The Allendale Wake-Up Call

Fed Meeting Likely to Yield Higher Rates

Good Morning! From Allendale, Inc. with the early morning commentary for March 21, 2018.  

Grain market traders are doing a bit of short covering as talk of China importing as much as 100 mmt of soybeans in 2018/19 and rains in Argentina believed to be too late to revive their crops. Change in interest rates could support the US Dollar creating further headwinds for US grain exports. Trade will begin to position themselves for the USDA Plantings and Quarterly Stocks report due for release one week from tomorrow.

World Weather Inc. says, “The bottom line for the official weather outlook in most production regions is unchanged.”  The GFS model run remained mostly consistent for a meaningful rain event in Argentina Friday into Saturday. The rain will be most significant in central and northern production areas of the country and will provide more improvement of soil moisture. Favorable conditions for crop development will continue across much of Brazil through next Tuesday.

Funds were estimated to have been net sellers of 8,500 contracts in corn on Tuesday. They were net buyers of 7,000 soybeans and 2,500 wheat contracts.

U.S. Agriculture Secretary Sonny Perdue signaled on Tuesday that the Trump administration was backing off efforts to make major changes to the nation's biofuels program and may leave it to lawmakers to settle the divisive issue instead.

U.S. lawmakers neared agreement on Tuesday on a massive government spending bill that Congress hopes to pass by Friday, as congressional leaders worked to narrow their differences on thorny issues such as President Donald Trump's border wall. (Reuters)

CME raises margin requirements in soybean futures from $1,400.00 to $1,550.00 per contract. Wheat margins are going up by $100.00 per contract to $1,250.00.

Winter wheat crop conditions declined in Kansas and Oklahoma last week. Trade is expecting the winter storm that dropped snow and rain on Kansas and parts of Oklahoma this past week will show an improvement on next week’s report.

Chinese premier said Tuesday that China plans to reduce tariffs on the import of consumer goods and services to open up the economy further to international free trade.

Fed is expected to raise its key rate by a quarter percentage point, at todays FOMC meeting. However, the trade is held in suspense on whether the policy makers will raise rates 3 or 4 times this year. Home sales and business investment reports will be out later this morning.

Cattle-on-Feed report will be released Friday at 2:00 pm CST. Trade estimates from Bloomberg News are: On Feed 108.2%, Placed 104.1% and Marketed 101.2% of a year ago.

Cash cattle trade picked up in the Southern Plains at 126 yesterday afternoon. There also was reports of feedlots passing on a 127 offer. Cattle feeders with hedges are likely moving cattle with a 5.00 plus basis. Product values have softened as most retailers are through buying for the post-Easter/first of month features.

Futures markets are dominated by spreaders buying the April selling the deferred due to the discount of futures to cash.

June live cattle futures fell to levels not seen since September 7, 2017. Support crosses at 106.50 with resistance at 112.00.

Cash hog markets remain weak as market ready supplies are burdensome. Fill-in buying for the holiday at the retail level could provide some support late this week.

June lean hog contract traded to lowest price since early September 2017 on Tuesday. Technical support now comes in at 75.00 with resistance near 79.00.

Dressed beef values were lower with choice down 1.52 and select down .55. The CME Feeder Index is 141.25. Pork cutout value is up .09.

If you have any questions on any of our content, give us a call at 800-262-7538 or service@allendale-inc.com