May 20, 2018

Quick US Planting Pace Continues

May 15th, 2018

Good Morning! From Allendale, Inc. with the early morning commentary for May 15, 2018.

Grain markets deal with a US crop that is quickly getting planted as US trade negotiations continue to make headlines. Outside markets have a couple of important economic reports this morning which could impact trade.

Corn plantings was reported at 62% by the USDA in yesterday's crop progress report. Traders estimated that would be 59%, compared to the five-year average of 63%. Soybeans were reported 35% planted, vs. the 30% expectation and 26% five-year average.

Spring wheat was reported 58% planted, above the 52% estimate and 67% five-year. Winter wheat was reported 36% good to excellent, above the 34% expectations.

NOPA Crush is expected to be 160.966 million bushel, or 15.7% over last year. February crush ran 7.7% over while March was up 12.3% year/year. We now have three months in a row of strong numbers. This 160.966 would be a new record for the month of April. USDA’s current 1.990 billion bushel estimate for the whole year would be 4.7% over last year. This new number would bring the ytd pace to 5.7% over. USDA may need to raise their crush estimate again.

Weekly export inspections for the week ending 05/10/2018 had soybean exports of 688,195 tonnes, wheat 404,180, and corn 1,554,495 tonnes. The soybean number was a bit higher than expected.

FARM BILL MAY DRAW ENOUGH VOTES: The farm bill is expected to be brought to the floor this week and after some tough days, House Ag Chairman Mike Conaway might just have the votes to get his signature legislation through. As of Friday, Conaway didn't have the votes to pass the bill, H.R. 2 (115). But that seems to have changed over the last few days as some senior Republicans now think Conaway can get there, sources told POLITICO.

A top-level Chinese delegation is expected to arrive in Washington for a second round of trade talks today - just before the United States finalizes the list of mainland products to be hit with punitive tariffs, a source familiar with the situation has said. It will be led by Vice-Premier Liu He, President Xi Jinping's top economic adviser, who met a ­delegation from the White House in Beijing last week. (Reuters)

Managed money funds were buyers of 2,500 corn contracts, 6,000 soybeans, and 3,500 soymeal in yesterday's trade. They were thought to be sellers of 4,000 wheat and neutral in soyoil.

The economic calendar is busy this morning with Retail Sales and Empire Manufacturing at 7:30 AM CDT. Business Inventories and NAHB Housing Market Index will be out at 9:00.

The week's cattle showlist was 2,700 head under last week. This is not unusual for later May. The year's biggest kill is still ahead of us, mid-June.

Limit down trade was seen for June cattle futures yesterday as the seasonal rise in supply is happening. At the same time, we are seeing some of those extra fall placements now being marketed.

Hog fundamentals continue to improve. Friday's slaughter report showed the seasonal decline into summer is on track. Last week's kill was only 2.1% over last year. That is better than the +3% general trade expectation for this time. On top of the head count issue, weights will start their big seasonal decline from here into August.

Dressed beef values were higher with choice up 1.15 and select up .43. The CME Feeder Index is 136.12. Pork cutout value is up .08.

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