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New Data Gives Traders Something to Talk About

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Good Morning! From Allendale, Inc. with the early morning commentary for May 11, 2018.

Grain market overnight traders adjust their positions after yesterday's USDA data. New estimates out of China and South America are impacting markets as well, while the ongoing US negotiations around the world continue to grab headlines.

USDA's Supply and Demand report had US old crop corn ending stocks left unchanged at 2.182 billion bushels, just above the trade expectation of 2.178 billion. New crop stocks were 1.682 BB, also above the estimate of 1.628 billion. Old crop soybean stocks were lowered from .550 to .530 billion bushels, a little more bullish than the .541 guess. The real surprise was in the new crop stocks of .415 billion bushels. Traders were expecting .535. The new crop number left traders scratching their heads though as the lower carryout number was a result of a higher export sales estimate. Time will tell.

Wheat old crop stocks were raised from 1.064 billion to 1.070. New crop stocks were reported at 955 million bushels. The trade guess was 930. For more on yesterday's report, take a look atRich Nelson's WASDE video .

China will cut its soybean imports for the first time in 15 years in 2018/19, the agriculture ministry forecast on Thursday, as a trade spat with the United States pushes pig farmers in the world's top buyer to seek cheaper proteins. In its first predictions for the upcoming crop year which starts in October, the Ministry of Agriculture and Rural Affairs said soybean imports were expected to dip 0.3 percent to 95.65 million tonnes. That would be the first decline since 2003/04, according to data from the United States agriculture department. (Reuters)

Exports sales for the week of the 27th through the 3rd were out yesterday as well. Combined corn sales of 785,568 tonnes were reported (695,568 for 2017/18), within the 750,000 1,300,000 trade expectation. Soybean sales were reported at 632,577 tonnes (354,257 for 2017/18). also within expectations of 400,000 900,000 tonnes. Notably, there were no cancellations from China. Wheat export sales totaled 83,398 metric tonnes, under the 200,000 700,000 expectation.

China's Ministry of Agriculture estimates that the country will produce 210 million tonnes of corn in the 2018/19 crop year. This would represent a 2.9% drop from the 2017/18 year. Soybean production is expected to rise 4.9% to 15.27 MT.

Conab estimates Brazil's 2017/18 soybean crop is larger than first thought at 116.99 tonnes. This is up from their April estimate of 114.96, and last years 114.08. Their corn crop was also revised higher at 89.20 tonnes. Last month they estimated the crop at 88.61. Still, the larger number would fall below last year's 97.84.

Managed money funds were estimated sellers of 11,000 corn contracts, 4,500 wheat, and 2,500 soymeal. They were buyers of 6,000 soybeans, and 2,000 soyoil.

Import/Export Prices lead this morning's economic data at 7:30 AM CDT. Michigan Sentiment will follow later today at 9:00. Economic traders will be more focused on headlines out of the many Trump Administration "renegotiations".

Weekly Actual Slaughter showed the average hog carcass fell 1 lb. in the latest week to 212. They went from 0.9% over last year to 1.0% over last year. The next two weeks is the start for the major drop in weights. This is a contributor to the years lowest supplies in the summer.

USDA revised their beef production estimate in yesterday's Supply and Demand. Last month's estimate was 7.055 billion lbs. which would be 10.1% over last year. That was sharply cut to 6.750 billion or 5.4% over last year. They also lowered the Q3 down from 7.020 billion (+4.2%) to 6.930 billion (+2.9% yr/yr).

Dressed beef values were higher with choice up .11 and select up .19. The CME Feeder Index is 137.93. Pork cutout value is up .54.

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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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