Good morning!
Quiet overnight session... Corn futures are fractionally to a penny higher after trading in a narrow, two-sided trading range overnight. Soybean futures are mostly down 2 cents, which is off session lows. Winter wheat futures are mixed, while spring wheat is up a penny. The U.S. dollar index is slightly lower, as are crude oil futures.
Meteorologists call for active hurricane season... There is a 70% chance of seeing between 11 and 17 named tropical storms for this year’s Atlantic hurricane season, the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center said yesterday. This would be more such storms than normal for the six-month period that begins June 1. Ben Friedman, acting NOAA administrator, details that five to nine of the storms could become hurricanes, including two to four major ones with winds of at least 111 miles per hour. In a normal season, there is typically an average of 12 tropical storms and six hurricanes, including three major ones.
Australia shipping grain at a record clip... Australia has been shipping a record volume of grain this year, thanks to record- to near-record crops that have pushed down prices. For the first five months of the year, wheat, canola and barley exports of 17.2 MMT are up 60% from normal, according to Thomson Reuters Eikon data. Thanks to aggressive exports, industry sources believe the country will still be left with just 5 MMT to 6 MMT of wheat at the end of the marketing year, which would be similar to last year’s stocks. But looking ahead to the second half of 2017, competition from the Black Sea region is expected to heighten as big crops from Russia and Ukraine move into position.
Report notes major growth potential for U.S. exports to China... China would like to increase imports of ag products like soybeans and cotton from the U.S. and speed up talks on traceability, inspection and quarantine for U.S. beef to enter China, according to a report on China-U.S. Economic and Trade relations issued by its ministry of commerce. It called for China’s total imports from the U.S. to reach $8 trillion in the next five years.
Chinese users continue to aggressively scoop up corn at auctions... China sold 233,660 MT of the 2011 and 2012 crop corn it put up for auction from its state reserves at an average price of 1,155 yuan ($168.34) per metric ton. This represents 94.75% of the grain available for those years at the auction. China also sold more than 2.103 MMT of 2013 crop corn at the auction, which was 91.47% of what was available for that year. That grain sold at an average price of 1,383 yuan ($201.57) per metric ton.
China may change how it calculates the daily reference rate for the yuan... China is considering changes to the way it calculates the yuan’s daily reference rate, adding a “counter cyclical factor” to the fixing, in a move that would be designed to reduce exchange-rate volatility. The measures seem to suggest that policy makers are going cold on the idea of an eventual float of the currency, with officials more interested in avoiding turmoil in domestic markets than embracing free-market principles.
Accident leads to temporary closure of ADM export terminal... Archer Daniels Midland Co.'s grain export terminal in Ama, Louisiana had to be closed Thursday after a barge-mounted crane hit a conveyer belt system, causing damage. ADM is working to shift export operations to its other three terminals along the Louisiana Gulf Coast while damage is assessed and repaired.
Cattle on Feed expected to show all major categories up from year-ago... In its Cattle on Feed Report, traders expect USDA to report the number of cattle on feed stood near 10.864 million head as of May 1, up 0.8% from year-ago. Placements are expected to come in around 106.8% of year-ago levels, with marketings at 101.8% of last year’s levels. Note that the report will be released early -- at 11:00 a.m. CT.
Cash cattle trade picks up... Cattle futures posted strong gains Thursday as traders noted the wide discount futures hold to some early, lower cash cattle trade. More active trade took place in Kansas around $132, in Nebraska at $133 and in Iowa at prices ranging from $130 to $134 yesterday, which is still well above where futures are trading.
Trend remains up in hog market... Cash hog bids strengthened yesterday, giving traders a reason to push futures higher. While the market is technically overbought, momentum clearly remains on the side of market bulls. And traders are optimistic cash market strength will continue after Memorial Day given seasonally tightening supplies, strong packer profit margins and ideas retailers will feature pork after the holiday.
Overnight demand news... A group of animal feed makers in the Philippines issued an international tender to buy up to 50,000 MT of soymeal from South America. South Korea bought around 65,000 MT of feed wheat from optional origins, which is expected to be sourced mainly from the Black Sea region. Japan purchased 79,930 MT of food-quality wheat from the U.S. as well as 37,870 MT from Australia.
Today’s reports:
- 11:00 a.m., Cattle on Feed -- NASS
