How Much Is More Soybeans In EU Deal?
Jul 26, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for July 26, 2018.
Grain markets and soybean complex react to EU and US deal. Juncker and Trump announced during a joint Rose Garden appearance that as long as negotiations were ongoing the US would hold off further tariff and reassess the existing tariffs on steel and aluminum. Trump also said they agreed to increase imports of American soybeans. The next visitors to Washington will be Mexico’s leadership to discuss trade.
Rich Nelson, Allendale’s Chief Strategist, will present our Hog Outlooks today at 2:00 pm CDT. Ryan Ettner will be providing cattle outlooks and trading strategies. Get registered, NOW! Allendale Summer Conference Webinar! Please click HERE for more information.
Thanks to the hundreds of viewers who participated in Allendale’s Summer Conference Webinar on Wednesday. The corn, soybean and wheat outlooks have been recorded and are available online.
Midwest corn harvest will come early this year as farmers are checking their early planted cornfields and finding it already well into dent stage. They are guessing corn could be ready late in August. Their concern about corn maturing this quickly is with test weight and depth of kernels. Time will tell.
USDA Weekly Export Sales will be released at 7:30 am this morning. Trade estimates are: wheat 200,000 to 500,000 tonnes, corn old crop 300,000 to 400,000 tonnes and new crop 400,000 to 800,000 tonnes, soybeans old crop 200,000 to 400,000 tonnes and new crop 200,000 to 500,000 tonnes, soymeal 50 to 275,000 tonnes and soyoil 8,000 to 40,000 tonnes.
Trade will be watching the weekly export sales today as US soft red wheat is now competitive with Russian wheat on the world market. Drought in the EU has their wheat $18.00 per tonne higher priced than US and Russian supplies.
Strategie Grains cuts its estimate for this year's European Union soft wheat crop by 2.5 mmt, which is now expected to be below 130 million tonnes.
Ethanol production increase by 0.93% above previous week. However, the 1.074 million barrels per day was 6.13% greater than last year. Ethanol stocks were slightly higher than last year. EIA crude and gasoline stocks dropped more than trade was expecting while distillates were unchanged.
Cash cattle is basically at a standstill as packers will likely wait until Friday to fill their needs. The Fed Cattle Exchanged offered 1,249 head and all were no sales. Auction barns this week had good receipts, however, the sales were trending lower from last week.
Packer profit margins are being calculated to be over 125.00 per head. Current futures to cash relationship suggest futures should be supported on dips as we are approaching a time of year where historically futures move to a premium to cash.
August live cattle futures first notice day is August 6. Current price relationships would suggest no deliveries. August futures contract closed on the 50-day moving average for the second time in as many days. Expect some corrections in price as the uptrend in cattle is intact, however the key support in August is 106.20 and, in the Oct, contract is 108.20.
Hog producers should be eligible for government payments as part of a USDA’s $12 billion farmer aid package aimed to offset the impact of tariffs from China and Mexico on U.S. pork. Mexico’s lead negotiator and economy minister will be in Washington today to talk about rate.
Lean hog futures consolidated on Wednesday trading within the previous days range. News continues to pour water on any bullish flame. Market hog supplies are more than adequate to meet packers interest currently, keeping futures in a down trend. August futures contract has support at 65.20 (contract lows) and resistance at 68.50 level.
Dressed beef values were lower with choice down .01 and select down .37. The CME Feeder Index is 148.17. Pork cutout value is down 1.65.