First Thing Today: Consultant Raises Argentine Soybean Crop Peg
Modest corrective trade overnight... Corn and soybean futures enjoyed some light short-covering overnight. Corn futures are currently fractionally to a penny higher, while soybeans are up 1 to 2 cents. SRW wheat futures are also fractionally higher, while HRW and HRS wheat futures are narrowly mixed. The U.S. dollar index is slightly higher, as are crude oil futures.
Consultant raises Argentine soybean crop peg... South American Crop Consultant Dr. Michael Cordonnier raised his Argentine soybean crop estimate by 1 MMT to 56 MMT, noting that early yields have been very good. He has a neutral to higher bias toward the crop going forward. He left his Argentine corn crop estimate at 37 MMT, but he is also leaning up on that crop peg. Cordonnier made no changes to his Brazilian soybean and corn crop estimates, which stand at 108 MMT and 88 MMT, respectively. He also warns these figures could move higher. Also of note, Cordonnier raised his soybean crop estimate for Paraguay by 900,000 MT this week to 10 MMT, explaining good weather has lifted yields.
Winter wheat conditions continue to decline... State statisticians report the condition of the winter wheat crops in Kansas, Oklahoma and Texas declined slightly last week. While statisticians kept the amount of crop rated "good" to "excellent" in Kansas unchanged at 38%, they rate 25% in "poor" to "very poor" shape -- a one-point increase from last week. In Oklahoma, 37% is rated in top shape, which is a drop of three points from last week. In Texas 34% is rated in top shape, which is unchanged from last week, but 23% is rated in "poor" to "very poor" shape, which is an increase of two points from last week. Read more at this link.
India reinstates 10% duty on wheat imports... India has reinstated a 10% import tax on wheat that will take effect immediately. During the four-month span without the tax, the country made aggressive overseas purchases of the grain. This along with a large domestic crop encouraged the government to reinstate the tax. Some had expected the country to revert to its original duty of 25%. India lowered the tax on wheat from 25% to 10% in September and then it eliminated the tariff altogether on Dec. 8.
EPA, farm groups reach agreement on CAFO disclosures. The Environmental Protection Agency (EPA) and farm groups reached an accord on how much information related to concentrated animal feeding operations (CAFO) in 37 states the agency will be permitted to release in response to Freedom of Information Act (FOIA) requests filed by environmental activists in 2012. In a settlement approved by a federal judge Monday, the American Farm Bureau Federation, the National Pork Producers Council and the agency have consented to allow only the disclosure of the city, county and zip code of the farms in those states referenced in the FOIA requests along with information on status of Clean Water Act permitting for waste discharges. The deal, which does not apply to CAFO-related requests not referenced in the legal action, ends years of litigation.
Brazil shutters more meat processing plants... Yesterday, Brazil ordered three more food processing plants to suspend production as the country works to contain fallout regarding corruption in its meat sector. So far, Brazil has temporarily closed six of the 21 food processing plants under investigation, and 15 of those plants are not allowed to export meat. They are still allowed to produce meat for the domestic market, however. Brazil hopes that other nations will follow China's lead in lifting its ban on meat from the country and that the European Union will not followthrough with tougher restrictions.
Futures likely too far below cash... Cash cattle trade took place at an average price of $130.91 last week, which is nearly $10 above where the April contract settled yesterday and nearly $19.50 above the June contract. While this clearly signals traders expect cash prices to come down in a hurry, the wide gap is likely overdone. A marked slowdown in beef movement Monday on softer prices adds to ideas cash prices will soften. But showlist estimates are down a net 3,000 head this week as tighter numbers in Kansas and Texas more than offset an increase in Nebraska.
Some corrective trade is due in hogs... Lean hog futures came under heavy pressure to start the week. But the nine-day Relative Strength Index is signaling numerous contracts are either near or in oversold territory, so some corrective trade is likely warranted. The pork cutout value strengthened 43 cents this morning, but movement was light at 265.96 loads.
Overnight demand news... South Korea's Feed Association bought around 55,000 MT of soymeal on Friday, likely from South America. The country's largest feed maker also tendered to buy 55,000 MT of soymeal from South America. Algeria purchased around 25,000 MT of corn, possibly from Argentina. Syria has received 50,000 MT of Russian wheat as humanitarian aid.