Weekly Market Recap


Trade deals abound with the US in negotiations with several countries. No confirmation of a resolution to the US/China trade war, as the Administration continues to say that progress is being made. It seems that an enforcement mechanism remains to be a key sticking point. The US and Japan are talking about a trade agreement between the two countries that would improve upon the US absent TPP deal.  The US and the EU have also begun trade talks.  Ag will be a key component of that deal that is very much in its infancy.  NAFTA 2.0 is stuck in Congress and could be a long process.  The latest WASDE report made adjustments to the demand side of the balance sheets.  The May report will give us our first look at the 19/20 marketing year and the focus will be on what the acreage numbers for corn and soybeans will be.


Conab has updated their Brazilian corn production estimate to 94 mmt.  The USDA is at 96 mmt. The weather in South America has been very good for corn production.  This week’s storm system that brought snow and rain across the upper Midwest offers support to the corn market. Some forecasts call for another system next week to travel across the upper Midwest bringing rain to the same general area that just got hit. The WASDE report was a negative for the corn market.  The demand side of the ledger was slashed with reductions to feed, ethanol, and exports.  The cuts totaled 200 million bushels which then bumped up the carryout to over 2 billion bushels.  


France’s AgriMer raised its 2018/19 soft wheat export projection by 200,000 tons which brings the total shipped expected to top last year by 19.5%. UkrAgroConsult forecast Russian 19/20 exports at 37million tons, up from 35 million tons last year. This week’s winter storm across parts of South Dakota, North Dakota and Minnesota is likely to reduce spring wheat acres in South Dakota as early seeding provides the optimal timeframe for production. Later seeded spring wheat brings with it a greater possibility of production shortfalls. There were only small adjustments to wheat usage.  Small cuts to seed, feed, and exports bumped up the carryout by 32 million bushels to 1.087 billion.  The USDA has US carryout projected over 1 billion bushels for the third consecutive year and the past 4 years have been the largest free carryout supplies since the late 1980’s.


USDA raised last year’s Brazil production to a record 122 million tons and pegged this year’s production at 117mmt with Argentina’s production at 55mmt, which is over 17mmt larger than last year’s 37.8mmt.  China imported 4.92 million tons of soybeans in March.  This was slightly larger than last month but the lowest total for March in 4 years. The WASDE report was a non-event for soybeans. A 3 million ton reduction to exports and a 2 million ton increase in seed use led to a small 5 million bushel reduction to the carryout which now sits at 895 million.


The hog market has been extremely volatile with big price swings.  Hopes of Chinese buying rallied the market.  Thursday’s export sales saw huge activity to China.  The total was the 2nd biggest tally in pork ever, but the market actually sold off on the confirmation of the sales.  June hog futures were $75 just over a month ago and close at $98.50 today.   Cash cattle were trading lightly at steady money with last week around $124 in the south. 


WTI last traded up $0.90 to $64.48, up $1.40 on the week and on pace for a sixth consecutive weekly gain.  A Bloomberg survey of traders reveals the following WTI sentiment: 74% bullish, 15% bearish and 11% neutral.  AAA reports a national average price for a gallon of gasoline of $2.784, up from $2.715 last week and compared to $2.674 at this time last year.