Short-Covering Continues
Good Morning from Allendale, Inc. with the early morning commentary for May 16, 2019.

Grain markets are higher once again with corn up 5, soybeans up 3, and wheat up 7. The major theme of the overnight session is short-covering on a weather forecast that is still too wet. Attention will continue to be paid to trade developments, demand reports, as well as farmer sales with ample supplies throughout the globe.

Weekly export sales will be released today at 7:30 AM. Traders expect to see corn sales of 300,000 to 900,000 tonnes, soybeans 300,000 to 1,000,000, and wheat 150,000 to 600,000, soymeal 125,000 to 400,000, and soyoil 5,000 to 25,000. The big ranges are likely the result of disappointing data in recent weeks.

April NOPA soybean crush fell to 159.990 million bushels during April. That was under the 161.607 trade expectation, and was 0.6% under last year. We are officially ahead of USDAs goal on a year to date basis but the past two months have been -1.1% and -0.6%. We'll have to see if this trend continues.

Weekly ethanol production was reported at rose from 1.036 million barrels per day to now 1.051 in the latest week. This is the largest weekly production number since the second week of January. However, it is normal for production to rise at this time of year.

Brazilian exports of soybeans to China, by far their largest market, fell 13% in the first four months of 2019 versus a year ago, according to a report from Cargonave shipping agency. Soybean exports to China were 20.07 million tonnes from January to end of April, from 23.08 million tonnes in the same period a year earlier, the report showed. (Reuters)

Fund short covering was thought to have continued yesterday with managed money funds buying 18,000 corn, 5,500 soybeans, 3,000 soymeal, and 3,000 soyoil. They were thought to be neutral in wheat.

Treasury Secretary Mnuchin announced, "I think we are close to an understanding with Mexico and Canada," in reference to an agreement regarding the US steel and aluminum tariffs against Canada and Mexico. In a further sign of progress, Mexican Deputy Foreign Minister for North America stated, "I don't think it's a necessary step," when asked about new Mexican tariffs against the US.

Initial & Continuing Claims lead the economic reports out today at 7:30 AM CDT. They will be joined by Housing Starts, Building Permits, and Philadelphia Fed Index at that same time. EIA Natural Gas Inventories will be released at 9:30.

On a seasonal basis this specific week is likely the peak in cattle kills for the year. That could be justified by this week's showlist number at 12,600 head under the previous week. That would imply lower kills next week which would match up with last year's slaughter pattern.

Today's weekly pork export numbers should be moderately watched by the market, though the market is likely not expecting any big China numbers. The past five weeks ran +795 metric tonnes, +173, -214, +23,476, and +77,732.

Yesterday morning's wholesale pork report showed a carcass reading at 89.92 per cwt. That would surpass the previous peak from April 23 at 88.92. A new high in wholesale pork, the area of pricing which has been struggling, is important to note.

Dressed beef values were lower with choice down .55 and select down .93. The CME feeder index is 134.77. Pork cut-out values were down 1.83.