First Thing Today: With Lawmakers on Recess, Attention Turns Abroad
Good morning!
Mixed start to the week... Corn futures are down a penny while soybeans are steady to up 2 cents as traders engage in some mild position evening to start the week and note forecasts for fieldwork-slowing rains in some areas of the Midwest this week. Wheat futures are a mixed bag, with SRW and HRW wheat fractionally to 2 cents lower and HRS wheat up 1 to 2 cents. The U.S. dollar index is down slightly, while crude oil futures are moderately lower.
NOPA crush data out today... Traders expect members of the National Oilseed Processors Association to report they crushed 156.728 million bu. of soybeans during March, which would be up notably from February's crush of 142.792 million bushels. In March 2016, NOPA members crushed 156.690 million bu. of soybeans. Analysts surveyed by Reuters expect NOPA to report soyoil stocks of 1.809 billion lbs. as of March 31, up from 1.770 billion lbs. at the end of February but down from year-ago when stocks totaled 1.859 billion pounds.
With lawmakers on recess, attention turns abroad... The House and Senate remain on their Easter/Passover break for another week, but staffers continue to work on a budget to keep the government operating beyond April 28. Geopolitical hotspot North Korea is also is a focus after a failed holiday weekend missile attempt by the country. Hours after the test, Vice President Mike Pence arrived in South Korea for a previously planned trip to Asia. The top issue of his trip will be that “we are fully committed to our security alliances," according to a senior administration official. He will also work to contain fallout from the president's withdrawal from the Trans-Pacific Partnership. Get more details on this week's happenings.
Chinese corn acreage to fall 4.0% as soybean acres climb... Chinese farmers will likely cut corn acreage 4.0% in 2017, while soybean acres will jump 8.1%, according to a a survey conducted by the National Bureau of Statistics. China has been working to bring down its corn stockpiles, which stand at roughly 250 MMT -- more than a year of consumption. The survey also showed that wheat acreage will drop 0.8% in 2017, with cotton acreage down 0.7%.
Chinese GDP tops expectations for the first quarter... China's economy grew 6.9% in the first quarter of 2017, which was a bit higher than the 6.8% growth economists polled by Reuters anticipated. This is the highest quarterly growth since the third quarter of 2015. Growth was propelled by the government spending on infrastructure as well as a hot housing market that some fear may be overheating. Retail sales, factory output and exports all outpaced expectations. China's government is targeting economic growth of 6.5% for 2017 as a whole, versus growth of 6.7% in 2016, which was the slowest growth in 26 years.
U.S. begins antidumping probe on Argentina, Indonesia biodiesel... The U.S. Commerce Department said in a statement that it has initiated an investigation into imports of biodiesel from Argentina and Indonesia. On March 23, the National Biodiesel Board Fair Trade Coalition filed a petition with the Commerce Department and the U.S. International Trade Commission (ITC), The ITC in a separate statement said that the commission “is scheduled to make its preliminary injury determinations on or before May 8.” If the investigation finds the claims are valid, it will announce preliminary countervailing duties in June and an antidumping ruling in August. In 2016, biodiesel imports totaled $1.2 billion from Argentina and $268.2 million from Indonesia, according to the ITC.
Turkish restrictions on Russian grain exports slow shipments.. Russia is likely to export between 3.0 MMT and 3.1 MMT of grain in April, according to SovEcon, which would be down from shipments of 3.8 MMT in March due to Turkey's unofficial ban on Russian wheat, corn and sunflower. But the firm says the absence of Turkish demand will be temporary as its flour millers rely on Russian supplies. Key government officials will meet in Moscow Tuesday to discuss the situation. SovEcon expects Russia to export 2.50 MMT of wheat in April, which would be up notably from shipments of 1.44 MMT the year prior. So far this marketing year, Russia has exported 24,330 MMT of wheat, up 21.6% from 2015-16 at this point.
Firmer cash cattle trade in the face of higher showlists... Cash cattle trade got underway at $2 higher prices of $128 on the Plains on Friday, with northern locations seeing trade up to $130. The cash market gains surprised the market as showlists were up after just light trade the week prior. Futures posted a strong rally last week in response to hopes for Chinese demand, which likely contributed to cash market strength.
Optimism about lean hog market going forward... Market bears maintain the upper hand in the lean hog hog market, but a seasonal recovery should be ahead. Cash hog bids and pork cutout values typically bottom in April and climb into the June/July period. Indeed, the market enjoyed some short-covering the latter half of the week on spillover from live cattle.
Weekend demand news... There is no export business to report.
