May 25, 2018

Soybean Planting Pace Well Above Average

May 22nd, 2018

Good Morning! From Allendale, Inc. with the early morning commentary for May 22, 2018.

Grain markets are focusing on trade agreements. Last weeks talks between the US and China may have resulted in an increase for agricultural exports. More details are needed to confirm. NAFTA agreement is still on the table and could be impacted by political elections if not finalized soon. The US Dollar remains strong against other foreign currencies which creates a price disadvantage for US products.

World Weather Inc. says, “Frequent shower and thunderstorm activity will continue to impact the Corn Belt, southeastern states, and Delta into early next week. This will cause some more fieldwork delays.”

US Farmers planting progress for corn is right on average and is now in line with last year. They have 81% complete verses 81% average. That was a 19% increase in one week for the US. Minnesota, Wisconsin and Michigan are behind their average pace due to wet conditions.

Soybean plantings are now 56% complete compared to 44% average and 50% last year. Spring wheat planting surged and is now 79% complete. That was over the 77% trade expectation. It is right next to the 80% five-year average.

Funds were estimated to have been net sellers of 4,000 corn and 8,500 wheat contracts on Monday. They were net buyers of 10,000 soybean contracts.

U.S. Commerce Secretary Wilbur Ross will travel to China next week to help finalize a trade agreement after Washington and Beijing reached an initial framework last week, U.S. Treasury Secretary Steven Mnuchin said. (Reuters)

Brazilian truck drivers used their trucks to draw attention to the increase in domestic fuel prices. They blocked major roadways around the capitals of the country's largest grain states to protest increases fuel prices, this action affected highways in 12 states, was reported federal highway police.

NAFTA talks have intensified in recent weeks to reach a deal on reworking the 24-year-old accord. Negotiators are pressed by U.S. congressional deadlines and the common will to reach an agreement before Mexico's July 1 presidential election.

Meat production is likely to be reduced this week as demand slows and some packers plan for a 3-day holiday. Packers bought a lot of cattle last week and will be tougher to deal with due to shortened work week ahead. Product values are trending lower.

June live cattle futures closed higher on Monday as short covering was cited as a reason for the rally. Chart support crosses at 101.37 at 108.00. Look for more consolidation this week.

Pork product is starting the week with strength as retailers complete their fill-in buying for the holiday. However, the large supply of meat available to the consumer is providing headwinds. A new agreement with China may be positive to pork however China currently has an oversupply of pork.

Nearby lean hog futures bounced off early session sell-off provide hope for the chart watchers. However, a close above the 77.50 is needed to break the long-term down trend. Current support is 72.10 with near-term resistance at 75.60.

Dressed beef values were lower with choice down 1.39 and select down .94. The CME Feeder Index is 133.63. Pork cutout value is up 2.19.

Technical Chart of the Day

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