Planting Progress Should Show Improvement
May 07, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for May 7, 2018.
Grain markets have the USDA’s May Supply and Demand report scheduled Thursday. The USDA will provide the first look at their thoughts for the 2019 crops. Trade talks between the US and China will remain in focus while NAFTA discussions will take front center this week.
US corn planting progress is expected to be 30% to 31% versus 17% last week and 47% avg. Soybean planting could be 9% to 11% versus 5% last week and 13% avg. Hard Red Spring wheat planting should be 25-30 % versus 10% last week and 54% avg.
World Weather Inc.’s Drew Lerner says, “A change is coming this weekend into next week that will allow weather patterns to begin moving from Argentina into southern Brazil once again which should end the anomalous weather of late and bring on significant rain to portions of Southern Brazil that have become too dry. At the same time this change will bring Argentina’s flooding rain to an end this weekend.”
CFTC Commitment of Traders report showed managed money funds net buyers in grains and oilseeds last week. They added 63,440 corn contracts to make them net long 186,317 contracts. Funds bought 26,011 wheat contracts, however, still hold a net short position of 28,702 contracts. They bought 6,953 soybean contracts and boosted a net long position to 177,047.
Funds on Friday were estimated to have been net sellers of 6,000 corn contracts, 11,000 soybeans and 9,000 wheat contracts.
Soybean traders are disappointed that trade talks between Washington and Beijing did not move closer to a deal to resolve the mounting dispute that has crimped U.S. crop sales to China. The Trump administration has drawn a hard line in trade talks with China, demanding a $200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies.
Higher crude oil prices are giving a reason for oil producers to increase working rigs. US oil rig count is up 9 on the week to 834.
Goldman Roll starts today as they move their positions out of June to a deferred contract. They will be selling the nearby and buying the backs months.
USDA estimated weekly cattle production is at 647,000 head. This was well above trade estimates and the question traders are asking: Is this the beginning of the wall of cattle trade has been looking for or is it just catch up from previous week light slaughter?
One of the big topics the past few weeks has been the significant difference between cash cattle prices and June futures. The current spread is at the widest discount over the past 10 years as of May 3. Recent year’s trend suggests the market has taken a larger and larger discount to the June in the spring than the previous year.
June live cattle futures settled .95 lower for the week after trading in a range from 104 to 108. It is important for futures traders to keep the bull going by pushing futures prices into new highs.
Pork production last week was 2.32 million head which was in line with expectations. Last week's supply offering was the smallest non-holiday production week of the year. Allendale expects a normal supply flow to continue into summer, which the trend is lower.
June lean hogs closed .90 higher for the week with support at 72.00 level and resistance at 75.42.
Dressed beef values were higher with choice up .74 and select up .32. The CME Feeder Index is 137.90. Pork cutout value is up .10.
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