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Weather, Trade and Technicals

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Good Morning! From Allendale, Inc. with the early morning commentary for June 8, 2018.

Grain markets remain cautious ahead of the weekend as a USDA Supply and Demand report and the US/North Korean summit await us next week. Any headlines on US trade relations, weather and technicals are important to watch throughout the session today as well.

Average trade estimates for next week's USDA Supply and Demand report have been released by Reuters. 2017/18 corn ending stocks are estimated at 2.166 billion bushels, soybeans .522, and wheat 1.079. 2018/19 corn ending stocks are estimated at 1.663 billion bushels, soybeans .417, and wheat .958. The report is due next Tuesday at 11:00 AM.

Weekly export sales for the week ending May 31st had corn sales of 1,256,894 metric tonnes (838,626 for 2017/18). That was within the 800,000 1,300,000 trade expectation. Sales now total 98% of USDAs whole-year goal a bit ahead of the 96% five year average.

Soybean sales missed expectations at just 199,546 metric tonnes (164,830 for 2017/18 and 34,716 for 2018/19). This was under the 400,000 1,000,000 trade estimate. Normally by this time, sales total 100% of USDA's WASDE number. This year sales are behind at 99%.

Wheat sales in yesterday's report also represented the end of the wheat marketing year (May 31st). Allendale's Rich Nelson noted, "Total shipments came to 824 million bushels. These weekly numbers are just for sales made to paying customers. Separately, we also ship out from 33 81 million each year from donations. Even with an assumption of a stout 75 million we only come to 899 million bushels for total 2017/18 export shipments. USDAs goal is 910."

Agroconsult estimates that Brazil's soybean acreage will grow by almost 2.5 million next growing season as farmers take from cattle ranching ground in the region. The first corn crop area is expected to decrease, while the second corn crop could decline due to early frosts.

The Rosario Grains Exchange estimates that Argentine farmers will harvest 35 million tonnes of soybeans in the 2017/18 season, a drop from its previous estimate 37 million.

Technical traders have their eye on the 9.65 1/4 level (the January low) on the soybean chart.

CME Group announced that corn futures reached a new open interest record of more that two million contracts. This beats the previous record set in 2011.

Managed money funds were estimated sellers of 19,000 corn contracts, 18,000 soybeans, 7,000 soymeal, and 3,000 soyoil in yesterday's trade. They were estimated buyers of 5,500 wheat contracts.

US Secretary of State Mike Pompeo announced that North Korea's Kim Jong Un has, "indicated to me personally that he is prepared to denuclearize." This comes as the US prepares for a summit with the North Koreans scheduled for Tuesday.

U.S. Commerce Secretary Wilbur Ross said on Thursday Washington had reached a deal with ZTE Corp that would lift a ban on buying from U.S. suppliers, allowing China's No. 2 telecommunications equipment maker to get back into business. (Reuters) Some believe this is the first step in a trade resolution between the US and China. A group of US lawmakers, however, have vowed to block the deal.

Monthly trade data for April was positive for beef at 253.571 million pounds exported, or 16% over last year. That is better than the previous three months that ran 10% to 15% over last year. April imports came to 235.883 million. This was considered slightly positive at 6% under last year.

Monthly pork exports in April totaled 547.931 million pounds, 18% over last year. This is considered a surprise as Jan - Mar ran +6%, +9%, and +3% vs. 2017 respectively. Imports were 96.071 million pounds or 3% over last year.

Weekly beef export sales from May 25th to the 31st totaled 15,578 metric tonnes. That was 13% over last year in the same week. Sales have been over last year for five weeks in a row now. Year to date sales are 19% over last year.

Pork export sales were a disappointing 8,640 metric tonnes. This was the lowest of the marketing year. It was also 62% under last year.

Dressed beef values were lower with choice down .56 and select down .24. The CME Feeder Index is 139.65. Pork cutout value is up .79.

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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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