Headlines:

  • Cargill Inc. will be exiting the US cattle feeding market in order to free up working capital and put it towards higher-margin businesses
  • FIRST NOTICE for May grain futures is Friday
  • World grain stocks to fall less steeply than thought in 2017-18 – IGC
    World grain stocks will fall by less than had been thought next season, the International Grains Council said, nudging higher its harvest forecast, while trimming wheat demand expectation too.  The council, in its second estimate for the world grains balance sheet in 2017-18, raised its estimate for inventories at the close of the season by 7m tonnes to 491m tonnes. The upgrade, which reduced to 25m tonnes the estimate for the drop in global stocks expected over the season, reflected in part a higher expectation for inventories carried into the period. However, the IGC flagged that “upward revisions for wheat and corn [output] boost the 2017-18 production projection by 4m tonnes”, although adding that “at 2.054bn tonnes, output is still seen falling by 3%”year on year.

Summary:

The White House had been considering issuing an executive order to withdraw the US from its trade pact with Canada and Mexico. That disclosure prompted both Mexico and Canada to call President Donald Trump who later tweeted that he “received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed.”. He also went on to tweet, “subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good – deal very possible!”.

The news appeared to bring a lift into the grain and oilseed markets but the intraday strength fizzled out over the last 45 to 60 minutes of trading. The USDA Weekly Export Sales reports showed that Corn sales landed at the high end of expectations and the Soybeans demolished expectations. Wheat came in at the low end of expectations.

Investors are still uncertain as to whether or not to focus on weakness in the USD or on the accelerated planting in the Midwest. Earlier this week, the US Dollar fell to its lowest level in about 5 months which should typically be bullish for AGs that are traded in USD. At the same time, some investors are betting on prices falling as planting speeds up in the US. If the bulls are right, when an advance starts that move is poised to happen very fast.