Headlines:
- First Notice Day for May grain futures is April 30th.
- Egyptian soybean imports to soar, as processors pick up pace
- US officials warn on beef prices – on eve of key demand period
US officials cautioned over beef prices, even as the industry gears up for the barbecue season, saying that exports rather than domestic demand offer brightest prospects. The US Department of Agriculture acknowledged the prop that longer days and warmer temperatures will give to values, saying that “there is a seasonal tendency for beef prices to strengthen during the spring quarter as warmer weather supports grilling activities. This rise, ahead of a barbecue season seen as starting on the Memorial Day holiday weekend in late May “should support values… in the weeks ahead” of the beef cutout – the wholesale value, which indeed rose $10.33 per hundredweight last week to $225.13 per hundredweight for better quality “choice” beef.
Summary:
The Kuwaiti Oil worker strike ended but that had little effect on the ending price of Crude Oil futures. Supply continues to exceed demand but there was no fighting the tape. For several weeks now we have been calling for a minimum price objective in the range of 43-44. On April 13th we came with 58 cents of reaching it followed by three day pullback. In spite of the failed production freeze agreement and the Kuwaiti strike ending price have been recovering over the past three days. May Crude made a high of 42.91 and was trading near the highs late in the trading session. US equity markets have officially recouped the losses posted in during the first two months of the year. The existing home sales report was stronger than expected helping to buoy prices on the day.
The rain that has been hammering the Argentine crop are finally looking to subside according to the 7-10 weather forecasts. Weather risk is always a factor this time of the year. The upcoming projected weather will allow us insight into how much damage has been done to the Argentine crop. Brazil has announced that it will allow up to 1 MMT of tariff-free Corn imports to offset tightening supply. Drought has been reducing Safrinha Corn yield estimates and the drought is projected to expand impact almost 66% of Brazil’s Safrinha Corn crop.
Soybean Futures started the day very slowly but after 45 minutes it returned to for. The November contract made a high at 1000 as there was undoubtedly large cash orders waiting in the wings near that level. Near term we believe that Beans can reach 1020-1025. Wheat futures moved up big today largely on continued short covering pressure. It also benefited from fund buying as the other two grain markets.
The weather problems in South America are currently the drivers of the market action right now. Once the weather issues subside we expect a volatile reversal depending on how the inventory has been impacted.
Corn – May Corn futures moved up another 10.75 and December Corn rose 7.50 finishing at the high of the day. It is only 6 cents away from our price objective.
Soybeans – May and November Beans continue to move at torrid pace. Adding 23.25 and 23 cents respectively. The May contract made a high of 1012.25 and the November contract touched 1000. The price objective of 1020 for both contracts is looking more probable.
Wheat – July Wheat blasted through our minimum price objective of 505 closing at the day’s high of 512. It rose 17.75 and has its next levels of resistance at 530 and 545.
