Markets Watch Political Drama
May 19, 2017
Good Morning! Paul Georgy with the early morning commentary for May 19, 2017.
Grain markets are higher as traders assess the fallout from the political events in the US and Brazil. Outside markets await Trump's first foreign trip as US President.
Allendale’s Ag Leaders Monthly Webinar is set for Next Tuesday, 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 corruption, 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.
Brazil's President Michel Temer, says he will not resign following bribery allegations involving the countries JBS meat scandal (Operation Weak Flesh) two months ago. The allegations have added extreme volatility to Brazil's currency, as well as export expectations, and thereby commodity prices here in the US (find out why in next week's Ag Leaders Webinar).
90 Days: The Trump administration has officially triggered the 90-day countdown to NAFTA renegotiation with a formal notice to Congress of its intent to reopen the trade deal. US Trade Rep Robert Lighthizer said he and the US will now work to, " create an agreement that advances the interest of America's workers, farmers, ranchers, and businesses. Formal talks will begin in August.
Mexico is expected to import a record amount of corn from Brazil this year according to a Mexican government official who was part of delegation that visited South America last week.
Allendale's Rich Nelson identified five other years out of the past 10 with a rain/moisture situation equal in severity to more severe than this year. "From March Prospective Plantings to the June 30 Acreage report corn acreage rose in four out of those five years. In three of the past five wetter than normal springs, soybeans acres fell from March to the June farmer surveys. 2007 -3.1 million, 2008 -0.3, 2011 -1.4, 2013 0.6, 2015 0.5."
Weekly export sales for the week of May 4 to 11 reported corn sales of 873,332 metric tonnes (705,325 old crop). That was within the 550,000 - 1000,000 trade expectation. We have sold 93% of USDA's whole-year expectation. That is within the 92% to 95% sold by now in the last three years of normal South American crops.
Soybean export sales totaled 396,779 tonnes (355,279 old crop). That was within the 300,000 - 650,000 trade expectation. USDA's total old crop export shipment goal is 2.050 billion bushels. To hit that shipment goal we need to have sales of 2.086 billion. Through yesterday's numbers we have already sold 2.107 billion.
Wheat export sales ran 640,626 tonnes (247,565 old 393,071 new). The trade expectation was 250,000 - 600,000 tonnes. The old crop marketing year ends on May 31.
Managed Money Funds were big sellers yesterday. Traders estimated they sold 8,000 corn contracts, 21,000 soybeans, and 2,000 wheat in yesterday's trade.
Monday's Cold Storage report is estimated to show beef stocks in April to have fallen 18.863 million lbs from the end of March to the end of April. In the past five years the flow has ranged from a 14 million lb drawdown to a 3 million increase. Pork stocks are estimated at 581.173 million lbs at the end of April. That would be 26.1 million over the end of March.
Pork has more riding on the NAFTA agreement than even corn. Allendale forecasts US pork exports at 22% of all production for 2017. Mexico was our top buyer last year taking 31% of all exports.
Dressed beef values were lower with choice down .96 and select down .27. The CME Feeder Index is 142.05. Pork cutout value is down .26.
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