First Thing Today: Trump Softens Trade Rhetoric on China

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Soybeans break out to the upside overnight... Soybeans rallied overnight and as of 6:30 a.m. CT the market is trading high-range with gains of 7 to 9 cents. Corn futures are 1 to 2 cents higher on spillover support. Wheat futures are up 1 to 3 cents, with the HRS market leading gains. The U.S. dollar index is posting solid losses, while crude oil futures are just above unchanged.

Trump softens trade rhetoric on China... President Donald Trump told the Wall Street Journal in an interview that he would not declare China a currency manipulator, contrary to his campaign promises. In a joint news conference, he also signaled he would offer China a "good trade deal" if it helped the U.S. deal with the threat from North Korea. This comes soon after a meeting with China's president that resulted in China offering some trade concessions on beef and financial products. The two also spoke by phone this week.

Upbeat Chinese trade data... China's overall exports in March were up 16.4% from year-ago, hitting their highest level for the month and easily topping expectations. The nation's imports were also stronger than expected and up 20.3% from year-ago, resulting in a trade surplus of $23.93 billion for the month of March. Analysts had expected a surplus of just $10.0 for the month. For the first quarter, China's trade surplus stands at $65.61 billion.

China brought in a record amount of soybeans last month... China imported 6.33 MMT of soybeans during March, which was a new record for the month, according to preliminary data from the General Administration of Customs of China. Sales were up 230,000 MT from year-ago and 790,000 MT from February. The strong shipments were in line with expectations and reflected the arrival of presale orders. China's first quarter soybean imports totaled 19.52 MMT, up 20% from year-ago. Analysts and traders cited by Reuters expect soybean imports to climb even higher in the months ahead, topping 8 MMT.

Brazil ships record amount of beans in March, but exports should be even higher... Brazil shipped a record 9 MMT of soybeans during March, according to Thomson Reuters trade flow data. This was up 1 MMT from March 2016. And April exports already top 6 MMT. But while this data is strong, Reuters says "these total should be significantly higher" considering harvest is around 75% complete and the crop is expected to be record large by at least 10 MMT. Wait times at major ports like Santos are at record lows, according to the trade flow data.

Another week of solid soybean export sales expected... USDA will release its weekly export sales report at 7:30 a.m. CT. Traders expect the report to show corn sales between 900,000 MT and 1.4 MMT, wheat sales of 300,000 MT to 700,000 MT, soybean sales ranging from 550,000 MT to 950,000 MT, soymeal sales of 50,000 MT to 450,000 MT, and soyoil sales of 8,000 MT to 35,000 MT.

Argentina's Macri to visit White House... Trump will welcome Argentina's president, Mauricio Macri, to the White House on April 27. The two plan to discuss "a range of bilateral and regional issues, including the expansion of trade, security sector collaboration, and the deteriorating situation in Venezuela," the White House said yesterday.

EU wheat exporters to benefit from Russia/Turkey tensions... Strategie Grains projects the European Union will export 23.5 MMT of soft wheat in 2016-17, which is up 300,000 MT from its estimate last month. The firm explains the increase "is due in large part to the fact that Russian wheat is not allowed to be imported into Turkey, which has led many [importers] to turn to Lithuania, Latvia and Hungary." Looking ahead to 2017-18, Strategie Grains expects the EU to export 26.2 MMT of soft wheat, which is steady with its projection last month.

Egypt to tax sugar exports... Egypt will impose a sugar export tariff of 3,000 Egyptian pounds ($165.47) per MT tomorrow, the state's official gazette reported today. Last month the country eliminated a duty on raw sugar imports through the end of 2017. The country is expected to produce around 2.4 MMT of sugar this year, which is below the nation's roughly 3 MMT in consumption. The new tariff on exports is expected to have very limited impact.

Limited cash cattle trade at steady to lower prices... Some light cash cattle trade got underway yesterday in Kansas and Colorado at $122 to $123 and in Nebraska and Texas at $126. This was steady to down slightly from last week's $124 to $126 action. This week's sharp gains have brought April live cattle in line with these prices, though the June contract is still well below the cash market. Meanwhile, boxed beef movement was solid on Wednesday on choppy prices.

Cash hog market remains under pressure... Cash hog bids remain under pressure as supplies are ample and needs are reduced due to Easter downtime. In addition, the pork cutout value has chopped around the $74 to $75 level of late. But this combination has strengthened packer profit margins, which has kept kill runs strong.

Overnight demand news... Japan purchased 68,095 MT of wheat from the U.S., as well as 24,190 MT from Canada and 34,120 MT from Australia. South Korea issued an international tender to buy up to 115,000 MT of feed wheat to be sourced optionally from the U.S., Australia, east Europe, Canada or South America.


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