Ahead of the Open: Corn, Meal Exports Improve to Lend Light Support Ahead of Holiday Weekend

Posted on 04/18/2019 7:57 AM

Grain Calls

Corn: Steady to up 1 cent

Soybeans: Steady to up 1 cent

Wheat: Up 1 to down 4 cents

General Comment: Corn and soybeans seen fractionally higher ahead of the three-day holiday weekend while winter wheat is retreating on rain across the central Great Plains the past 24 hours and more in the forecast. News is very light this morning with export sales positive for corn, soybean meal cattle and hogs but slightly negative for soybeans and wheat. 
Markets worldwide await the end of US-Chinese negotiations. Grain markets continue to question whether a deal can be struck prior to world demand shifting fully to South American corn and soybean supplies. The U.S. and China have tentatively scheduled a fresh round of face-to-face meetings as they seek to close out a trade deal, with negotiators aiming for a signing ceremony in late May or early June, according to a person familiar with the situation. Under the draft schedule, U.S. trade representative Robert Lighthizer is tentatively set to travel to Beijing the week of April 29, the person said, with Chinese envoy Liu He coming to Washington the week of May 6. 
Rains will be featured from Texas to Ohio the next couple of days before a drier, warmer weather pattern develops. The next rain event is due Sunday-Wednesday but not as wet as it has been the past two months. A large low-pressure system is developing in the Gulf of Alaska that suggest warmer pattern with smaller storms and less rain that will allow for increased planting opportunities. A drier forecast is developing for Brazil and Argentina the next two weeks, but recent rain should prevent any concerns developing for second-season Brazil corn and aid harvesting across the region. A drier pattern is set develop across Europe and Black Sea region the next two weeks that will begin to deplete recent added soil moisture. That will increase the importance of showers forecasts in the 11-15-day outlook.

USDA made no large export sales announcements in its daily reporting service Thursday.

 Corn market is seen firm on improving ethanol production and exports. This morning’s USDA export sales report showed exporters sold 947,600 metric tons (MT) sold in the week ended April 11. That topped trade estimates and was 33% above the prior four-week average. U.S. ethanol production for the week ended April 12th averaged 1.016 mil barrels per day, up 1.4% versus a week ago and up 0.7% versus a year ago. Stocks fell 2.2% percent in the week, suggesting improved demand.

Soybean seen recovering a small portion of Wednesday’s steep decline. Export sales for last week were a disappointing 382,100 MT, down 46% from the prior four-week average and included now Chinese sales.  Soybean meal sales jumped 94% to 295,300 MT last week from a week earlier, led by the Philippines taking nearly half of the total Shipments were a strong 382,800 MT, up 63% from the prior four-week average.

Wheat futures are seen pressured by generally favorable global weather and another week of sluggish export business. Sales in the week ended April 11 were 317,700 MT, up 16% from the prior week but down 28% from the 4-week average. Vince Peterson, president of U.S. Wheat Associates, says the U.S. hopes to get 80% of the business in Brazil’s recently announced 750,000 MT tariff-free wheat import quota. Currently, any U.S. wheat sales to Brazil are subject to a 10% tariff

Livestock Calls:

Cattle: Steady to firm

Hogs: Steady to mixed

Cattle futures seen firming with strong cash markets.  Cash cattle trade was up about $2 in Kansas and Texas yesterday. Wholesale beef prices were mixed Wednesday with choice up 71 cents and Select down 99 cents. But the story was strong yesterday on a surge in Choice movement. Slaughter is up 7,000 head this week from a year ago and 3,000 higher than a week earlier. USDA reported this morning that beef sales rebounded to 28,800 MT, up 81% from the prior four-week average on increased buying from South Korea and Japan. It should be relatively quiet today with USDA set to release its monthly Cattle on Feed report after the close. Traders look for on-feed numbers to be up about 1.8% After placements in March rose 2% to 4%.

Hog futures seen pausing for a second day on slightly lower cash hog prices Wednesday. However, fresh pork cutout values rose another 47 cents to $87.00, very close to the seasonal highs set last June. Movement was sluggish. The weekly export sales report showed exporters sold 40,300 MT of pork last week, down more 50% from last week’s record but still up 6% from the prior four-week average. China bought 23,500 MT and shipped 4,500 MT last week.

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