May 25, 2018

Back and Forth on Trade Continues

May 23rd, 2018

Good Morning! From Allendale, Inc. with the early morning commentary for May 23, 2018.

Grain markets are waiting on the latest from the US/Chinese trade talks for their next direction. Which way this ends remains to be seen, but Ag traders would like more details. As usual this time of year, weather map updates have the potential to change market sentiment quickly.

Trade talks are grabbing headlines and moving markets. Allendale's Rich Nelson took a deeper look at the potential of a new US/China deal and shares what it could mean for Agriculture. Listen here.

Argentine grains ports will be paralyzed by a 24-hour strike on Thursday to demand better working conditions and protest against government talks with the International Monetary Fund (IMF), a union spokesman said on Tuesday. Strikes are common in Argentina, where workers are hard-pressed to negotiate salary increases that keep them ahead of the country's notoriously high inflation rate, clocked at 25.5 percent in April. (Reuters)

Argentina's 2018/19 corn crop is expected to reach 40 million tonnes and best last year's drought damaged crop according to Alberto Morelli, president of the corn association Maizar.

Corn spot basis bids were lower in Illinois and Nebraska yesterday as farmers took advantage of the recent rally and sold grain. Elsewhere, bids were mostly even as planting continues across the Midwest.

Wheat fields in Ukraine look much better than last year in general according to finding from a Thomson Reuters crop tour. They estimate this year's crop yield will beat last years. Corn fields in the country were also said to look good.

The cargo ship RB Eden, originally heading for China and carrying US sorghum, was turned around after the announcement of anti-dumping tariffs against the US. After China reversed course on the anti-dumping measures last week, the ship did the same and is now heading back to China.

Managed money funds were estimated buyers of 8,000 corn contracts, 3,500 soybeans, 10,500 wheat, and 1,000 soyoil in yesterday's trade. They were sellers of 2,000 soymeal.

Economic traders have a few reports to monitor this morning including MBA Mortgage Index at 6:00 AM CDT, New Home Sales at 9:00 AM, Crude Inventories at 9:30 AM, and FOMC Minutes at 1:00 PM CDT.

Cold Storage, out yesterday afternoon reported pork at 641.4 million pounds vs the 642.6 trade estimate. Beef stocks came in at 471.5 million vs the 465.9 estimate. The next livestock report, Cattle on Feed, will be out Friday at 11:00 AM CDT. Average trade estimates have On Feed (as of May 1) 104.9%, Placements 90.9%, and Marketings 106.0%.

A protest by truck owners in Brazil against high diesel prices is hampering transport of feed and animals in the meat processing sector, ABPA, an association of poultry and pork processors, said on Tuesday. ABPA said the truckers protests have impacted delivery of cargoes to local and export markets, adding that there are reports of some processing plants reducing working shifts due to lack of inputs. (Reuters)

CME is amending the feeder cattle futures contract to include cattle the USDA identifies as "fancy, thin, fleshy, gaunt or full" in the calculation of CME's feeder cattle index price. The change will take effect with the May 2019 contract, which will also see its listing delayed until June 10th, rather than the original May 28th date.

Dressed beef values were lower with choice down 1.47 and select down 1.66. The CME Feeder Index is 133.41. Pork cutout value is up .04.

Technical Chart of the Day

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