Will Upcoming Reports Trump Trade Talks in The Grain Markets?
Sep 26, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for September 26, 2018.
Grain Market Traders experienced another mixed trading session on Tuesday with wheat futures sliding lower while corn and soybean futures closed higher. The focus today will remain the upcoming USDA reports as more estimates swirl the market, as well as the ongoing trade discussions.
USDA Grain Stocks report will be released this Friday at 11:00 AM CDT. Analysts averages expect wheat stocks of 2.343 billion bushels, corn stocks of 2.010 bb, and soybeans of .401 bb. Allendale estimates wheat stocks at 2.441 billion bushels, corn stocks at 2.032 bb and soybean stocks at 0.399. The June quarterly report showed wheat stocks at 1.100 billion bushels, corn stocks at 2.306 bb and soybean stocks at 1.222 bb.
Wheat acreage will also be a focus on Friday with the release of the Small Grains Summary. Most analysts are not looking for a large shift in the acreage numbers, however.
China has started buying more Argentine soybeans because of China’s trade war with the United States, and analysts expect Argentina will in turn purchase more U.S. soybeans to meet its own needs. China has transferred much of its soybean purchases from the United States to Brazil, and with Brazilian supplies tightening the Chinese will be forced to transfer their buying to Argentina.
Brazil's 2018-19 soybean crop is estimated at 122 million tonnes an increase of 1 million tonnes over August according to Informa. They see total soybean acreage at 89.5 million. They cite good planting weather for the increase.
Argentina's largest union called for a 24 hour strike this week to protest the president's handling of the economy. The protesters are seeking compensation for their loss of buying power due to the countries rampant inflation. Argentina's inflation numbers are expected to surpass 40% this year.
Argentine Economy Minister Nicolas Dujovne said yesterday that the International Monetary Fund was finalizing a revision of a lending agreement with the country and that it should be able to announce a deal sometime today.
Canada & US NAFTA Talks have continued with little progress. US trade chief, Robert Lighthizer told press yesterday, "The fact is, Canada is not making concessions in areas where we think they're essential. We're going to go ahead with Mexico. If Canada comes along now, that would be the best. If Canada comes along later, then that's what'll happen."
USDA Quarterly Hogs & Pigs Report will be released this Thursday at 2:00 PM CDT. Allendale has estimated All Hogs at 3.3% over last year, the breeding herd at 3.8% over, and the marketing herd of 3.3% over last year.
China's Agriculture Ministry suggested that Beijing must be supplied with sufficient quantities of pork. Many experts believe this is likely not a reflection of the current hog deaths that have been seen from African Swine Fever. This is due to the impact that the government's ban on movement of hogs from infected provinces. That has left a few hog plants with shortfalls in daily processing (despite large numbers of market ready hogs).
December Live Cattle futures traded unchanged yesterday closing at $117.20. Strong resistance still remains at the $119 level and with key support at $116.
Cash Hog Prices continued pushing higher yesterday, making it 15 out of the last 17 days higher. December lean hogs traded 55 cents higher, closing at $57.75.
Dressed Beef Values were lower with choice down 0.43 and select down 0.52. The CME Feeder Index is at 157.83. Pork cutout value was up 0.43.