October 22, 2018

Traders Await USDA Numbers

Good Morning! From Allendale, Inc. with the early morning commentary for December 12, 2017.

Grain markets are in wait and see mode as traders prepare for the 11:00 AM CST USDA Supply and Demand report. Outside markets look to the FOMC meeting which begins today.

USDA's Supply and Demand report has analysts expecting US 2017/18 corn ending stocks at 2,478 million bushels. Soybeans are estimated at 438 MB, and wheat ending stocks at 938 MB. Changes to US export sales are expected.

World ending stocks are estimated at 202.7 million tonnes for 2017/18 world corn, soybeans 97.8 MT, and wheat ending stocks of 267.1.

CONAB will update Brazil's corn and soybean crop production early today. Yesterday, Brazil's Ag Minister stated that he believed this year's crop could equal or exceed last years.

The White House appears to be interested in changing biofuels policy. President Trump called Charles Grassley (IA) and Ag Sec Sonny Perdue called Joni Ernst (IA) to ask them about the possibility of a meeting with big oil interests. This comes after a meeting with nine senators from big oil states on Thursday. It appears they convinced the president that movement must be made on this issue.

SovEcon has raised its estimate of the 2017 Russian grain crop up from 134.1 million tonnes to 134.3. The wheat crop, included in those numbers, was raised 300,000 tonnes to now 84.2. The firm left its 2018 forecast unchanged at 128.2. Of that, they see wheat at 76.7.

Russia's State Secretary-Deputy General Director of the United Grain Company estimates total grain production in Russia at 130-150 million tonnes. Of that, they need 75 million for domestic usage, leaving the potential exportable amount of 80 - 85 million tonnes per year.

Export inspections for the week ending December 7, had wheat exports of 316,867 tonnes, corn exports of 658,403, and soybean exports of 1,229,817 tonnes.

Managed money funds were estimated sellers of 9,000 corn contracts, 7,000 soybeans, and 5,000 wheat, 4,000 soymeal, and 2,000 soyoil  in yesterday's trade.

The Two Day FOMC meeting begins today with a rate decision due tomorrow. Most traders are calling for a .25 point increase in rates. Perhaps more important, however, will be their comments on GPD, unemployment, and inflation. This is especially true as the House and Senate meet in Conference Committee to hammer out a tax-cut deal. This will also be the final press conference for Chair Janet Yellen.

USDA's Supply and Demand report also has livestock tables to note. For pork, USDA in November was assuming 6.955 billion lbs for the almost ended Q4 production estimate. That would be 4.6% over last year. Actual production since October 1 is only 1.6% overUSDA should also be changing their Q1 and Q2 production estimates. They have Q1 at 6.710 billion bushels, 4.7% over last year. For Q2 they have 6.390 billion, 4.1% over.

Yesterday's Comprehensive Boxed Beef report showed problems remain in short term end user interest. Beef procurement for extended delivery was 4% under last year last week. It has been lower than last year in five of the past six weeks.

Dressed beef values were lower with choice down .06 and select down .31. The CME Feeder Index is 154.32. Pork cutout value is down 2.01.

Technical Chart of the Day

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