First Thing Today: Cool and Wet 6 to 10-day Forecast for Much of the Corn Belt
Good morning!
Mild position evening overnight... Corn futures faced pressure overnight and most contracts are around a penny lower as of 6:35 a.m. CT. Soybean futures are fractionally to 1 cent higher after favoring the upside overnight. Winter wheat futures are down 3 to 4 cents, while spring wheat is just a penny or two lower. The U.S. dollar index is under pressure, while crude oil futures are enjoying strong gains.
Cool and wet 6 to 10-day forecast for much of the Corn Belt... The National Weather Service forecast for May 20-24 calls for above-normal precip across the Corn Belt and Plains, with the exception of the Dakotas, where normal to dry weather is anticipated. Temps are also expected to be cool across the western Belt and into the Plains. Warm temps are expected for southeast Illinois eastward. Rains is in the outlook for the northern and western Corn Belt this week, but producers in these areas have been able able to take advantage of near-ideal conditions leading up to and over the weekend.
NOPA expected to report further slowing of crush... Members of the National Oilseed Processors Association (NOPA) likely crushed 145.739 million bu. of soybeans in April, according to traders surveyed by Reuters. This would be down 7.321 million bu. from March and a 1.875 million-bu. drop from year-ago. Soyoil stocks are expected to come in around 1.777 billion lbs. at the end of April, which would be down from 1.815 billion lbs. at the end of March and 1.943 billion lbs. the year prior. The report will be released at 11:00 a.m. CT.
Attention remains on White House... The Senate is in today but House members return Tuesday. The biggest focus will probably remain on the White House and whether any new shakeups take place or statements are made that spark uncertainty. Leaders of the intelligence panels in both chambers say they are continuing to look into Russia’s activities in the 2016 election. Hearings on tap in the House will include issues for native Americans, FAA and aviation, South American energy, fiscal 2018 matters and the rural economic situation update. On the Senate side, various committees will hold confirmation hearings on nominees for sub-Cabinet positions at several agencies. Medicare, infrastructure, operating the government on less money and other policy matters will also be on tap.
Monsoon rains move in early... Monsoon rains hit India's Andaman and Nicobar islands on Sunday, which was six days ahead of the norm, the domestic weather office reports. This comes after the head of India's Meteorological Department last week said monsoon rains will likely be greater than previously expected as El Nino concerns have eased.
China's subsidies for soybean growers to top those for corn producers... China will pay higher subsidies to soybean farmers than corn growers in its top grain producing provinces. The country is still working to draw down corn stocks after abandoning its state stockpiling system. Details on the subsidy levels in Heilonjiang and Liaoning provinces have not yet been released.
Disappointing economic signals out of China... China's factory output climbed 6.5% from year-ago levels in April, down 1.1 percentage points from March, while fixed-asset investment climbed 8.9% for the first four months of the year, with both figures below expectations. Analysts surveyed by Reuters had expected factory output to climb 7.1% and fixed asset investment to climb 9.1%. This adds to recent data showing momentum is slowing in China after a strong first quarter.
Brazil investigating loans to JBS SA... Police in Brazil are investigation whether the state development bank BNDES issued fraudulent loans to JBS SA, the world' s largest meatpacker. The two brothers, Joesley and Wesley Batista, that serve as chairman and chief executive at JBS have or will be brought in for questioning. The company issued a statement saying all investments it received from BNDES followed laws and regulations governing capital markets. The situation may put plans for a $1 billion initial public offering of a food processing unit on hold. Such plans were already delayed due to tepid investor interest and other scandals involving the company. The Batistas are barred from making any structural changes at JBS until the probe is concluded.
Renewed buying interest for cattle?... News that the Trump administration had reached a trade deal to reopen the Chinese market to U.S. beef by mid-July bolstered futures late last week. As the market gauges what trade potential this might entail, prices could climb even higher. In addition, futures start the week at a steep discount to last week's cash cattle trade that took place at an average price around $138.
Lean hogs trading well above cash hog index... Strong processing demand has helped bolster cash hog prices, which has in turn lifted futures. But with the new front-month trading at nearly a $9 premium to the cash hog index, there is risk of some profit-taking near-term.
Weekend demand news... Turkey tendered to buy up to 180,000 MT of corn for animal feed. Iraq's bought 50,000 MT of wheat from Australia, despite the U.S. having the lowest offer in the tender.
Today's reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 11:00 a.m., Crush Report -- NOPA
- 2:00 p.m., Feed Grains Yearbook tables -- ERS
- 2:00 p.m., CE: Cattle 2016-2017 -- NASS
- 3:00 p.m., Crop Progress -- NASS
