Weekly Market Recap


Grains

The NAFTA agreement appears to be on shaky ground.  Canada’s foreign minister said that the US is ready to walk away from the deal.  This statement caused the peso and the Canadian dollar to become volatile. It has also worried US producers and corporations as Mexico and Canada are critical partners for US ag and livestock products.

Wheat

Egypt issued a wheat tender this week and they received zero offers initially.  Suppliers are worried about what contamination level will be deemed acceptable at unloading.  Uncertainty has been expensive for some suppliers.  After receiving governmental assurances, Russia sold Egypt a couple cargoes. US wheat export sales were just terrible at only 71,000 tons which is the lowest sales total of the year.  The WASDE report was just slightly bearish for wheat with ending stocks a touch above expectations.  The acreage report was main bearish driver with more wheat acreage than anticipated.  The trade was looking for 31.3 million acres but the actual was 32.6.  Hard red wheat was the biggest portion of the increase with an additional 800,000 acres above the estimates. 

Corn

Weekly ethanol production dropped off sharply again this week. This is a record large 2 week decline. Seasonally, refiners blend the smallest amounts of the year in January.  US corn export sales were very weak with the 3rd lowest total of the year this week.  The WASDE report had a big surprise with the corn yield increasing to 176.6 bpa making it the highest yield ever.  The USDA did take down acres slightly so the carryout only grew by 40 million bushels. 

Soybeans

New estimates from Brazilian agronomy firms continue to show their soybean crop is increasing in size.  The weather remains very good and production is approaching last year’s record size. The USDA increased Brazilian production from 108 to 110 million tons.  Last year’s record was at 114.1 million tons. Rains in Argentina continue to be spotty so the outlook for their soybean crop is steady at best for now.  US soybean export sales continue to be very poor.  This week they posted the 2nd lowest sales of the year.  The WASDE report had a bigger cut to bean yield than expected going from 49.5 to 49.1 bpa.  The USDA offset the lower production with a large cut to bean exports of 65 million bushels.  Overall the carryout increase from 445 to 470 million bushels. 

Livestock

Cash cattle trade was lower by $2 this week at $120/head.  The futures market still holds a small premium to the cash market. Packer margins have improved slightly from last week’s $42/head to $50/head to close out this week.