Grain Traders Deal With More Than Slow Planting Pace
Apr 25, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for April 25, 2018.
Grain markets are nervous and are consolidating as trade deals with important factors such as: slow planting progress for row crops, higher trend in interest rates and weakness in stock indices.
The bottom line for the official weather outlook in most production regions is unchanged. A trough of low pressure is still expected to enter the western United States this weekend and then slowly shift into the central U.S. May 1 – 5. This will likely promote shower and thunderstorm activity in the Hard-Red Winter Wheat Region and West Texas Sunday – May 2 with locally meaningful rainfall, says World Weather Inc.
CME Group raises storage rates on KC wheat futures to 11 cents per bushel per month up from 8 cents after an initial variable storage rate observation period.
Funds were estimated to have been net-buyers of 9,500 corn contracts, 6,500 soybeans and 2,000 wheat contracts on Tuesday.
Brazilian agricultural consultant, Safras & Mercado increased their estimate of the Brazilian soybean crop to 119.2 MMT in their latest update, from 117.3 MMT, which compares to USDA and CONAB at 115.0 MMT.
China’s soybean imports from the U.S. dropped to the lowest March total in a decade. Trade is citing the reason for the drop was due to the escalating trade tensions between the two countries and China’s declining hog industry.
American farmers have managed to stay afloat despite years of shrinking crop values, the lowest incomes since the recession and a budding trade war with China. Now, they’re feeling a new squeeze -- borrowing money is getting more expensive as interest rates rise. For some, it may be fatal. (Bloomberg News)
Rising interest rates edging near 3% in long-term bonds are cited for the slide in US equities on Tuesday. US dollar index closes above the 100-day moving average for the second straight day. Trade is concerned about higher interest rates impact on US exports.
Fed Cattle Exchange will be offering 3,194 head at today’s auction. Cash trade this week has been light so far with asking prices higher than last week. Product demand and values are strong as retailers prepare for the highest beef demand period of the year. It appears packers are looking for inventory of market ready cattle.
US stock market slide on Tuesday may provide a negative headwind for live cattle futures. June live cattle contract needs a close above 106.00 to ignite additional buying interest. Support crosses at 101.62.
Lean hog futures were hit from several angles on Tuesday. The weakness in stock indices, concerns over ample supply of market hogs and technical sell stops were triggered. June lean hog contract has support at 71.32 and resistance at 77.30.
Dressed beef values were higher with choice up 2.54 and select up .39. The CME Feeder Index is 138.65. Pork cutout value is up .21.
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