Good Morning! Paul Georgy with the early morning commentary for April 27, 2017.
Grain markets are range bound with some bargain hunting after the President clears up his stance on NAFTA. The US Dollar Index retreats due to strength in the Canadian and Mexican currency.
World Weather Inc. is staying with their forecast that this current system moving through the Midwest will be followed by another system on Friday through Sunday. The second system could bring thunderstorms, hail and damaging winds.
North American Free Trade Agreement takes center stage when a senior administration official said that President Trump is considering issuing an executive order to pull the United States out of the pact. Late yesterday, President Trump told the leaders of Canada and Mexico that he will not terminate the NAFTA treaty at this stage, but will move quickly to begin renegotiating it with them.
Weekly export sales will be released at 7:30 this morning. Trade estimates are: corn 700 to 900 tmt, wheat 300 to 500 tmt, soybeans 250 to 450 tmt, soymeal 100 to 200 tmt, and soyoil 8 to 30 tmt.
Weekly ethanol production fell from 993,000 barrels per day to 987,000 bpd. A decline at this time of year is expected. More importantly, this number was 6.5% over last year in the same week. That brings this year’s to-date production to 5.0% over last year. The USDA’s current corn for ethanol goal of a 4.3% increase in 2016/17. Ethanol stocks are now 7.6% over last year in the same week.
Senator Chuck Grassley and Senator Maria Cantwell introduced a bill to reinstate a biodiesel tax credit.
First Notice Day tomorrow for CME May grain contracts. Trade is expecting large wheat deliveries, 200 to 500 contracts in soybeans and no corn deliveries.
Kansas Wheat Quality Tour starts on Monday and runs through Thursday of next week.
Funds were estimated net sellers of 11,000 corn contracts and 8,500 soybeans on Wednesday. They were thought to be even in wheat.
USDA ATTACHE sees Argentina 2017/18 corn production at 39.0 million tonnes, up from 38.5 million in 2016/17.
Macro traders are concerned about the congressional vote on a shutdown on Friday.
NAFTA’s possible impact on livestock trade. Live hog imports supply 5% of our total slaughter of which 55% come from Mexico and 45% from Canada. US Pork exports account for 22% of total production. Mexico buys 31% of US pork exports and Canada takes 10%. Live cattle imports supply 6% of our total slaughter, of which, Mexico supplies zero and all come from Canada. Beef exports are 10% of total production and Mexico takes 16% while Canada takes 12%.
Fed Cattle Exchange Auction had several pens of cattle for immediate delivery bringing $130 to $132. The pens of cattle slated for delivery in 17 to 30 days sold for $125.
Technical buying takes June cattle futures to new contract highs as strength of cash market is providing underlying support. Live cattle futures open interest continues to set new record highs.
Lean hog futures react to ideas US will pull out of the NAFTA agreement. Technical traders turned sellers on Wednesday when June futures failed at the 20-day moving average. Chart support in June hogs comes in at $68.00 with resistance at $72.00.
Dressed beef values were mixed with choice up .17 and select down .55. The CME Feeder Index is 139.44. Pork cutout value is down .35.
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