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Traders Wait for New Supply and Demand Numbers

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Good Morning! From Allendale, Inc. with the early morning commentary for April 10, 2018.

Grain market traders are making their final adjustments ahead of this mornings USDA Supply and Demand report. As always in recent months, traders have one eye on headlines out of Washington as sentiment can shift quickly based on new news.

Winter wheat ratings fell again yesterday, this time down 2% to now 30% good to excellent. That was under the 32% average guess, and is the lowest rating for this week since 1996. The first corn planting number of the year had corn at 2% planted, inline with analyst estimates.

USDA will be out with their latest Supply and Demand estimates this morning at 11:00 AM CDT. Average estimates have old crop corn ending stocks higher at 2.189 billion bushels. Old crop soybean stocks are estimated at 574 bb, and wheat stocks are seen in creasing to 1.036 bb on lower exports.

Brazil's corn production is estimated to fall from 94.5 to 92.7 and Argentina down from 36.0 to 33.7. For soybeans Brazil is seen increasing from 113.0 to 115.3 and Argentina down from 47.0 to 42.7.

Export inspections reported corn exports of 1,937,040 tonnes, soybeans 373,940, and wheat 430,080.

Managed money funds were estimated buyers of 10,000 corn contracts, 10,000 soybeans, 11,500 wheat, and 5,000 soymeal in yesterday's trade. They were sellers of 2,000 soyoil.

U.S. farmers will be protected by the Trump administration during rising trade tensions between the United States and China, Agriculture Secretary Sonny Perdue said on Monday. "We're not going to allow agricultural producers to bear the brunt of Chinese retaliation as we defend our own interests," Perdue said during a speech to the National Rural Electric Cooperative Association in Washington. (Reuters)

Bayer has won approval from the US Justice Department to purchases Monsanto for 62.5 billion dollars. They will be required to sell some assets as part of the approval, but will create a company with more than 25% of the world's seed and pesticides market.

Mexico's economy minister said he does not believe a NAFTA deal will be announced this week at the Summit of the Americas on the 13th and 14th. He was optimistic, however, as progress is being made. He suggests there is a 80% chance of a deal by early May.

Economic reports out today include PPI and Core PPI at 7:30 AM CDT, and Wholesale Inventories at 9:00.

Cattle showlist numbers were 20,500 head higher for the week as reported yesterday afternoon.

USDA is calling for a 12.8% year over year increase in beef production for the April - June quarter we are now in. This comes on top of the seasonal increase which also happens. The big supply is now hitting the market.

June hogs filled the gap from 75.35 - 75.47. The market closed above its downtrend resistance, filled a gap that was open on the upside, and closed over the gap after it was filled. These are positive signs. The next gap on the June is at 79.75. There is also a third waiting up at 81.80.

Dressed beef values were mixed with choice up .73 and select down 2.46. The CME Feeder Index is 134.49. Pork cutout value is down .07.

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About the author

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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