Traders Look to Old Fashioned Open
Jul 05, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for July 5, 2018.
Grain markets await the "old fashioned" 8:30 open as traders have been off since Tuesday afternoon for the 4th of July holiday. Factors to watch today include the usual suspects of trade disputes and weather map updates. A busy economic calendar could also impact outside markets.
Trade between the US and China remains the main focus of ag markets with US tariffs on Chinese goods set to take effect tomorrow. China's finance ministry stated yesterday, "The Chinese government's position has been stated many times. We absolutely will not fire the first shot, and will not implement tariff measures ahead of the United States doing so." However, China has made it clear they will retaliate if the US implements the announced tariffs.
Weather is also a major factor to track. World Weather, Inc. says, "Key U.S. crop areas in the northern and central U.S. Plains and Midwest will experience net drying in the next few weeks and eventually the firmer soil will raise crop moisture stress. Consistent warm temperatures and rainfall that is erratic and often lighter biased will combine to result in a net loss in soil moisture. The implication is that subsoil moisture in the Midwest will remain sufficient to carry on normal crop development for the next two to three weeks while the topsoil dries out, but greater rain will be needed in late July and August to protect late season crop development."
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Brazil's Trade Ministry reports that exports of some of its big ag products were down in June. Meat products and raw sugar were down hard, however, soybeans and coffee were up. The trucker strike is blamed for many of the export problems.
Black Sea exports of wheat are set to fall 11% in the 2018/19 marketing year according to a Reuters poll of analysts. The average estimate pegs total exports from Russia, Ukraine and Kazakhstan at 58.8 million tonnes.
Russia's agriculture ministry estimates the country will export 40 to 45 million tonnes of grain in 2018/19. This is an increase from their previous estimate of 35 to 40. They left their total crop size unchanged.
Weekly export sales will be delayed one day this week due to the federal 4th of July holiday. They will be out tomorrow at 7:30 AM CDT.
Bayer AG's crop science unit will lead revenue gains in Brazil this year and next as the South American country becomes the company's main driver of growth and its second biggest market, the global head of the crop science division said on Tuesday. About 80 percent of Brazilian sales will come from the crop business, including agrochemicals and licensing of genetically modified seeds, he said. (Reuters)
Funds were buyers in corn in Tuesday's shortened trading session. It is estimated they bought 11,500 corn contracts and 6,000 wheat. They were sellers of 2,500 soybeans, 2,000 soymeal, and 1,500 soyoil.
Economic reports due today add to the uncertainty of traders. ADP Employment is out at 7:15, Initial and Continuing Claims at 7:30, ISM Services at 9:00, Natural Gas Inventories at 9:30, Crude Inventories at 10:00, and finally FOMC Minutes at 1:00.
December fats and August feeder cattle pushed to new highs for their uptrend Tuesday. The charts may be confirming the expectation of a change in cash cattle prices from early summer to the late summer/fall period. The Head and Shoulders bottom formation is still valid.
NAFTA remains an issue for the hog market. With last week's Mexican elections out of the way, a new deal is not expected with Mexico until after the US mid-term elections in November.
Dressed beef values were mixed with choice down 1.62 and select up .94. The CME Feeder Index is 143.42. Pork cutout value is down .85.