July 18, 2019

Is A Trade Deal The Only Hope For A Rally?

Good Morning! From Allendale, Inc. with the early morning commentary for September 14, 2018.

Grain market traders are looking for reason to be a buyer as some commercial buying provide some support. Current oversold condition and potential bargain hunters may find reason for a Friday rally. Dec corn is down 16 ½ cents, November soybeans down 10 ½ and December wheat down 14 1/4 through Thursday’s close. Trade talks will be important friendly factor to watch over next few weeks.

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Brazilian farmers are selling more of next year's soy and corn harvest since the U.S. dollar strengthened past 4 reais in August, driving up the value received by producers pricing the crop in the local currency, according to analysts. (Reuters)

Funds were estimated net sellers across all grains on Thursday. They were net sellers of 10,500 corn contracts, 5.500 soybeans, 8,000 wheat, 3,500 soymeal and 2,500 soyoil.

U.S. corn sales, for the week ended 9/06/08 were 30.5 million bushels, coming in slightly below the range of market estimates and below last year's same-week sales of 41.2 million bushels.

U.S. soybean sales of 25.5 million bushels were within market expectations. Based on the USDA's 2.060-billion-bushel soybean export projection, sales will need to average roughly 29 million bushels per week over the course of the marketing year versus last year's 30.2 million per week average.

Argentina's soybean production is expected to hit 50 million tonnes for the 2018-19 season, suggest Rosario Grain Exchange. USDA forecast is for 57 mmt vs. 37.8 mmt actual last year. Estimates for corn production by Rosario Grain Exchange fell to 43 million tonnes versus USDA 41 mmt and 32 mmt last year.

FranceAgriMer projected French soft wheat exports outside the EU at 8.5 million tonnes, up from 8.1 million in 2017/18, while barley exports to non-EU destinations were forecast to rise to 3 million tonnes from 2.5 million. France was less affected by drought conditions this year compared to the rest of the EU.

Focus for economic traders will be on China’s Aug data, US retail sales for Aug, US import prices for Aug, US industrial production for Aug and US Michigan Confidence for Sept.

Cash cattle trade will likely wait until later this afternoon to develop. Packer margins remain over $200.00 per head in the black which is providing a huge incentive to process as many cattle as possible.

December live cattle futures have resistance at the 116 level with key support at 133.40. Deferred contract set new highs this week for the recent uptrend which has traders saying bear markets don’t make new highs. However, others are concerned that bear spreads as still working.

Goldman Roll has been an influence on spreads in the livestock markets. While possible damage of packing plants in North Carolina and disruptions in movement of hogs to market has traders guessing the impact.

December lean hog futures consolidated on Thursday with 57.60 major resistance going in the weekend. Support crosses at 53.60.

Dressed beef values were lower with choice down .75 and select down .03. The CME Feeder Index is 152.60. Pork cutout value is up .19.

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