How Will USDAs Tariff Relief Program Affect Me?
Jul 25, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for July 25, 2018.
Grain markets waiting for details concerning the $12 billion program President Trump and the USDA suggest will help the American Farmer. They have only a few short weeks to develop the details and get the money in the hands of those impacted by the tariffs. How should the US farmer mange sales during the period of this program development? Weather conditions are ideal for most row crops and suggest the possibility of record yields in 2018.
Rich Nelson, Allendale’s Chief Strategist will present a macro view of grains and full details of soybeans, while Steve Georgy, President will discuss the full outlooks and strategies for corn and wheat.
Get registered, NOW! Allendale Summer Conference Webinar! Please click HERE for more information.
Drew Lerner, World Weather Inc. presented at Allendale’s Summer Conference on Tuesday. To summarize, Drew is looking for fairly normal temperatures and moisture for most of cornbelt through August. September/October could lead to a wetter bias for Midwest, possibly creating some harvest delays in some areas. He is looking for El Nino to develop which could impact US weather this fall. Historically, the weather in Brazil and Argentina do well during an El Nino. September dry conditions in South America could cause volatility in the markets.
Funds were net buyers of 8,000 contracts of soybeans and net sellers of 9,000 corn and 1,000 wheat contracts on Tuesday.
USDA Secretary Sonny Perdue announced a $12 billion program to help farmers who are currently bearing the brunt of trade tariffs. The program includes a market facilitation program which would result in direct farmer payments, a food purchase and distribution program and a trade promotion program. However, details still must be worked out by USDA.
Jesus Seade, Mexico’s designated NAFTA negotiator of president-elect Andres Manuel Lopez Obrador believes, while some contentious issues still must be resolved, he thinks it was almost "inevitable" a deal would be reached. Mr. Seade and the Economy Minister of Mexico will visit Washington later this week.
Analyst’s in Argentina are forecasting next years corn crop to hit record levels after this year’s short crop. Due to increased plantings and forecast for favorable weather production, it could reach 44 mmt.
Cash cattle offers are higher this week but packers will likely wait until late in the week to be aggressive. Product values are stable for this time of year while live cattle futures continue to trade several dollars discount to last week’s cash. August futures first notice day is August 6th.
August live cattle futures have resistance at Tuesday’s highs (109.40) with support at 106.20.
Pork packing plants are taking a floating holiday this week and the storm damage at the Iowa plant is reducing slaughter projections. In turn it is making it easy for packers to buy their need without much effort, ultimately driving hog index lower.
Meat supplies are plentiful driving pork values lower during the dog days of summer. Futures traders are holding negative bias as funds, fundamentals and technicals point lower.
August lean hog futures are trading at an abnormally wide discount to cash. October contract shows an even larger discount until recent sessions. Bull markets are historically led by bear spreading (August losing to the Oct) which we have seen in recent sessions. A change in spreads may give us the first hint of a trend change.
Dressed beef values were lower with choice down .17 and select down .08. The CME Feeder Index is 148.27. Pork cutout value is down 1.65.