Ag Market Commentary

Corn futures are fractionally lower this morning heading into the USDA report. They closed the Wednesday session with most contracts within a penny of UNCH. World ending stocks are expected to be cut by 3.73 MMT to 199.36 MMT on lower world production and US ending stocks in today’s monthly USDA report. The main focus will be on the South American corn production estimates, with both Argentina and Brazil expected to be reduced. CONAB this morning put Brazil at 87.3 MMT. It would be a surprise if USDA drops that far. The weekly EIA report showed daily ethanol production rose to 1.057 barrels per day during the week of 3/2. All regions showed a buildup in ethanol stocks, with a weekly increase of 165,000 barrels to 23.144 million barrels. CIF corn basis rose to +61K yesterday on a combination of strong export interest and barge delays on the Mississippi River. The USDA is expected to show 1-1.5 MMT in old crop export sales for the week of March 1 this morning, with new crop at 0-100,000 MT.

Soybean futures are trading 4 to 8 cents lower this morning. They showed losses of 7 to 9 cents in the front months yesterday on profit taking ahead of today’s USDA supply/demand report. Nearby Soymeal futures were down $4.30/ton, with front month soy oil 37 points lower. Analysts are expecting that the USDA will raise Brazilian production 1.9 MMT to 113.9 MMT. That is estimated to be more than offset by a 5.5 MMT drop in Argentine production to 48.5 MMT. Some trade estimates are as high as 117 MMT for Brazil, however. World ending stocks for 17/18 are seen at 95.5 on that lower Argentine production, down 2.64 MMT from February. Weekly Export Sales are projected to range 900K to 1.4 MMT in the USDA report, with 100,000-300,000 MT for new crop. Sales of soy meal are seen at 100,000-350,000 MT, with soy oil at 10,000-40,000 MT.

Wheat futures are currently 1 to 2 cents lower after since showing 5 to 9 cent losses in most contracts on Wednesday. Minneapolis spring wheat is a little closer to UNCH than the others. Analysts are expecting world ending stocks at 265.63 MMT in Thursday’s March WASDE, down a slight 0.47 MMT. The USDA Export Sales report will also be released on Thursday at 7:30 AM CST, with trade estimates running 200,000-500,000 MT for old crop. Last week’s report showed sales of just 191,122 MT. New crop estimates are at 0-100,000 MT.

Live cattle futures ended the day with most contracts steady to 25 cents in the green. Feeder cattle futures were mixed with most nearby months lower. The CME feeder cattle index was down 29 cents on March 6 at $144.96. Wholesale boxed beef values were steady to higher on Wednesday afternoon. Choice boxes were up 22 cents at $223.57, with Select boxes UNCH at $215.20. Estimated FI cattle slaughter was 348,000 head through Wednesday, 2,000 head fewer than last week but 1,000 head larger than the same week in 2017. The FCE online auction showed sales on 387 of the 474 head offered, at $126. There were bids of $126 and $203-204 reported for Wednesday in the country, but not much for sales.

Lean hog futures finished the Wednesday session with losses of 40 cents to $1.65. The CME Lean Hog Index on March 3 was down 17 cents from the previous day to $67.52. The USDA pork carcass cutout value was a sharp $3.21 lower at $77.71 in the Wednesday afternoon report. The belly led the way down by $10.36, with the ham primal $4.67 lower. The national base hog weighted average price was 21 cents higher at $62.73. The USDA estimated week to date FI hog slaughter at 1,355,000 head through Wednesday. That is down 14,000 head from the previous week but 31,000 head more than the same time last year.

Cotton futures are trading 23 to 136 points higher this morning, with old crop futures surging in anticipation of tighter stocks numbers from USDA. They settled Wednesday with the front months 4 to 43 points higher. Trade guesses ahead of Thursday’s USDA report show 17/18 exports 400,000 bales above the February projection at 14.9 million bales. Expected increases in exports would help to trim ending stocks for the US 500,000 to 5.5 million bales according to a Reuters survey. The Cotlook A index jumped 315 points higher from the previous day on March 6 at 94.60 cents/lb. Cash sales on the Seam were reported at 7,220 bales, with prices averaging 72.49 cents/lb. The Adjusted World Price (AWP) will be updated later today.

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