March 27, 2017

Trade Prepares for Key USDA Data on Friday

March 27th, 2017

Good Morning! Paul Georgy with the early morning commentary for March 27, 2017.

Grain markets are mixed in narrow trading ranges. The US Dollar and stock indices are sharply lower as traders lose confidence that the Trump administration can deliver on their campaign pledges.

Listen in Tuesday, March 28th to the Allendale Monthly Webinar Series. Rich Nelson shares estimates and expectations of the big USDA reports due Friday March 31st.  We'll also talk to R.J. O'Brien's Chris Modaff to get a floor traders perspective on acreage, managed money's impact on report days, and more. Register Here

USDA Prospective Plantings and Quarterly Stocks reports will be released on Friday at 11:00 am. Historically this report will cause price volatility.

Planted acreage poll by Reuters: Corn 90.969 million acres, Soybeans 88.214 million acres, wheat 46.139 million acres. USDA 2017 Outlook Forum estimated 90 corn, 88 soybeans and 46 million acres of wheat.

Quarterly stocks analyst poll by Reuters: Wheat 1.627 billion bushel (Last Year 1.372), corn 8.534 (LY 8.205) and soybeans 1.684 (LY 1.627).

Weather conditions in South America and in the US should be mostly favorable to crop growth. Some regions in Argentina and Brazil may see harvest delays this week due to rain.

CFTC Commitments of Traders report showed managed money funds as big sellers last week. They increased their short positions in corn by 58,089 contracts to a net short of 81,691. They sold 20,376 wheat contracts to push their net short positions to 121,005 contracts. In soybeans, they were net sellers of 32,685 contracts but remain net long 65,669 contracts.

Russian Agriculture Minister says Russia will replace Turkey with other grain buyers within a few months.

US oil rig count continues to climb with 21 additional rigs going online to a total of 652.

Ag Rural puts Brazil’s soy harvest at 68% vs. 62% average.  Trade estimates are expecting Brazil’s soybean crop at 108-111 mmt.

Economic markets this week will be looking to get some details from the White House or Congressional Republican leaders about the timing and content of a tax reform plan. The Fed Officials will have an active week with 10 speeches, Chairman Yellen will speak on Tuesday.

China lifts ban on imports of Brazilian meats. There were several other countries that also will restart taking meat from the South American country.

Cattle on Feed report released on Friday should be considered neutral as USDA numbers were very close to the trade average. However, the marketing number could be considered a bright spot in the report. It suggests feedlots are moving cattle ahead which could reduce some of the larger production expected this summer.

Cattle’s weekly slaughter was larger than expected at 613,000 head, again pulling cattle ahead and keeping feedlots current. This is the largest weekly production in 2017.

Hog and Pigs report will be released on Friday at 2:00 pm.

Lean hog futures closed lower for the week on Friday. Trade will likely be looking at Friday’s low as support.

June lean hog futures fell by -1.57 last week. Cash hogs lost 0.72 and cash pork was down 3.12. Since the mini-peak in the cash markets on February 20 cash hogs are off 8.86 and cash pork fell by 6.98.

Dressed beef values were lower with choice down .66 and select down .22. The CME Feeder Index is 132.46. Pork cutout value is up .99.

Markets At-A-Glance – 5:00 AM

  • May Corn    + 3/4
  • May Beans   -1
  • May Wheat   -1 3/4
  • May Soymeal +.40
  • May Soy oil -.26
  • Jun Dlr     -.54
  • Jun S&P     -20.50
  • May Crude   +9.30
  • Apr Gold    -3.40

    Allendale Advisory Contributor:


    Paul Georgy

    Paul is one of the founders of Allendale. He is very active in the futures industry and currently serves on the Board of Directors of the National Futures Association.
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