One Step Closer to All Out Trade War?
Apr 06, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for April 6, 2018.
Grain markets continue to assess the latest in the potential trade war between the US and China as additional tariffs have been threatened. Markets will also watch this morning's jobs report for signs of US economic health.
President Donald Trump said on Thursday he had instructed U.S. trade officials to consider $100 billion in additional tariffs on China, fueling an already heated trade dispute between the world's two biggest economies. Trump said in a statement the further tariffs were being considered "in light of China's unfair retaliation" against earlier U.S. trade actions that included $50 billion of tariffs on Chinese goods. (Reuters)
The Buenos Aires grains exchange has lowered its estimate of Argentina's soy crop to 38 million tonnes for the 2017-18 season, down from their last estimate of 39.5 million. The impact of the drought is the region is still being seen.
USDA April Supply and Demand report will be released on Tuesday at 11:00 am CST. Allendale’s estimates are for an increase in corn, soybean and wheat ending stocks. Look for average trade estimates later today.
Weekly export sales for the week of March 22 – 29 had corn sales of 909,268 metric tonnes (898,268 for 2017/18), under the trade’s 1,100,000 – 1,600,000 expectation. Though it missed analyst expectations, this week’s sale was the best in four years for this particular week. Marketing year to date sales are 84% of USDA’s expectation, just over the 82% five year average by this point.
Soybean export sales were strong at 1,491,134 metric tonnes (1,132,962 for 2017/18), over the 600,000 – 1,050,000 trade expectation, and a record sale for this particular week. 92% of USDA’s whole-year sales expectation has now been met. That is under the five year average point by this time of 95%.
Wheat export sales were reported at 309,139 metric tonnes (108,989 for 2017/18), within the 250,000 – 700,000 trade expectation. Year to date sales now come to 842 million bushels, while USDA’s whole-year goal is 925. The wheat marketing year ends on May 31, so a little catch-up is needed.
Managed money funds were estimated buyers of 25,000 corn contracts, 16,000 soybeans, 7,000 wheat, 3,000 soymeal, and 4,000 soyoil in yesterday's trade.
Goldman Roll starts today, which means the index funds will be rolling their long positions out of the May contract into a deferred month. The roll usually last for five business days.
Last trading day for April live cattle options is today with first notice day for deliveries against he April futures on Monday. Due to the discount of futures to cash it seems unlikely to see many deliveries.
Cash trade is done for the week with most showlists cleaned up. Southern plains trade was 116 to 118 with cornbelt mostly at 115 to 120 market. The offer on unsold cattle is 120. Beef product is under pressure as retail markets are slow as weather conditions limit the incentive for cookouts. However we should see an improvement in demand as we approach the best demand period of the year.
June live cattle futures gaped higher on Thursday which is giving technical traders calling the seasonal bottom being established. However, most gaps on the cattle chart get filled, be cautious and expect volatility. Support in June futures is 101.80 and resistance is 106.82.
Cash hog markets continue to deal with large supplies of market ready hogs. Packer margins are in the black, however, moving product to retailers is still an issue.
June lean hog futures as cattle could had made a seasonal low however we need more time to confirm. First level of support is 72.95 and major support at 70.25. Resistance crosses at the 20-day moving average or 76.00.
Dressed beef values were mixed with choice down 3.08 and select up .13. The CME Feeder Index is 135.31. Pork cutout value is down 1.18.
If you have any questions on any of our content, give us a call at 800-262-7538 or email@example.com