Grain and soybean futures higher overnight... Corn futures are around a penny higher and soybeans are up fractionally to 2 cents after both markets favored the upside overnight. Wheat futures are also higher, with most contracts posting gains between 1 and 2 cents. The U.S. dollar index is slightly lower, while crude oil futures are posting solid losses.
Export sales report expectations... USDA will release its weekly update on export sales activity at 7: 30 a.m. CT. Traders expect the report to show corn sales ranging from 600,000 MT to 1.1 MMT, soybean sales between 200,000 MT and 550,000 MT, wheat sales of 250,000 MT to 650,000 MT, soymeal sales ranging from 50,000 MT to 250,000 MT and soyoil sales between 5,000 MT and 42,000 MT.
Brazilian soybean shipments surge... The corruption scandal in Brazil caused the real to tumble against the U.S. dollar, making Brazilian soybean shipments more competitive and raising prices for farmers. Plus storage has increasingly been an issue. As a result, farmer sales have surged, helping Brazilian soybean shipments to catch up with year-ago. Through May 23, Brazil has shipped 6.85 MMT of soybeans (versus 6.79 MMT last year) and Williams shipping data shows another 3.5 MMT of soybeans are scheduled to depart this month. This month’s shipments are expected to top May 2016 by nearly 2 MMT. And shipments are expected to remain strong given record production and fast selling
Thune releases another farm bill measure... Senate Agriculture Committee member John Thune (R-S.D.) has released more farm bill language, this time targeting changes to Title I crop support payments. The bill would require that Agriculture Risk Coverage-County payments be based on where the land is located and not on the administrative county for the farm and require base allocation for crop support payments to be based on planted acres from 2014-2017 instead of the historical acreage currently used. Under the current base allocation system, farms that have not planted commodity crops in years could still get crop-support payments because of the reliance on old data, Thune said, adding that the changes are “good government provisions” that could result in millions of dollars in savings.
Crushing margins slip as soymeal stocks rise to highest level in nearly five years... China’s crushing margins for soybeans dropped to a nine-month low this week, which helped push soymeal stocks to their highest level since August 2012. Soymeal prices hit their lowest level in a year. In Shandong province, a key crushing area, soy processors are losing 261 yuan ($37.98) per metric ton. Demand for soymeal is week. Liang Yong, an analyst with Galaxy futures, explains, “poultry farms are losing money and restocking of hogs is slow due to falling profits.” Crush margins are expected to remains low for at least a couple of months as sluggish demand for soymeal and large edible oils supplies are expected to continue.
Mexican sugar association asks for antidumping investigation into U.S. fructose... Last week, CNIAA, Mexico’s sugar industry association, submitted a request to the economy ministry, asking the government to investigate suspected dumping of high fructose corn syrup (HFCS) by the United States. Whereas Mexican sugar headed to the U.S. is subject to tariffs, HFCS enters Mexico tariff-free. Mexico is expected to target the sweetener if it cannot reach an agreement with the U.S. regarding a long-running sugar trade spat by June 5.
Ag consultancy cuts Russian grain crop estimate... SovEcon slashed its estimate of Russia’s grain crop by 3 MMT to 106.5 MMT. It details that the wheat crop will likely total 63 MMT, which is a 500,000-MT increase from its March estimate.
Russia/Turkey trade dispute flares back up... Yesterday, reports circulated that Turkey has introduced new limits, restricting wheat imports from Russia to about 20% to 25% of total imports. While Turkey’s economy ministry denied these reports and said that Turkey remains committed to the agreements it signed recently with Russia. But some traders are struggling to get licenses, according to Andrey Sizov Jr., managing director at SovEcon. Traders note the informal restrictions are due to Russia not following through on lifting restrictions on Turkish products, such as on Turkish tomatoes. Corn and sunflower oil have also reportedly been impacted by the latest restrictions.
Lower cash cattle trade begins... Cash cattle traded at a weighted average price of $132.54 for one to nine-day delivery at the online Fed Cattle Exchange auction yesterday, which was a drop of $2.62 from the week prior for the same delivery period. This paved the way for some light cash cattle trade in Texas and Kansas at $132, down $1 to $2 from the bulk of trade the week prior. Active trade is expected at similar price levels, which is roughly $10 above where June futures are trading.
Cash and product prices slip Wednesday, but trend remains higher... The pork cutout value fell 63 cents yesterday as all cuts except loins and butts softened. Cash hog bids also softened as needs are reduced due to Memorial Day downtime. However, traders expect cash bids to renew their uptrend after the holiday as supplies tighten seasonally. Therefore, they are comfortable with nearby futures at a premium to the cash index. The nine-day relative strength index signals the market is mildly overbought, but momentum is clearly in bulls’ favor.
Overnight demand news... Jordan tendered to buy 100,000 MT of hard milling wheat from optional origins. South Korea purchased 63,000 MT of feed wheat from optional origins, but it will likely be sourced from the Black Sea region.
Today’s reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 8:00 a.m., Food Price Outlook -- ERS
- 2:00 p.m., Outlook for U.S. Agricultural Trade -- ERS
- 2:00 p.m., Livestock Slaughter -- NASS
- 2:00 p.m., Poultry Slaughter -- NASS
