May 25, 2017

Wake Up Call

Traders Prepare For Post Memorial Day Weather

Good Morning! Paul Georgy with the early morning commentary for May 25, 2017.

Grain markets are slightly higher as the US Dollar retests 2017 lows. US row crops are caught in a tug-o-war between farmer selling in Brazil due to the exchange rate of Real versus the US Dollar and the weather forecast that stays on the cool/wet side in the 11 to 14-day period. Going into the weekend and a holiday on Monday, traders are trying to get positioned for a potential volatile Tuesday.

Allendale’s Ag Monthly Webinar Series recorded on Tuesday evening is worth your time to listen in. Just click on the link Registration and it’s free.

Weekly export sales data will be released at 7:30 this morning. Trade is looking for 2016/17 corn sales to be 600 to 900 tmt, soybeans 200 to 400 tmt, soymeal 50 to 150 tmt, soyoil 5 to 22 tmt and wheat 0 to 200 tmt. Estimates for the 2017/18 marketing year is wheat 200 to 400 tmt, corn 0 to 200 tmt, soybeans 0 to 150 tmt, soymeal 0 to 100 tmt and soyoil 0 to 20 tmt.

Argentine Agriculture Ministry says their farmers are expected to harvest 58 million tonnes of soybeans and 46.5 million tonnes of corn this season.

Ethanol production for the week ending May 19 averaged 1.01 million barrels per day compared to 1.027 million the previous week. However, last week’s production was 6.8% above same period a year ago. The marketing year to date pace is 5.2% over last year. USDA’s whole-year goal in corn for ethanol is for a 4.3% increase from 2015/16.

EIA Weekly Petroleum data showed crude oil stocks declining more than expected while gasoline and distillates declined less than expected.

Malaysian palm oil traders are concerned that exports to China might not meet expectations this year. Chinese buyers have only procured 100,000 tonnes so far in June through August period. That is under the 200,000 tonne pace last year.

Allendale's current unofficial changes for the 2017 corn supply are a 1.0 to 1.5 million acre drop in total plantings.

Mexican and Canadian trade ministers jointly suggested that NAFTA renegotiations should be done as a trilateral agreement.

Fed Cattle Exchange sold 1333 head out of the 2684 offered. Sale prices ranged between $131.00 and $133.00.

Packer margins are calculating to be at record levels but the short production week next week is limiting their aggressiveness. Supplies of market ready cattle are expected to improve as we move into June.

Cattle on Feed report will be released on Friday at 11:00 am (not 2:00 pm) due to the Memorial Day holiday. Allendale’s estimate for On Feed is 99.8%, Placed 104.6% and Marketed 101.3% of a year ago. The Reuter survey of analyst’s average guess is: On Feed 100.8%, Placed 106.8% and Marketed 101.8%.

June live cattle futures tested support only to bounce as cash traded in the country at $132.00. The $10.00 discount of futures to cash is providing support as first notice day in the June contract approaches.

August futures is being pressured due fundamental data suggesting more cattle should be market ready by mid-summer. Technically, the chart price patterns appear to be holding an uptrend.

Lean hog futures are getting support from unwinding of the long cattle short hog spreads. Pork also has a price advantage at the retail counter as we enter the kick-off of the cookout season.

Dressed beef values were mixed with choice up .34 and select down 1.57. The CME Feeder Index is 143.40. Pork cutout value is down .44.

Markets At-A-Glance – 5:00 AM

  • Jul Corn    +1 1/4
  • Jul Beans   +3
  • Jul Wheat   +2
  • Jul Soymeal +.60
  • Jul Soy oil +.17
  • Jun Dlr     -.09
  • Jun S&P     +7.00
  • Jul Crude   -.41
  • Jun Gold    +3.40

Technical Chart of the Day

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