Headlines:
Trade Woes Shrink U.S. Pork Packer Margins to Three-Year Low
Margins for some of the biggest U.S. pork processors have lately slipped to their lowest level in three years, dragged down by surging hog prices and mounting worries over trade with China and Mexico, analysts and economists said. They said packers, including Tyson Foods Inc and Smithfield Foods Inc, might stem declining margins by paying farmers less for hogs while raising wholesale pork prices. But another option – reducing input costs by trimming plant operations – is a tricky proposition amid seasonally tight hog numbers and four new plants competing for market share. Colorado-based analytics firm HedgersEdge.com calculated that U.S. pork packers for the week ending June 15 lost an estimated $5.41 for each hog processed. It was the widest loss since the average loss of $7.31 for the week ending May 11, 2015.
Ideal Growing Conditions to Persist Despite Areas of Excessive Rain
Ideal growing conditions in the Corn Belt are likely to continue for at least the next seven to 10 days, though excessive rainfall in parts of the Midwest could curb prospects in some areas, according to forecaster. Don Keeney, a senior agricultural meteorologist for MDA Weather Services, said some areas likely will receive too much rain in the next week to 10 days, but the precipitation will be a net benefit for the Corn Belt. “It’s getting a little too wet in far eastern Nebraska and that will be spreading into western Iowa in the next day or two,” he said. “If you look at the grand scheme of things, the rain will be a significant benefit, but there are some areas that will be too wet.” The USDA last week said that 78% of the corn crop and 73% of soybeans were in good or excellent condition. That’s up from 67% for both crops a year earlier, the USDA said in a report on Monday. Commodity Weather Group said in a report Wednesday morning that it expects heavy rains in the central and southern Midwest for at least the next 10 days. The greatest risk for flooding is in parts of Kansas, Iowa, northern Missouri, and western Illinois.
Summary:
Corn prices finished in positive territory today after recovering off of technical lows yesterday. Gains were tempered because of forecasts calling for beneficial weather conditions in the Midwest this week and the prospect of a big US crop come harvest time. Weekly export sales are estimated at 850k to 1.4 million metric tons. South Korea has been a strong buyer of US Corn in July totaling just over 1.5 million metric tons so far. Likewise, Soybean futures managed to finish the day in positive territory post a huge rebound from yesterday’s massive intraday collapse. Ongoing tariff concerns between the US and China remains a potential stumbling block to strong gains. The average trade estimate for weekly export sales ranges from 400k to 1.0 million metric tons. Brazil has nearly 6.8 million metric tons of soybeans and soymeal shipments that have been delayed from the recent trucker strike, with about 60 ships being impacted from the delay. Intermarket spread activity (selling KC/buying Chicago) played into our cycle projections for strength in Wheat on the day which led to double digit gains. Winter Wheat harvest delays are possible with forecasts calling for rain events across the Southern Plains this week and again over the weekend. Weekly export sales are expected to be between 250k and 500k metric tons.
