Weekly Market Recap


The latest WASDE report saw adjustments to exports across the board.  The surprise was the magnitude of the changes.  The tariffs on steel and aluminum proposed by President Trump will have consequences, as our trading partners are sure to retaliate.  We just don’t know at this time if our trading partners will target any agricultural products, but the trade is extremely worried about it.      


Increasing industrial demand for corn in China has their ag minister seeing a growing deficit between production and use this year.  China has seen less acreage devoted to corn this year. China will begin to auction off some of their corn reserves as early as the end of this month.  Last year the auctions began in May.  One of the biggest WASDE changes was the sharp increase in corn exports. A big jump of 175 million bushels to exports was much higher than expected. In addition, a small increase to ethanol production helped cut into the big carryout and the futures market staged a nice rally.


UkrAgroConsult raised its wheat estimate by nearly 5% citing great growing conditions. The only adjustment to the US wheat balance sheet on the WASDE report was a reduction to exports of 25 million bushels.  World wheat stocks were bearish coming in over 3 million tons above expectations at 268.9 million tons


Chinese soybean imports for February were a very low levels not seen since October of 2016.  This is concerning as now is the time when the US is the main supplier of soybeans just ahead of the South American harvest. South American soybean production is really a tale of two cities.  Brazil has been getting very good weather and estimates continue to rise with most now above last year record production of 114.1 million tons.  Argentina has been very hot and bone dry with dramatic production cuts seen. The USDA sees the Argy crop at 47 million tons with many analysts 3 to 5 million tons lower than that. In Thursday’s WASDE report, the changes to the soybean balance sheet were pretty much as expected.  A 35 million bushel cut to exports and a 10 million bushel increase to crush was a net increase to ending stocks at a comfortable 555 million bushels.


The cattle market bounced back with a rally on Friday. The market saw some cash trade at $127 which was $1 higher than last week.  Boxed beef values have picked up nicely this week, and packer margins have gone up with them.  Packers are now making roughly $57/head which is up from $34/head last week.


WTI futures are higher on encouraging employment news in the U.S. and easing geopolitical issues with North Korea. A Bloomberg survey of analysts shows the following WTI market sentiment: 57% bearish, 20% bullish, 23% neutral. AAA’s daily fuel gauge report showed the average price of gasoline at $2.532, down from $2.540 last week and compared to $2.304 last year.


The Dow is creeping back slowly.  For the first time in March, the Dow closed above 25,000.  The high point before the correction was January 29th at 26,616. The economy added 313,000 jobs in February. Estimated were calling for 205,000 jobs.