After USDA Data Traders Turn to Trade-Deal Progress
Feb 11, 2019
Good Morning from Allendale, Inc. with the early morning commentary for February 11, 2019.
Grain markets struggled to breakout of recent trading ranges after the USDA data showed no major surprises. Traders remained cautious amid uncertainty over a U.S. trade deal with China and moderating crop weather in Brazil and Argentina. US and China will resume negotiations tomorrow in Beijing.
Last week, March corn futures were down 4 cents, March soybeans down 1.25 cents and March wheat down 6.25 cents, March soymeal down $5.20 and soyoil up 92 points.
CFTC commitments of traders report has managed funds long corn 75,194 contracts, soybean short -1,220 contracts, wheat short -16,479 contracts, soyoil short – 50,000 and soymeal long at 26,000 contracts. Managed funds were long 95,739 live cattle contracts and long 13,511 lean hog contracts. This data was good through January 8th.
USDA revised 18/19 Chinese soybean import forecast to 88 million mt. (90 million mt. in December, 94.4 million mt. last year and 103 million mt. in USDA’s May ’18 forecast).
USDA reduced 2018 corn and soybean yields from November’s report, but both are still the 2nd highest ever. Lower corn production figures were overshadowed by larger-than-expected cuts in feed and ethanol use. Wheat feed use was also cut more than expected.
USDA’s February crop report made unique adjustments in South America soybean ending stocks over the last 10 years, by cutting Argentina soybean stocks from 16.8 million mt to 8.4 million mt., while increasing Brazil soybean ending stocks from 0.775 million mt. to 1.152 million mt.
Brazil farmers halted sales of their soybeans as port premiums rised sharply, the real currency strengthened and a pause in the U.S.-China trade war pushed China to purchase soybeans from the U.S., South American growers and trading companies said.
CONAB will release updated 2019 Brazil soybean production figures tomorrow morning.
Egypt's GASC bought 300,000 tonnes of wheat for shipment between March 21-31. GASC said it accepted 120,000 tonnes of U.S. soft red wheat, 120,000 tonnes of French wheat, and 60,000 tonnes of Ukrainian wheat. Egypt has strategic reserves of wheat sufficient “for more than five months”, the Egyptian supply ministry said.
Russian Ag Minister announced they will be meeting with grain exporters today to discuss their export outlook for the remainder of their marketing year.
China's agriculture ministry said a new African swine fever outbreak was confirmed in the Hunan province. The outbreak was on a farm with 4,600 live pigs in the city of Yongzhou, infecting 270 of the animals and killing 171, the Ministry of Agriculture and Rural Affairs said.
Dressed Beef Values were lower with choice down 1.36 and select down 0.36. The CME feeder index is 141.69. Pork cut-out values were down 0.29.