First Thing Today: Slow Farmer Selling of Beans in Brazil Continues

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Firmer tone in wake of WASDE... Corn futures stuck to a narrow range overnight and as of 6:30 a.m. CT the market is fractionally higher in most contracts. Soybeans enjoyed some corrective gains overnight and futures are up 5 to 6 cents as the overnight session winds down. Winter wheat futures are narrowly mixed, while spring wheat is up 3 to 4 cents. The U.S. dollar index is just below unchanged, while crude oil futures are slightly higher.


Slow farmer selling of beans in Brazil continues... Ag Rural recently estimated that Brazilian farmers had sold just 49% of their soybean crop at the end of March, the lowest since 2009-10 and well below the five-year average of 63%. In southern states, farmers have sold just 27% of their crop. And shipping data shows that port lines are 30% shorter this year than they were in 2016, despite bigger export volumes. This indicates traders are avoiding commitments to mid-term loadings. Amid record crop prospects, soybean prices have dropped sharply and farmers in the country are reluctant to sell at a loss. Therefore, they are storing the crop and hoping for a rally during the U.S. weather market period.

Attaché weighs in on Brazilian corn crop... A USDA ag attaché estimates Brazil's corn crop at a record 93 MMT, which is 500,000 MT below USDA's official crop projection released yesterday. The resulting rise in 2017-18 corn stocks could encourage government intervention, according to the post. Brazil will likely export 30 MMT of corn in 2016-17, the attaché projects, which would be more than double the prior year's shipments. Looking ahead to 2017-18, the post projects a drop in acreage will lower production to 85 MMT, with exports likely to fall to 28 MMT.

French farm office trims wheat ending stocks... FranceAgriMer cut its 2016-17 ending stocks forecast for soft wheat by 400,000 MT from March to 2.6 MMT. The cut was primarily due to a smaller crop estimate. The French farm office trimmed that figure from 26.0 MMT to 25.7 MMT. It made no change to its export forecast for wheat, with shipments outside the European Union expected to total 5.0 MMT and shipments within the bloc pegged at 5.7 MMT.

Mild weather boosts German wheat crop prospects... Germany will likely produce a 25.26 MMT wheat crop in 2017, says the country's association of farm cooperatives. This is up slightly from its mid-March estimate and would be an increase of 2.7% from the year prior. Mild weather has boosted crop development in recent weeks, according to the association. The group adds that rain is needed for the crop to reach its full yield potential. Rain is in the forecast for Germany this weekend. Germany is the EU's second largest wheat producer after France.

Muted Chinese CPI reading for March... China's Consumer Price Index (CPI) climbed 0.9% from year-ago levels in March, according to its National Bureau of Statistics. This inflation gauge was in line with expectations and up 0.1 points from February. NBS explained the relatively low inflation reading was due to plunging food prices; they fell 1.9% in March, with vegetable prices dropping 7.9% from February.

Mexican regulatory body approves ChemChina/Syngenta deal... Mexico's antitrust commission COFECE approved ChemChina's planned $43-billion takeover of Syngenta AG on the condition that Syngenta divest five products (without naming them) in order to avoid risks to competition. These conditions "are not material to our business," says a Syngenta AG spokesperson. This comes soon after U.S. and European regulatory bodies gave the deal the green light, with conditions. Syngenta hopes to close the deal in the second quarter of 2017.

Abiec: March trade data shows resilience of Brazil's beef industry... Despite a corruption scandal that temporarily disrupted meat trade, Brazil's total beef exports climbed to 125,000 MT in March, a 20% gain from February, according to Abiec, the nation's beef exporters association. However, this was an 11% drop from year-ago levels. Revenue from that trade stood at $501 million, up 22% from the month prior but down 3% from March 2016. "The results in March show the resilience of the Brazilian beef industry," says Asntônio Camardelli, Abiec president, who adds that the probe "did not reduce average export volumes as many destination countries quickly suspended their bans."

Strong rally for cattle complex... Live and feeder cattle futures surged on Tuesday, with many feeder cattle contracts hitting new contract highs. Recognition that live cattle futures have been trading too far below the cash market has contributed to price strength this week, as has recent improvement in the boxed beef market that signals some buying for spring grilling season may be getting started. Of note, the nine-day Relative Strength Index shows some contracts crept into overbought territory yesterday.

Hogs pulled higher by spillover support... Strong gains in the live cattle market provided spillover support to lean hogs yesterday, despite ongoing weakness in cash hog bids. Pork movement did pick up yesterday, but this came on a lower pork cutout value. Of note, all cuts strengthened except bellies, which plunged $10.65.

Overnight demand news... Iraq tendered to buy at least 50,000 MT of hard wheat from the U.S., Canada or Australia. Taiwan purchased 65,000 MT of corn that will likely be sourced from the U.S.


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