Will Stocks Report Weigh on Price Rally?
Apr 09, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for April 9, 2018.
Grain markets are firmer as the tariff war between China and US escalates, traders are expecting world soybean buyers will be coming to the US as Brazil’s soybean prices rise. Weather in hard red winter wheat areas support wheat overnight. USDA report is expected to show rising ending stocks for 2017/18, however, the smaller planted acreage and late planting concerns are feed for the bulls. Expect more volatility to be tied to weather, tariffs and politics through the summer.
USDA April Supply and Demand report will be released on Tuesday at 11:00 am CST. Trade is expecting an increase in ending stocks for wheat soybeans and corn on tomorrow’s report. They are looking for Argentina’s corn crop to fall from USDA March estimate of 36.0 mmt to 33.74 mmt. The soybean crop could fall from 47.0 mmt to 42.66 mmt for Argentina. Trade is looking for Brazil’s soybean crop to increase from the March estimate of 113.00 mmt to 115.25 mmt.
Allendale's branch office in North Dakota pointed out last week that farmers there were ordering more seed beans and will reduce spring wheat plantings. The reason is simple; it is more profitable to plant soybeans.
CFTC Commitments of Traders Report showed managed money funds net buyers of 23,276 corn contracts as they are now long 140,187 contracts. They were net sellers of 2,424 contracts in soybeans and net buyers of 4,334 contracts in wheat.
U.S. renewable fuel laws will be on the review list at a meeting with President Trump and members of his cabinet this morning as biofuels groups warned against any action that would weaken ethanol demand.
Funds on Friday were net sellers of 10,000 contracts in corn futures and net buyers of 6,000 soybeans and 5,000 wheat.
Goldman Roll started on Friday, which means the index funds will be rolling their long positions out of the May contract into a deferred month. The roll should last through Thursday.
President Trump will be in Lima, Peru for the Summit of the Americas. The hope is that NAFTA negotiations will move forward with major leaders in attendance.
Facebook’s chief executive, Mark Zuckerberg will be testifying on Capitol Hill on Tuesday. US stock traders are concerned about possible regulations to the tech sector.
FOMC March 20-21 meeting minutes will be released on Wednesday and trade will further analyze whether the Fed will soften its stance on rate-hikes.
Managed Money funds were net sellers in livestock last week. They reduced live cattle positions by 12,109 contracts to 36,650 and lean hogs by 1,083 contracts to 3,535.
Weekly cattle production exceeded trade expectation last week at 615,000 head. That number was 6.4% over last year however that week had a sharp dip in production. The 615,000 head were a record slaughter for 2018.
June live cattle futures closed down $.25 for the week on Friday after a large trading range. The contract low was made at 97.07 which will be support and resistance at 105.17.
Weekly hog slaughter was 2.335 million head and 0.7% over last year. Historically the first of April should begin a period of supply and price shifts. Lean hog futures fell by 3.27 last week on news of Chinese tariffs on US pork. New contract lows were made in the June contract at 70.25 which is support. Resistance is 74.25.
Dressed beef values were lower with choice down .78 and select down .71. The CME Feeder Index is 135.41. Pork cutout value is down 2.22.
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