week, but still just over 100,000 head below year-ago levels. The CME Lean Hog Index recently jumped $3.84, its biggest one-day rise on record, despite backed up supplies. That signals the index is following the strong pork market as negotiated hog bids were over $1 lower on Monday. The pork cutout value renewed its surge on Monday, jumping $5.16 following a 24-cent retreat Friday.