First Thing Today: Record-setting Chinese Soybean Imports for May
Weather concerns, fund buying push markets higher overnight... Corn futures enjoyed strong followthrough buying overnight and are currently up 2 to 4 cents, with old-crop leading gains. Soybean futures are mostly 8 cents higher. Wheat futures are up 3 to 6 cents, with the HRS market leading gains. The U.S. dollar index is slightly firmer today, while crude oil futures are just below unchanged.
Global markets have a trio of things to watch today... Markets have a lot to digest today via the UK elections, the European Central Bank (ECB) meeting conclusion and especially the testimony of former FBI Director James Comey before the Senate Intelligence Committee. The UK elections are too close to call based on polls. The ECB is not expected to shift its monetary policy, so attention is on its forward guidance and whether it adjusts its inflation expectations. Comey's appearance will focus on questions and answers as his prepared remarks, released Thursday, did not provide any major revelations. How these events unfold will shape market activity today and potentially the prospects for the Washington agenda on key issues like tax reform.
Export sales out today... 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 950,000 MT, soybean sales of 350,000 MT to 750,000 MT, wheat sales between 50,000 MT and 550,000 MT, soymeal sales ranging from 50,0000 MT to 200,000 MT and soyoil sales of 8,000 MT to 37,000 MT. These expectations include old- and new-crop expectations combined.
China imported record amount of soybeans last month... China imported a record 9.59 MMT of soybeans during May as a backlog of previously purchased supplies finally arrived, according to preliminary customs data from the country. This represented a dramatic increase (25.2%) from imports of 7.66 MMT last year and 8.02 MMT in April. Shipments were in line with expectations, however. China's overall exports and imports both topped expectations last month, rising 8.7% and 14.8% from year-ago levels, respectively. This resulted in a in a trade surplus of $40.81 billion for May, up 7.3% from the month prior. Analysts had expected a trade surplus of around $46.32 billion.
Notable slowdown in demand at latest Chinese corn auction... China sold just 474,845 MT of 2013-crop corn at its auction of nearly 1.860 MMT of state corn reserves. The sales represented just 25.53% of the total, representing a dramatic slowdown from recent auctions where users scooped up the majority of the grain offered. The sales took place at an average price of 1,332 yuan ($196.01) per MT.
Global food prices rise in May... For the first time in three months, global food prices climbed during May, according to the Food and Agriculture Organization of the United Nations (FAO). Its Food Price Index averaged 172.6 points in May, up 3.7 points from April and nearly 16 points (10%) higher than year-ago. All commodity indices used in the calculation climbed last month, with the exception of sugar. FAO lowered its global cereal production estimate for 2017 by 5 MMT to 2.594 billion MT, which is down 14.1 MMT (0.5%) from year-ago. It explains that much of the annual decrease is due to contraction in wheat production, which is expected to fall 2.2% from year-ago levels to 743 MMT.
Commerce delays decision on Argentine and Indonesian biodiesel tariffs... This week the U.S. Commerce Department pushed back its decision on duties on Argentine and Indonesian biodiesel to Aug. 21. The deadline for the final determination will still be 75 days after the date of the preliminary determination, "unless postponed at a later date." This puts preliminary determinations on antidumping and countervailing duties on the same deadline.
Beef gains spur optimism about cash cattle market... Packers moved a solid 146 loads of beef on Wednesday on firmer prices for both Choice and Select boxed beef, signaling retailers are gearing up for summer grilling season. Recent boxed beef gains along with near-steady showlist numbers have traders optimistic about this week's cash cattle trade prospects. The online Fed Cattle Exchange auction that is often telling of cash direction was canceled yesterday and rescheduled for today.
Another day of strong pork movement... Pork movement was again strong on Wednesday at 379.22 loads on a 59-cent rise in the pork cutout value on Wednesday. This signals some late buying for Father's Day and grilling features may be underway. Meanwhile, cash hog prices continue to climb.
Overnight demand news... Algeria bought around 450,000 MT of milling wheat in a tender, with some putting the tally as high as 480,000 MT. Saudi Arabia issued an international tender to buy 770,0000 MT of hard wheat. A group of animal feed makers in the Philippines purchased an unknown volume of soymeal to be sourced from South America (likely Argentina); it had tendered for up to 200,000 MT. In recent days, Pakistan has purchased around 500,000 MT of soybeans, likely from the U.S. and Brazil. Japan bought 81,115 MT of food-quality wheat from the U.S., as well as 55,075 MT from Canada and 23,420 MT from Australia. Jordan issued another international tender to buy 100,000 MT of hard milling wheat from optional origins.
Today's reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 7:30 a.m., Weekly Export Sales -- FAS
