First Thing Today: Consultant Cuts Argentine Soybean Crop Peg on Excess Rain

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Grains higher in wake of progress and condition update... Corn futures favored the upside overnight after USDA's crop progress update confirmed a slow start to planting season. Most contracts are fractionally higher as of 6:35 a.m. CT. Soybean futures are down 3 to 4 cents. Wheat futures are fractionally to 2 cents higher, with winter wheat markets leading gains. The U.S. dollar index and crude oil futures are both facing some pressure.

 

PF CCI: Winter wheat ratings climb... When USDA's winter wheat crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the HRW wheat crop climbed 3.39 points from last week to 338.87 points, which is just 8.77 shy of year-ago. The SRW wheat crop also improved marginally (1.55 points) to 375.92, which is 3.62 points ahead of year-ago. Get more details.

Cordonnier cuts Argentine soybean crop peg on excess rain... South American Crop Consultant Dr. Michael Cordonnier trimmed his Argentine soybean crop estimate by 1 MMT to 55 MMT, citing heavy rains in Buenos Aires, La Pampa, Cordoba, Santa Fe and northern areas of the country last week. He details that an estimated 1 million hectares or more have been affected by excess moisture so far this month, adding that soybeans are affected more than corn. He left his Argentine corn crop peg unchanged at 37 MMT. Cordonnier made no change to his Brazilian soybean or corn crop estimates, which stand at 109 MMT and 90 MMT, respectively.

Early test for Trump impact in Georgia special election... Voters in suburban Atlanta head to the polls today for a special House election contest that offers an early test President Donald Trump's political standing, with Democrats sensing an opportunity. The vote is to replace Rep. Tom Price (R-Ga.) who President Donald Trump picked to head up Health and Human Services (HHS). Both parties are monitoring the results in the Republican-leaning sixth district for clues to the emerging 2018 playing field. Traditionally, the midterm elections are overwhelmingly influenced by voters' level of satisfaction with the president.

U.S. trade deal with South Korea falling short: VP Pence... The U.S. trade relationship with South Korea is “falling short,” with the free-trade deal between the countries under review, Vice President Mike Pence said today. “We’ll pursue trade that is both free and fair,” Pence said during remarks at a U.S. business chamber gathering in Seoul. “And that’ll be true in all our trade relationships, including KORUS,” he said, a reference to the U.S./South Korea deal. “We’re reviewing all our trade agreements across the world to ensure they benefit our economy as much as they benefit our trading partners,” Pence said. “We have to be honest about where our trade relationship is falling short. Most concerning is the fact that the U.S. trade deficit with South Korea has more than doubled since KORUS has come into effect.” He called the trade gap with South Korea a "hard truth,” with "too many" barriers to entry for U.S. businesses.

South Korea expected to source much of its corn needs from the U.S... South Korea will likely import 9.8 MMT of corn in 2016-17 and 10.2 MMT of corn in 2017-18, according to a USDA ag attaché in the country. Of note, the attaché expects the U.S. to supply 5 MMT of the 2016-17 business, citing strong trade numbers and increased price competitiveness. The post expects South Korea to bring in 4.0 MMT of corn from the U.S. in 2017-18.

Average monsoon likely for India... An average monsoon season is likely for India this year, says K. J. Ramesh, director general of the state-run India Meteorological Department, who details that rainfall will likely be 96% of the long-term average. The department defines "average" as rainfall between 96% and 104% of the 50-year average of 89 cm (roughly 35 inches) during the four-month rainy season. Ramesh adds the weather department expects "the trend of higher agricultural production and economic growth to continue." The rains, which are critical for crops like rice, sugar cane, corn, soybeans and cotton, will likely begin around June 1, says Ramesh.

Reuters poll: China to cut corn acres and boost soybean plantings... Analysts polled by Reuters expect China to cut corn acreage to 35.2 million hectares (87.0 million acres) this year, which would be the smallest crop in six years and below the 36.7 million hectares (90.7 million acres) the country's National Bureau of Statistics (NBS) expects farmers to plant. Analysts surveyed expect China's corn crop to total 207.5 MMT in 2017-18, which would be a 5.5% drop from NBS's 219.6 MMT estimate of the 2016-17 crop. They expect Beijing's soybean crop to climb to 13.5 MMT on 7.6 million planted hectares. This would be up 400,000 MT from last year's crop, based on data from China National Grain and Oils Information Center.

South Korea downgrades bird flu alert status... South Korea has had no new cases of bird flu for two weeks. Therefore, the country's ag ministry says it will downgrade its bird flu alert status by one notch from its highest level, noting it expects the virus to abate. This year's bird flu epidemic was South Korea's worst on record, leading to the culling of more than 37 million birds.

Strong start to the week for cattle futures... Cattle futures rallied to start the week, with many contract notching new contract highs. Traders recognize that futures are too far below the cash market, especially considering solid price gains in the product market to start the week and tighter showlists estimates this week. However, futures are technically overbought according to the nine-day Relative Strength Index, signaling a setback is possible near-term.

Downside overdone in hogs... The May lean hog contract is just above oversold territory, signaling an upside correction may soon be warranted. Plus seasonal improvement in the cash and product market are likely ahead. However, the latter got off to a poor start to the week, with just 173.97 loads changing hands on a 2-cent decline in the pork cutout value.

Overnight demand news... South Korea's Major Feedmill Group purchased 60,000 MT of corn from optional origins. The country's Nonghyu Feed Inc. bought around 55,000 MT of optional origin feed wheat. Japan tendered to buy a total of 95,555 MT of food-quality wheat from the U.S. and Canada in a regular tender.

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