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Traders Look to Export Sales

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Good Morning! From Allendale, Inc. with the early morning commentary for April 12, 2018.

Grain markets look to this morning's export sales report for a possible next direction. Wheat traders have a close eye on US weather forecasts as major wheat areas need rain.

Export sales will be released this morning at 7:30 AM CDT. Traders are estimating corn sales of 900,000 to 1,7000,000 tonnes (new and old crops combined), soybeans 900,000 to 2,000,000, and wheat sales of 150,000 to 650,000.

Weekly ethanol production was reported at 1.034 million barrels per day in yesterday's EIA release. That was 4.9% over last year. The year to date production pace remains 2.2% over last year. USDAs goal is 2.6% over last year.

The Trump administration is reviewing a plan that would allow the sale of higher ethanol fuel blends in the summer months. The plan comes after meeting with the EPA, USDA, and industry groups from ag and big oil. Trump hopes to lower the cost of the RFS on oil companies while keeping ethanol demand the same.

USDA's ag attache in Brazil has pegged 2017/18 corn production at 89 million tonnes, a decrease from the previous estimate. Lower acreage, and more normal yields were cited for the decrease. 2018/19 production is estimated at 90 MT.

University of Illinois discussed acreage ahead of the year's plantings and noted, "Price changes have increased corn profitability relative to soybean profitability, but have not suggested shifts in acres. Overall, price changes suggest a slightly more profitability 2018 than earlier in the winter. Still, there are concerns about overall price levels and much can change between now and harvest."

House Agriculture Committee Chairman Mike Conaway could release his long-awaited farm bill Thursday or Friday, if the buzz around Washington is any indication. The committee is keeping a tight lid on its timeline for rollout and there are two competing camps of rumors (It's definitely happening Thursday! vs. No, it's actually going to be released Friday). There's also a third camp that believes the whole rollout will be scuttled by broader political forces. Whatever the timing, big questions remain about how the House will proceed. (Politico)

Managed money funds were sellers across the board yesterday. Traders estimate they sold 7,500 corn, 6,000 soybeans, 6,000 wheat, 5,000 soymeal, and 6,500 soyoil.

Jobless claims lead this morning's economic data with Initial Claims and Continuing Claims out this morning at 7:30 AM CDT. Export and Import Prices are also out at that same time.

Four lots of cash cattle sold during yesterday's Fed Cattle Exchange. 509 head of the 3,931 head that were offered ended with sales at $117 and $118. There were some 17 - 30 day delivery animals that saw $114.

June hogs continue to have two gaps on the chart, both at higher prices. The first is at 79.75 and the second at 81.80. Most traders are expecting those gaps to be filled.

Dressed beef values were lower with choice down .44 and select down .72. The CME Feeder Index is 134.85. Pork cutout value is down .71.

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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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