Forecast Important as US Plantings Continue
Apr 13, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for April 13, 2018.
Grain markets are weighing recent demand spikes with an uncertain weather outlook against ongoing world trade concerns. As US plantings continue, traders have their eye on extended forecasts looking for warmer/drier planting weather.
Weekly export sales for the week of Friday, March 30 - Thursday, April 5 had corn export sales of 895,914 metric tonnes (839,914 for 2017/18). That was under the 900,000 - 1,700,000 trade expectation. We have sold 85% of USDA's whole-year goal by this point, over the 84% five year average by this point.
Soybean sales were a surprise at 2,464,512 metric tonnes (1,510,476 for 2017/18 and 954,036 for 2018/19), well over the 900,000 - 2,000,000 estimate. The old crop sale of 1.5 million tonnes was the best in over 20 years. Marketing year to date Sales are 94% of USDA's goal, under the 96% normally sold by this point. We expect another strong soybean report on next week's sales report.
Wheat export sales were reported at 188,701 metric tonnes combined (120,706 for 2017/18). This was neutral as it was within the wide 150,000 - 650,000 trade estimate. Wheat needs to see much bigger sales to hit USDA's goal for the marketing year which ends at the end of next month.
Weather forecasts will be important to watch through the weekend. The 6 - 10 day outlook still has light/moderate rains for the Midwest next week while the 11 - 15 day offers much needed clearing. Maps can change quickly by Sunday night/Monday, and a cold/wet forecast on the longer term maps could cause concern.
Weekly Drought Monitor showed a worsening of drought conditions in the Plains. The area classified as Exceptional Drought was increased compared with last week's update. Winter wheat is in the middle of yield determination. Current moisture conditions are a problem and the sharp temperature fluctuations won't be welcome. Other wheat areas, however, are forecast to receive much needed rains.
Year-round E15 is a possibility according to the White House. At a press conference yesterday, President Trump stated, "We’re going to be going probably, probably to 15 and we’re going to be going to a 12-month period." No timeline was given for an official announcement, and the idea is expected to face opposition from big oil.
President Trump on Thursday instructed top administration officials to explore re-entering the Trans-Pacific Partnership (TPP) — a trade pact he pulled the U.S. out of last year while calling it a “disaster.” (The Hill)
Managed money funds were estimated buyers of 8,500 contracts, 14,000 soybeans, 5,000 soymeal, and 2,500 soyoil. They were sellers of 4,500 wheat.
Economic reports out today include Michigan Sentiment and JOLTS Job Opening. Both are due at 9:00 AM CDT.
June hogs continue to have two gaps on the chart, both at higher prices. The first is at 79.75 and the second at 81.80. Many traders are expecting those gaps to be filled.
Cash cattle trade this week should be steady to higher over last week. Talks of trade at $117 and $118 were heard yesterday. This comes after trade started the week with $114 trades on Tuesday. Higher trade this week would stop three weeks straight of cash cattle declines.
Estimates for next Friday's Cattle on Feed report will be out early next week. Early thoughts are that the placements number will see a change from the recent trend.
Dressed beef values were mixed with choice down .59 and select up .06. The CME Feeder Index is 135.76. Pork cutout value is up .20.
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