First Thing Today: Strong Demand at Chinese Corn Auction
Grains firmer as traders position for the weekend... Corn futures are up 2 cents in most contracts amid some light short-covering. Soybean futures are down 5 cents in the front month and narrowly mixed in deferreds. Winter wheat futures are 1 to 3 cents higher, while spring wheat is narrowly mixed. The U.S. dollar index is slightly higher, with crude oil facing light pressure.
April jobs report expected to show an uptick in hiring... The calendar flip to May means the April employment report will be issued today. Economists surveyed by Reuters expect the report to show employers added 185,000 nonfarm payrolls last month, which would be an improvement from just 89,000 jobs added in March. The unemployment rate is likely to tick up 0.1 point to 4.6%, according to the survey. A strong showing would add to ideas the Federal Reserve will raise interest rates at its mid-June meeting.
Stats Canada expected to report tight canola stocks, big wheat stocks... Traders surveyed by Reuters expect Statistics Canada to report that there are around 6.7 MMT of canola stocks in commercial and farm storage as of March 31, a 22% drop from year-ago and the smallest figure for that time of year since 2013. Wheat stocks are likely to come in around 18.3 MMT, up 27% from year-ago and a three-year high, according to the pre-report survey. March 31 durum stocks are expected at 5.2 MMT, nearly double last year's figure. However, quality is an issue with the crop. The report will be released at 7:30 a.m. CT.
USDA Secretary Sonny Perdue is in Iowa today to give his first major speech on farm policy... GOP Iowa Senators Joni Ernst and Chuck Grassley, as well as a few Iowa-based House members could attend. Perdue will be accompanied by Iowa Agriculture Secretary Bill Northey, who is expected to be offered some position in the Trump administration. Contacts expect Perdue to talk about upcoming trade negotiations, the new farm bill, potential aid to dairy and cotton producers, the Renewable Fuel Standard (RFS), support for E15, ideas for more farm workers and the budget for agriculture.
Strong demand at Chinese corn auction... China sold nearly 1.825 MMT of 2013-crop corn it put up for auction today, as well as 370,177 MT of 2012-crop corn, according to the National Grain Trade Center. But it was unable to sell the 12,433 MT of imported corn offered at the auction. Overall, the sales represented more than 80% of the roughly 2.5-MMT of corn offered, signaling stronger demand than the market anticipated. Sales took place at an average price of 1,425 yuan ($206.66) per MT, which also topped expectations. China plans to auction another 859,500 MT of 2014-crop corn on Tuesday.
Harvest picks up steam in Argentina... Soybean harvest picked up in Argentina over the past week thanks to a friendly weather regime, according to the Buenos Aires Grains Exchange. Fifty-five percent of the crop has now been harvested, an advance of 16.8 points from the week prior. The exchange maintained its 56.5 MMT soybean crop estimate. Corn harvest is now 29% complete, according to the Buenos Aires Grains Exchange. It still estimates the Argentine corn crop at 37 MMT. Also of note, the exchange pointed to wet forecast for the months ahead, which it says signals a solid start to the 2017-18 growing season. Corn planting will likely get underway in September and soybean planting in October.
Farmers in Mato Grosso unlikely to boost bean acres in coming marketing year... Growers in Mato Grosso, Brazil's top soybean producing state, are unlikely to boost planted acreage in 2017-18 due to price uncertainty, say farmers interviewed by Reuters. Imea is in the midst of of surveying farmers about their planting intentions so more concrete numbers lie ahead.
Wheat condition ratings continue to erode in France... FranceAgriMer puts 74% of France's soft wheat crop in good to excellent condition as of May 1, which is a drop of 4 points from week-ago and the fourth consecutive week of decline. France did receive welcome rain this week, but more is needed after a dry winter.
Force Majeure in effect due to flooding along Illinois River... CME Group has declared a force majeure because flooding has made loading impossible at most corn and soybean shipping stations along the Illinois River. The order took effect yesterday and will remain in place until further notice. While the force majeure is in effect, delivery contracts do not have to be filled in their agreed timeframe.
CME raises maintenance margins for wheat... CME Group raised maintenance margins for speculators from $1,000 per contract to $1,200 per contract for May 2017, a gain of 20%. This change will take effect after the close of business today.
Some nations still avoiding Brazilian meat... Brazil's ag minister, Blairo Maggi, yesterday said that 10 countries have yet to decide whether to reopen their markets to Brazilian meat in the wake of a meat inspector scandal. But Maggi also pointed out that these countries represent a "very small volume" of Brazil's meat export market.
Big price swings for cattle... Cattle futures posted wild price gyrations yesterday as traders switched between efforts to narrow the discount nearby contracts hold to the cash market and to correct the overbought condition of the market. Choice boxed beef values surged another $2.99 and Select cuts gained $1.95 on Thursday, plus movement was solid considering price strength at 121 loads. This paired with the fact futures are still well below the cash market could help keep traders on the buy side heading into the weekend.
Beef price rise spurs hopes for better pork demand... The recent surge in beef prices means retailers and consumers will likely be on the lookout for substitutes. And after the recent price drop in pork, such products are quite attractive. Therefore, we expect a significant demand surge -- the question is when. Yesterday the pork cutout value did rise $1.17, but movement was light at 265.42 loads.
Overnight demand news... Egypt bought 30,000 MT of soyoil.