First Thing Today: Markets in Holding Pattern Preceding USDA Reports

Markets in holding pattern preceding USDA reports... Corn futures held to a very narrow trading range overnight and as of 6:30 a.m. CT the market is narrowly mixed. Soybeans are fractionally to a penny lower. Wheat futures saw choppy trade overnight, but most contracts are currently 1 to 3 cents higher. The U.S. dollar index is down slightly, while crude oil futures are posting solid gains.

Wheat production, carryover updates out today... USDA will issue its first survey-based estimate of the winter wheat crop today that traders expect to come in around 1.293 billion bu., which would be a sharp decline from the year prior. But recent weather events means there is a lot of uncertainty about the peg. The department will also update its 2016-17 balance sheet and release its first look at 2017-18. Traders expect it to estimate 2016-17 corn carryover around 2.326 billion bu., with 2017-18 carryover near 2.122 billion bu.; soybean carryover around 438 million bu. for 2016-17 and 563 million bu. for 2017-18; and wheat carryover at 1.162 billion bu. for 2016-17 and 934 million bu. for 2017-18.

USDA puts six-month delay on organic animal welfare standard implementation... USDA announced a six-month delay on implementation on organic animal welfare standards, saying it intends to seek more public input on whether the measure should take effect, be delayed further, be indefinitely suspended or withdrawn. In a Federal Register notice, USDA said that "significant policy and legal issues" warrant additional review. The measure was originally supposed to take effect on March 20, but that deadline was initially pushed back to May 19. Senate Agriculture Chairman Pat Roberts (R-Kan.) said the rule would be “disastrous” for farmers and result in “increased prices at the grocery store; family farmers will be put out of business; and animal health will be put at risk, which will decrease food safety.”

Little change in soybean planted acreage likely for Mato Grosso... Farmers in Mato Grosso, Brazil's largest soybean producing state, will likely increase soybean plantings marginally (30,000 hectares) to 9.42 million hectares (23.277 million acres) in 2017-18, resulting in a crop of around 30.58 MMT, forecasts the ag research agency Imea. So far, producers there have only sold 1.74% of their expected 2017-18 crop, versus last year at this time when forward sales stood at nearly 9%, Imea details. Planting of the crop should get underway in September.

Ag ministry calls for a drop in China's corn crop and a boost in soybeans and cotton... Chinese farmers will likely plant 35.84 million hectares (88.563 million acres) to corn this year, which would be a decline of 2.5% from the year prior, says the country's ag ministry. It expects this to translate to a 213.19 MMT crop, which would be a cut of 2.9% from last year. On soybeans, the ag ministry projects China will boost acreage by 10.34% to 7.90 million hectares (19.521 million acres) for a crop of 14.10 MMT. It expects the country to bring in 93.16 MMT of soybeans this year, up 4.2% from last year thanks to a recovery in hog production and rising soymeal demand. The ministry also expects farmers to boost cotton acreage marginally to 3.2 million hectares, lifting cotton production to 4.88 MMT versus 4.72 MMT last year.

Chinese inflation gauge comes in just above expectations... China's Consumer Price Index (CPI) climbed 1.2% from year-ago levels in April, according to the country's statistics bureau, which was a 0.3-point boost from March and a bit above expectations for a 1.1% increase. Food prices fell 3.5% in April. Beijing is targeting consumer inflation of 3.0% this year, which would be steady with 2016.

FranceAgriMer raises wheat export forecast, trimming ending stocks... For the second month in a row, FranceAgriMer has cuts its 2016-17 ending stocks estimate for soft wheat, dropping it 200,000 MT to 2.4 MMT. This would be the lowest level in three years and a notable retreat from ending stocks of 3.3 MMT in 2015-16. The French farm office increased its outlook for soft wheat exports outside the European Union by 200,000 MT to 5.2 MMT; it also raised its projection of shipments within the bloc by 100,000 MT to 5.8 MMT.

Recovery in Indian cotton acreage expected... Cotton planting in India is likely to surge 15% in 2017-18 to a three-year high of around 12.08 million hectares (29.9 million acres), says Mekala Chockalingam, chairman of the state-run Cotton Corporation of India. A forecast for better monsoon rains as the threat of El Nino fades along with higher cotton prices are expected to encourage farmers to switch away from other crops. Planting should get underway in earnest next month with the onset on the rainy season.

Disconnect between cash and futures creates cash cattle trade uncertainty... Showlist estimates are tighter and the boxed beef market continues to rally which would typically point to higher cash cattle trade. But with the front-month trading nearly $20 below last week's average cash price, this could make it tough for feedlots to get higher prices again this week -- especially with packers cutting in the red. Nevertheless, futures have likely overdone it to the downside. Today's online Fed Cattle Exchange auction should provide additional cash market insight.

Aggressive hog processing... Lean hog futures favored the upside yesterday, but the market did finish well off session highs as traders noted some softer cash hog bids. But as volume was on the light side, this may not have been an accurate market test. This week's kill is running 35,000-head ahead of week-ago and 23,000-head above year-ago as packers take advantage of profitable cutting margins. Of note, pork movement finally picked up on Tuesday, with 436.41 loads changing hands on a $1.86 rise in the pork cutout value.

Overnight demand news... There is no business to report.

Today's reports:

• 9:30 a.m., Weekly Ethanol Production -- EIA
• 11:00 a.m., WASDE -- ERS
• 11:00 a.m., Cotton Ginnings - Ann. -- NASS
• 11:00 a.m., Crop Production -- NASS
• 11:15 a.m., Cotton: World Markets and Trade -- FAS
• 11:15 a.m., Grains: World Markets and Trade -- FAS
• 11:15 a.m., Oilseeds: World Markets and Trade -- FAS
• 11:15 a.m., World Agricultural Production -- FAS
• 2:00 p.m., Season Average Price Forecast -- ERS
• 2:00 p.m., Broiler Hatchery -- NASS
• 2:00 p.m., CE: Cotton 2015-2016 -- NASS