Grains Slide On Political Jitters
May 18, 2017
Good Morning! Paul Georgy with the early morning commentary for May 18, 2017.
Grain markets are under pressure as traders take a risk off attitude due to Brazil’s currency falling sharping. Stock indices are extending losses from Wednesday.
Allendale’ Ag Leader Monthly Webinar is set for May 23rd at 8:00 PM CDT.
The topic this month is South America's Impact on U.S. Prices. We will be speaking with Pedro Dejneka, who just returned from a trip to Brazil. He will share his insight on how South American agriculture, exports, currencies, and more could impact grain prices here in the U.S.
Can't make it live? Registration gets you access to the webinar recording as well.
Corn, soybeans and wheat have been range bound with narrow trading ranges for the current marketing year. The markets are waiting for guidance caused by weather pattern changes, demand outlooks or the drama in Washington. A close outside of the recent price ranges could open the door for a further move in the direction of the breakout. Stay in touch with your Allendale rep.
Weekly export sales numbers will be released later this morning. Trade estimates for 2016/17: corn 500 to 700 tmt, soybeans 200 to 400 tmt, soymeal 50 to 150 tmt and wheat 0 to 200 tmt. The 2017/18 marketing year trade estimates are corn 50 to 25 tmt, soybeans 0 to 200 tmt, soymeal 0 to 100 tmt, soyoil 1 to 12 tmt and wheat 200 to 400 tmt.
Ethanol production was reported at 1.027 million barrels per day, this was an increase from previous week’s 1.005 million barrels per day. Ethanol stocks were 23.14 million barrels up from previous week. Current corn usage for ethanol is outpacing the USDA’s estimate for 20116/17 demand.
EIA crude oil stocks showed a drawdown but not as large as trade was expecting. Gasoline usage continues to run below a year ago levels.
Iraq is increasing production of wheat this year to 3.65 million tonnes. Their goal is to provide food for hundreds of thousands people which have been displaced by war. This years production is expected to meet about 80% of domestic needs.
Funds were estimated net buyers of 7,000 corn contracts on Wednesday and 3,000 wheat. They were net sellers of only 500 soybeans.
Fed Cattle Exchange sold 1621 head out of the 2379 offered. With the immediately delivered cattle bringing 135.16 and the 2 weak to a month delivery averaging 130.14.
Live cattle futures struggle with the weaker trend in cash and the abnormally wide basis of futures under cash. However cutout values have likely topped and could be in for a sharp correction.
Technical picture for June live cattle contract is suggesting an oversold condition currently. Retracement levels based off of the February low and May high point to a 38% at 118.15 and 50% at 113.00.
Cash hog values continue to climb on tighter supplies and farmers focusing on fieldwork supports the cause. Pork demand from export market is also benefiting from the weaker US dollar.
June lean hog contract rallied to test old highs only to retrace after Tuesday’s outside day up. Key chart resistance now crosses at 80.00 level with support at 76.50.
Dressed beef values were lower with choice down 1.71 and select down 1.11. The CME Feeder Index is 142.12. Pork cutout value is down 2.46.
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