Grains gap higher to start the week... Corn futures gapped higher on the open and futures are posting gains around a penny as of 6:30 a.m. CT. Soybean futures are 4 to 6 cents higher, with the front-month trading back above the $10.00 level. A number of wheat futures also gapped higher on the open and most contracts are currently up 1 to 3 cents. The U.S. dollar index is marginally lower, while crude oil futures are posting solid losses.
Health care reform and hearings on USDA nominee, Supreme Court opening and farm bill in focus... The House is set to vote on the replacement for ObamaCare on Thursday, likely a signal that House Republican leaders think they have the votes for passage of the plan. Several days of hearings will take place this week on Supreme Court nominee Neil Gorsuch. And USDA nominee Sonny Perdue’s confirmation takes place Thursday before the Senate Agriculture Committee. Farm bill hearings continue on the House side, with sessions on dairy, nutrition and livestock issues. And the Small Business Committee will take a look at small family farms.
Tillerson: U.S. and China to work together on North Korea missile threat... The U.S. and China will work together to get nuclear-armed North Korea to take “a different course,” Secretary of State Rex Tillerson said on Saturday, ending his first trip to Asia since taking office. Meanwhile, Pyongyang over the weekend announced that it perfected a new high-thrust rocket engine, claiming another advance toward being able to fire a long-range missile. Much of Tillerson’s weekend meeting with Chinese officials involved preparations for the planned April 6-7 meeting between China President Xi Jinping and President Donald Trump in Florida.
Brazil considers request to tax ethanol imports... Brazil’s government is considering a request by the nation’s sugar and ethanol industry to reinstate a 20% import tax on ethanol, Blairo Maggi, the country’s ag ministry said Friday. Ethanol producers in the Northeast say rising imports of the biofuel from the U.S. are hurting their businesses during the harvest period. Maggi has assembled a group largely made up of directors of sugar mills in that part of the country to comment on a detailed study, including reasons ethanol imports should be taxed. The ministry will then evaluate the document and decide if the request is justified. Brazil eliminated this tax in 2010 as a “goodwill” gesture to encourage larger global trade of ethanol.
Dockworker strike at Argentina’s Rosario port... Workers at Argentina’s largest port of Rosario will hold a 24-hour strike on March 30 to push for higher wages, an end to dismissals, and state assistance for laid off workers, according to the General Workers’ Confederation. This comes after the country’s largest labor union said it will hold a nationwide general strike on April 6 to protest the business-friendly policies of President Mauricio Macri that it says has hurt jobs and wages.
Attaché expects Mexico’s corn imports from the U.S. to hold steady in 2017-18... Mexico is likely to produce a 25.25 MMT corn crop in 2017-18, which is down from 2016-17’s record 27.00 MMT crop due to expectations for smaller plantings and a return of “normal” weather. Mexico’s corn consumption is expected to grow a modest 1.9% due to population growth and slight expansion in its livestock and poultry sectors. The post notes that Mexico’s economy “is projected to slow considerably in 2017 due to multiple factors, including low oil prices and uncertainty regarding the future of U.S.-Mexico trade relations.” The attaché projects Mexico will import 13.4 MMT of corn in 2017-18, unchanged from 2016-17, with 13.2 MMT of that coming from the United States.
Money managers slash holdings in corn... Hedge funds and money managers cut their net holdings in corn by 103,683 contracts last week, according to data from the Commodity Futures Trading Commission, the largest ever drop for corn that took their net position to 23,602 contracts on the short side. Money managers also reduced their net long position in soybeans to 98,354 contracts, a cut of 29,284 contracts from the week prior and the biggest cut since September.
Brazilian police raid meatpackers amid reports of unsanitary conditions, rotten meat... Police in Brazil raided some o f the country’s meatpacking plants on Friday amid allegations some companies were paying bribes to cover up unsanitary conditions and reports that some producers had sold rotten and adulterated meat products. A senior ag ministry official says the issues raised did not present a threat to consumers or importers and President Michel Temer pointed out the raid affected just 21 of the nation’s 4,800 meatpackers, adding that investigators would accelerate the probe. South Korea says it will tighten inspections of chicken meat from the country and will temporarily ban the sale of products from BRF, one of the main companies involved in the investigation. Brazil had hoped to step up poultry shipments this year as the spread of bird flu around the world has disrupted trade.
Friendly fundamental factors for the cattle market... Boxed beef prices surged last week, but movement slowed, signaling the market could be working on a top. But the product market strength nevertheless led to higher cash cattle prices across the country. Futures ended the week at a wide discount to the cash market, signaling more corrective trade is likely warranted to start the week.
Softer trade likely in hogs to start the week... Bears have momentum on their side in the lean hog market to start the week given pressure on the cash hog market last week. We expect more lower cash hog bids this week as supplies are plentiful and plants appear to have near-term needs secured.
Weekend demand news... Saudi Arabia purchased 1.51 MMT of animal feed barley, with offered origins including Australia, South America, the European Union, the Black Sea and the sellers’ option. Taiwan tendered to buy 98,200 MT of milling wheat from the United States.
