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Historic Summit Has Hold On Trade

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

Grain markets are preparing for a busy week with government reports and historic talks between US and North Korea. Trade negotiations with our allies will prompt some headline trader activity. Weather conditions and technical pictures could also be applying pressure to a grain market that has had significant seller pressure last week.

USDA will release their June Supply and Demand estimates tomorrow morning at 11:00 AM CDT. CONAB will be updating their estimates for the Brazilian corn and soybean production early Tuesday morning.

Crop conditions report this afternoon should show corn crop at 78 to 79% good/excellent compared to 78% last week. Soybeans should be holding their record good/excellent conditions again this week. Late week rains should have helped improve conditions in many areas of the Midwest. Spring wheat ratings could improve from the 70% level last week.

CFTC Commitments of Traders report showed managed money funds as net sellers of 88,828 contracts of corn and 34,799 contracts of soybeans last week. They were net buyers of 986 wheat contracts.

Funds on Friday were estimated to have been net buyers of 8,500 corn contracts and net sellers of 5,000 soybeans, 5,500 wheat, 500 soymeal and 2,500 soyoil contracts.

Cash cattle traded higher late on Friday as feedlots won the standoff and packer margins remain well in the positive territory. Trade is still looking for this wall of market ready cattle which should be rolling in by mid-June. It has not arrived yet. History suggests product will come under pressure post July 4th.

June live cattle has had no deliveries to date. The August futures contract tested the late April highs on Friday. Initial resistance is 107.40 and support at 103.70.

Managed money funds remained basically flat last week on the CFTC report as they were net buyers of less than 100 contracts in live cattle and lean hogs.

Last weeks hog production was 2.271 million head, under the trade estimate of 2.286 million head. This is the smallest non-holiday production week of the year thus far. Market ready supplies are expected to decline through the last week of this month.

April pork exports were 547.931 million pounds, which is 18% over last year. Imports of pork, 96.071 million pounds during April, were 3% over last year.

July lean hog futures gapped higher on Friday and closed above previous resistance levels. Traders will be looking for further strength to confirm a change in trend. Today we find resistance and 82.40 and support at 79.00.

Dressed beef values were lower with choice down .20 and select down .23. The CME Feeder Index is 139.65. Pork cutout value is up .44.

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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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