Trade Fears Grip Markets
Jun 26, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for June 26, 2018.
Grain markets join the majority of markets in fear that an escalating trade war between the United States and China could impact economies across the world. Upcoming USDA reports later this week will have should play an important role beyond trade concerns.
Average estimates for Friday's big USDA reports have been released by Reuters. Traders estimate corn stocks at 5.268 billion bushels, soybeans 1.225, and wheat 1.091. Corn acreage is estimated at 88.562 million, soybeans 89.691, and all wheat at 47.124. The Planted Acreage and Grain Stocks reports are both due Friday at 11:00 AM CDT.
Crop progress out yesterday afternoon reported corn at 77% good to excellent, a drop of 1% from last week, but inline with analyst expectations. Soybeans were unchanged week over week at 73% GTE, also inline with estimates.
Spring wheat was reported 77% GTE, a drop of 1% from last week. Winter wheat was reported 41% harvested, just above the 40% expectation.
Agroconsult estimates the Brazilian corn crop at 55 million tonnes, a drop from their previous estimate of 57 million. Last year the crop size was 67.3 million.
A strike called by Argentina's largest trade union federation in protest over President Mauricio Macri's market-friendly economic policies brought the country to a standstill on Monday, freezing grains exports and halting banking and public transit. The CGT umbrella labor union demanded wage hikes to keep up with inflation rates running at more than 25 percent annually. The group has slammed Macri's deal with the International Monetary Fund, arguing that austerity measures linked to the agreement would harm workers. (Reuters)
First notice day for July contracts is this Friday, June 29th. Potential deliveries will be based on positions at the market close on Thursday the 28th.
Export inspections for the week ending June 21st showed wheat exports of 352,836 tonnes, corn 1,511,746, and soybeans 514,214. All three were within analyst expectations.
Managed money funds were sellers across the board in yesterday's trade. Traders estimate they sold 17,500 corn contracts, 13,500 soybeans, 8,000 wheat, 5,000 soymeal, and 3,000 soyoil.
Economic reports out today include S&P Case-Shiller 20-city index at 8:00 AM CDT, and Consumer Confidence at 9:00.
Quarterly Hogs and Pigs will be released on Thursday at 2:00 PM CDT. Allendale estimates the US hog herd at 2.9% over last year. Kept for Marketing is at 3.0% over last year, while we estimate the breeding herd at 2.1% over last year.
Cattle showlist numbers were down 46,400 vs last weeks numbers. Next week's July 4th holiday is impacting these numbers.
Both the August and October live cattle futures hit limit down in yesterday's trade. The August settled at limit down which means a $4.50 daily price limit for today's trade.
Dressed beef values were mixed with choice up .53 and select down .13. The CME Feeder Index is 142.28. Pork cutout value is up .80.