Barchart Commodity Futures Morning Update

Grains prices this morning are mixed with May corn -1.75 (-0.45%), May soybeans +1.00 (+0.09%) and May wheat -4.25 (-0.90%). Grain prices on Friday closed lower: May corn -2.50 (-0.64%), May soybeans -6.50 (-0.61%), May wheat -8.50 (-1.77%). Bearish factors included (1) reduced Chinese soybean demand after Chinese customs data showed China Mar soybean imports fell -11% y/y to 5.66 MMT, the lowest for the month in 3-years, (2) forecasts for rains in the Great Plains, which should improve the condition of the U.S. winter wheat crop, and (3) the action by Russia to extend its zero-wheat export tax for an additional 2-years, which should boost Russian wheat exports.

May soybeans on Friday had posted a 5-week high before retreating on bullish factors that included (1) reduced trade tensions between the U.S. and China after Chinese President Xi Jinping said he would open Chinese markets, and (2) positive carry-over from last Tuesday's WASDE report where the USDA unexpectedly cut its U.S. 2017/18 soybean ending stocks estimate to 550 mln bu, less than expectations of an increase to 574 mln bu, and also cut its global 2017/18 soybean ending stocks estimate to 90.8 MMT, less than expectations of 92.9 MMT.

Corn and beans also continue to see support from the Mar 29 USDA Prospective Plantings report, which showed substantially smaller-than-expected 2018 corn and soybean planting (i.e., corn planting at a 3-year low of 88.0 mln acres vs expectations of 89.5 mln acres; soybean planting at 89.0 mln acres vs expectations of 90.9 mln acres).

Monday's USDA Crop Progress report confirmed the poor condition of the U.S. winter wheat crop due to drought. U.S winter wheat in good/excellent condition was at only 30% as of Apr 8, down sharply from 53% last year. The winter wheat conditions represent the worst spring start since 2002. The NWS reported that the wheat-growing region from Texas to southwest Kansas had the driest Dec-Feb on record. On the negative side, the USDA in last Tuesday's WASDE report raised its U.S. 2017/18 wheat ending stocks estimate to 1.064 bln bu, higher than expectations of 1.039 bln bu, and unexpectedly raised its global 2017/18 wheat ending stocks estimate to a record 271.22 MMT, more than expectations of a cut to 268.4 MMT.



Livestock prices on Friday settle mixed: Jun cattle -0.050 (-0.05%), Jun hogs +0.400 (+0.52%). June cattle prices on Friday closed lower on signs of ample supplies. USDA slaughter data shows 8.975 mln head of cattle processed this year through Apr 14, up +2.2% y/y, and U.S. Feb beef production rose +2.6% y/y to 1.98 bln lbs. On the positive side, trade tensions eased between the U.S. and China after Chinese President Xi Jinping pledged to increase Chinese imports, and beef packer profit margins rose to a 4-1/2 month high Thursday, which may boost packer demand for cattle. Jun cattle posted a 1-week low Wednesday on domestic beef demand concerns after wholesale beef prices fell to a 2-month low. Cattle prices plunged to a 1-year low Apr 4 on news of China's implementation of a 25% tariff on U.S. pork exports to China and by Wednesday's news that beef is on the list of products subject to China's proposed 25% tariff on $50 billion of U.S. products. The USDA projects that U.S. 2018 beef production will climb +5.8% y/y to a record 27.752 bln lbs. Foreign demand for U.S. beef is robust with U.S. Jan-Feb beef exports up +12.6% y/y at 469.517 mln lbs and with the USDA projecting that U.S. 2018 beef exports will climb +5.7% y/y to a record 3.025 bln lbs.

The Mar 22 USDA Cold Storage report was supportive as it showed beef in cold storage in Feb fell -8.3% m/m and -8.4% y/y to 460.276 mln lbs. The Mar 23 USDA Cattle on Feed report was negative as it showed cattle on feed as of Mar 1 rose +8.8% y/y to 11.715 million head, above expectations of +8.2% y/y, and cattle placements in feedlots during Feb rose +7.3% y/y to 1.817 million head, higher than expectations of a +4.2% y/y. Also, cattle marketed for slaughter in Feb rose +1.6% y/y to 1.675 mln head, above expectations of +1.2% y/y.

June hog prices on Friday posted a 3-week high and closed higher on cash market strength and reduced trade concerns. The cash market has firmed over the past week as cash hog prices rose to a 2-week high Thursday and Chinese President Xi Jinping on Tuesday promised to open Chinese markets, which eased U.S. and China trade concerns. Demand concerns remain, however, after wholesale pork prices fell to a 3-year low Wednesday. Also, pork packer profit margins dropped to a 3-week low, which may curb packer demand for hogs. Jun hogs slumped to a contract low Apr 4 and nearest-futures (J18) fell to a 1-1/2 year low after China said that it may levy a 25% tariff on U.S. pork exports starting immediately, which is likely to nearly shut down U.S. pork exports to China and cause backed-up pork supplies in the U.S. Even aside from tariffs, U.S. pork production is bearish after rising by +3.6% y/y to 2.06 bln lbs in February. Slaughter rates are also on the rise as USDA slaughter data shows 35.61 mln hogs processed this year through Apr 14, up +2.7% y/y. The Mar 22 USDA Cold Storage report was negative as well as it showed overall pork supplies in Feb rose +5.9% m/m and rose +8.3% y/y to 614.918 mln lbs. Foreign demand for U.S. pork is firm with U.S. Jan-Feb pork exports up +7.6% y/y at 977.496 mln lbs and the USDA projects that U.S. 2018 pork exports will climb +5.2% y/y to a record 5.925 bln lbs. The USDA also projects that U.S. 2017/18 pork production will climb +5.2% y/y to a record 26.926 bln lbs.

The USDA Q1 Hogs & Pigs report (released March 29) was bearish as it showed that the U.S. pig herd as of Mar 1 rose +3.1% y/y to 72.908 mln, which was a record high for a March 1st (data from 1964). Also, sows retained for breeding as of Mar 1 rose +1.7% y/y to 6.2 mln, more than expectations of +1.4%, and hogs marketed for slaughter rose +3.3 y/y to 66.708 million, more than expectations of +2.2% y/y and a record high for a March 1st (data from 1964). In addition, piglets per litter in Q1 rose +1.4% y/y to 10.58, higher than expectations of +1.0% y/y and a record high for a March 1st (data from 1964).



Softs this morning are mixed with May sugar -0.06 (-0.50%), May coffee -0.30 (-0.26%), May cocoa +10 (+0.39%), and May cotton +0.45 (+0.54%). Softs on Friday settled mixed: May sugar +0.03 (+0.25%), May coffee -0.60 (-0.51%), May cocoa +22 (+0.87%), May cotton -0.28 (-0.33%). May sugar on Friday closed slightly higher as it consolidates recent losses. May sugar has trended lower over the past 5-weeks down to a 2-1/2 year nearest-futures low Wednesday as signs of abundant supplies fueled fund selling. Unica reported Brazil's Center-South 2017/18 sugar output in the crop year through Mar rose +1.21% y/y to 36.059 MMT with the percent of sugar used for ethanol down to 53.54% from 53.71% last year. Also, the Brazilian real plunged to a 16-month low against the dollar last Tuesday, which provides incentive for Brazil's sugar producers to boost more-profitable exports with the weak real. Other bearish supply factors included (1) the forecast by the Thailand Office of Cane and Sugar Board for Thailand 2017/18 sugar production to rise to a record 12 MMT, and (2) the forecast by India's SMA that India's 2017/18 sugar production will rise to a record 29.5 MMT and that India may boost its sugar exports to a 4-year high of 2 MMT because of the record output. India also recently scrapped its 20% duty on sugar exports, which should spur an increase in its sugar exports. ISO projects a global 2017/18 sugar surplus of +5.03 MMT following the global 2016/17 deficit of -6.465 MMT. The USDA's Foreign Agricultural Service (FAS) on Nov 17 forecasted (1) a record 2017/18 global sugar surplus of 10.73 MMT, and (2) record global 2017/18 sugar production of 184.95 MMT.

May coffee prices on Friday closed lower on the outlook for abundant coffee supplies. Safras on Thursday projected Brazil 2018/19 coffee production may jump +20% to a record 60.5 mln bags amid beneficial weather. Safras also hiked its Brazil 2017/18 coffee production estimate to 50.6 mln bags from a prior estimate of 50.45 mln bags. May coffee last Monday rose to a 2-week high after Cecafe reported Brazil Mar green coffee exports fell -12% y/y to 2.2 mln bags, the fewest exports for a Mar in 6-years. May coffee plunged to a contract and 9-1/4 month nearest-futures low Apr 4 on signs of ample supplies. ICE-monitored coffee inventories rose to a 2-1/2 month high Thursday of 1.957 mln bags and are just below Jan's 2-1/4 year high of 2.017 mln bags, while U.S. Feb green coffee inventories rose +1.2% y/y to 6.52 million bags. Meanwhile, Vietnam said it expects its 2018 coffee exports to rise +9% y/y to 1.55 MMT. ICO projects that global 2017/18 coffee production will climb +0.8% y/y to a record 158.93 mln bags. On the supportive side, the USDA projects that global 2017/18 coffee ending stocks will fall -8.6% to a 5-year low of 29.3 mln bags.

May cocoa prices on Friday climbed to a 1-1/2 week high and closed higher. Optimism in global cocoa demand is boosting prices as European Q1 cocoa processing is estimated to have risen +3.4% to a 6-year high of 351,292 MT and North American Q1 cocoa processing is expected to climb +1.5% y/y to 121,954 MT. Also, Barry Callebaut, the world's top cocoa processor, reported global chocolate sales rose +2.5% y/y from Aug-Jan. Current supplies have increased after ICE-monitored cocoa inventories rose to a 7-1/2 month high Thursday of 5.052 mln bags. May cocoa last Monday posted a 5-week low on forecasts for rain in West Africa, which should boost Ivory Coast and Ghana cocoa yields. Ivory Coast farmers delivered 1.475 MMT of cocoa beans to Ivory Coast ports during Oct 1-Apr 1, down -1.7% y/y. Cocoa prices have rallied sharply this year on dry weather in the Ivory Coast, which has received less than 75% of normal rainfall over the past month, according to Speedwell Weather. Cocoa purchases from the Cocoa Bard of Ghana, the world's second-biggest cocoa producer, have fallen -2.7% y/y to 642,451 MT from Oct 13-Mar 15. ICCO projects that 2017/18 global cocoa production will fall -2.3% y/y to 4.638 MMT and that the global cocoa surplus will fall to +105,000 MT from 2016/17's 6-year high surplus of 300,000 MT.

May cotton on Friday fell back from a 1-month high and closed lower on forecasts for rains in Texas, which should boost soil moisture levels. Cotton rallied to a 1-month high on bullish factors that included (1) projections from the China Cotton Association for 2018/19 cotton acreage in China, the world's biggest cotton grower, to fall -4% y/y to 2.8 mln hectares, (2) reduced trade tensions between the U.S. and China after Chinese President Xi Jinping promised to open Chinese markets, and (3) last Tuesday's WASDE report where the USDA raised its U.S. 2017/18 cotton export estimate to a 12-year high of 15 mln bales from 14.98 mln bales estimated in Mar. On the negative side, the USDA cut its U.S. 2017/18 cotton ending stocks estimate to 5.3 mln bales, more than expectations of 5.1 mln bales, and raised its global 2017/18 cotton production estimate to a 5-year high of 122.18 mln bales, up from a Mar estimate of 121.9 mln bales. Cotton prices on Apr 4 plunged to a 1-3/4 month low on the Chinese proposal to slap 25% tariffs on U.S. cotton exports. Chinese cotton demand has already weakened with China Jan-Feb cotton imports down -6.9% at 236.4 MT. Cotton still has support from the drought in the Southern Plains. The U.S. Drought Monitor reported that 28% of Texas (the biggest U.S. cotton-producing state) was in a severe-to-extreme drought as of Apr 10, up from 20% three months earlier. Cotton prices were undercut by the Mar 29 USDA Prospective Plantings forecast for 2018 U.S. cotton planted acreage of a 7-year high of 13.5 mln acres, more than expectations of 13.3 mln acres. Also, India, the world's second largest cotton producer, projects its 2017/18 cotton production will climb +9.8% y/y to a 3-year high of 37 mln bales. Cotton demand is a supportive factor as the USDA projects that global 2017/18 cotton use will climb to a 10-year high of 120.39 mln bales.



May crude oil prices this morning are down -70 cents (-1.04%) and May gasoline is -0.0209 (-1.01%). Friday's closes: May crude +0.32 (+0.48%), May gasoline +0.0108 (+0.53%). May crude oil and gasoline on Friday closed higher with May crude at a 3-1/3 year high. Crude oil prices rallied on the imminent U.S. military strike on Syria and on the IEA's estimate that less than 10% of the global surplus in oil inventories remains and that OPEC is on the verge of "mission accomplished" in its quest to clear a global supply glut.



Metals prices this morning are mixed with Jun gold -1.6 (-0.12%), May silver -0.063 (-0.38%) and May copper +0.006 (+0.18%). Friday's closes: Jun gold +6.00 (+0.45%), May silver +0.185 (+1.12%), May copper +0.075 (+0.24%). Metals on Friday closed higher on increased safe-haven demand for precious metals on heightened tensions ahead of the expected U.S. military strike on Syria. Copper prices were supported by tighter copper supplies after Shanghai copper inventories fell -25,809 MT to a 5-week low of 280,836 MT and LME copper inventories fell -5.675 MT to a 2-1/2 week low of 357,025 MT.