Closing Livestock Comments Livestock Market Losses Continue Friday

GENERAL COMMENTS: Limited movement early Friday left the door open for increased market volatility late in the day. Aggressive selling developed in all livestock markets. Feeder cattle futures led the market tumble with the August contract down $5.10 per cwt as traders took advantage of expanded trading limits. From Friday to Friday, livestock futures scored the following changes: Jun LC off $2.70; Aug LC off $4.88; Aug FC off $10.10; Sep FC off $9.80; Jun LH off $4.70; Jul LH off $2.03. Cash cattle activity remains quiet Friday afternoon, as it appears both sides are done for the week following moderate trade Wednesday and Thursday. A few bids remain at $115 live and $186 dressed, but given the late-day freefall in futures trade, these are not likely available at this point. Asking prices are at $116 and higher live and $188 dressed, but both sides appear willing to wait until early June before additional activity develops. The National Daily Direct afternoon hog report was $0.88 lower ($70-$78, weighted average $76.70) on 11,612 head sold. Corn futures were lower in active trade with July falling 9 cents per bushel. The Dow Jones Index was 354 points lower with the NASDAQ down 114 points.

LIVE CATTLE: Live cattle futures fell by triple digits Friday. ($1.10 to $1.97 lower). Mixed trade early in the session and a strong reversal lower in corn prices Friday were not enough to stimulate to buyer support and keep prices stable. The August contract led the complex lower, down $1.97 per cwt, setting a new contract low and testing long-term support of $102.40 set in May 2018. This selling pressure is much more complex than seasonal market pressure or end-of-the-month positioning. The sharp gains in grain futures over the last couple of weeks have led to increased concern about beef production costs as well as supply availability. The feeder cattle market has been affected most, but live cattle futures have followed feeder cattle lower. Even though less beef is expected to be seen due to higher costs of production, the grain market moves seem to be creating long-term shifts in the entire market structure. Beef cut-outs: lower, down $1.18 (select, $207.69) to down $0.37 (choice, $223.21) with moderate demand and offerings, 112 loads (55 loads of choice cuts, 31 loads of select cuts, 9 loads of trimmings, 16 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Early week, trade is not expected with showlist distribution and inventory-taking taking place Monday. The sharp losses in futures trade and lack of beef support is creating additional concerns of further cash market pressure in early June.

FEEDER CATTLE: Feeder cattle futures saw sharp losses of $1.77 to $5.10 as traders liquidated positions Friday. Though traders tried to cover short positions and stabilize prices early in the day, the August futures led the complex lower, falling $5.10 per cwt in late-day trade. Bearishness in the feeder cattle market continues to build even though the market appears to be oversold. Concerns about additional corn market gains on uncertain supplies through the end of the year have added to the volatility and pushed feeder cattle futures lower. Spot futures have fallen $9 per cwt in the last three sessions and over $27 per cwt since mid-April. The bearishness in the market is likely to continue during early June. CME cash feeder index for 5/30 is $132.47, down $2.53.

LEAN HOGS: Despite an attempt to bring buyers back to the market early in the day, sharp end-of-the-month losses pushed lean hog futures $0.87 to $2.27 lower. Active selling moved into the lean hog complex late Friday, leading to triple-digit losses in all but late-year contracts. Most nearby contracts held losses at or near $2 per cwt. The July contract closed at $85.92 per cwt, but remains slightly above support levels set earlier in the week. The ability to keep prices at or above these levels in early June is expected to help bring additional buyer interest back into the market. Although demand for pork is expected to increase through the end of the year, trade issues with China remain an uncertainty. Pork cutouts firmed Friday following mixed moves in primal cuts. Pork cutout values gained $0.83 per cwt, moving to $82.68 per cwt on 258 loads. CME cash lean index for 5/29 is $82.22, down $0.34. DTN Projected lean index for 5/30 is $81.92, down $0.30.

MONDAY'S CASH HOG CALL: Steady to $2 lower. Continued pressure is expected to filter into early June with packers still trying to limit spending given the choppy moves in pork values over the last couple of weeks. Most bids are expected $1 per cwt lower Monday. Monday's slaughter is expected at 464,000 head.

Closing Grain Comments - Grains Cap Higher Week With Lower Closes Friday

General Comments: 
July corn closed down 9 1/4 cents per bushel and December corn was down 8 1/2 cents. July soybeans closed down 11 1/4 cents and November soybeans were down 10 3/4 cents. July KC wheat closed down 6 cents, July Chicago wheat was down 11 1/2 cents and July Minneapolis wheat was down 11 1/2 cents. The June U.S. dollar index is trading down 0.418 at 97.635. The Dow Jones Industrial Average is down 275.81 points at 24,894.07. June gold is up $18.40 at $1,305.50, July silver is up $0.08 at $14.58 and July copper is down $0.0150 at $2.6390. July crude oil is down $2.43 at $54.16, July heating oil is down $0.0683, July RBOB is down $0.0717 and July natural gas is down $0.090.


For the week:

July corn closed up 22 3/4 cents and December 2019 corn was up 23 1/2 cents. July soybeans were up 48 cents while November 2019 soybeans were up 48 1/2 cents. July Kansas City wheat was up 31 cents, July Chicago wheat was up 13 1/2 cents, and July Minneapolis wheat was up 4 cents.

Corn:

July corn spent the day trading lower and finished down 9 1/4 cents at $4.27 Friday, securing a 22 3/4 cent gain on the week. Friday's trade showed some bearish impact from President Donald Trump's tweet that he was raising tariffs on Mexican goods. Mexico is an important U.S. ag customer, accounting for 26% of U.S. corn exports in 2017-18 and 30% of corn exports so far this season. A somewhat drier forecast the next five days will allow some planting to take place before rain returns to the eastern and southwestern Midwest late next week. The extended forecast should allow for more planting progress in the northern Corn Belt, but the eastern Midwest and southern Corn Belt remain areas of concern with above-normal precipitation expected. Estimating U.S. corn ending stocks for 2019-20 is difficult under these tenuous conditions and I offer two possible scenarios in Friday's DTN column Todd's Take to help understand what prices might be capable of doing (see "Estimating Ending Corn Stocks, Prices"). Early Friday, USDA said last week's export sales and shipments of corn totaled 35.7 million and 67.7 million bushels (mb), respectively, a bullish enough combination to keep U.S. corn exports above their estimated pace. With the national average of cash corn prices above $4.00, there is better incentive to get corn planted. The unanswered question continues to be how many acres won't get planted? Fundamentally, the outlook for corn prices is neutral to bullish and highly uncertain. Technically, the trend is up as cash corn prices are sitting near their highest levels in four years. DTN's National Corn Index closed at $4.09 Thursday, 27 cents below the July contract. In outside markets, Dow Jones Industrials are down 276 points and June gold was up $18.40 after President Trump's tweet about raising tariffs on Mexico.

Soybeans:

July soybeans also traded lower most of the day, closing down 11 1/4 cents at $8.77 3/4 Friday. For the week, the July contract gained 48 cents. USDA's news on Tuesday that only 29% of soybeans were planted spurred this week's rally in soybeans as planting concerns widened and caught noncommercials heavily short and vulnerable. It is still difficult to envision much bullish potential for soybeans as there is time for planting in June and USDA's U.S. ending stocks estimate of 995 mb is not going away. Actually, the ending stocks estimate may increase as soybean shipments are below their estimated pace for the current season. USDA said Friday that last week's export sales and shipments of soybeans totaled 16.7 mb and 17.2 mb, respectively, roughly half of what is needed each week to meet USDA's export estimate of 1.775 billion bushels by the end of August. It also does not help U.S. soybean prices to not have trade deals with important ag customers. In 2017-18, Mexico bought 7% of U.S. soybean exports and has accounted for 11% of soybean exports in the current season. Fundamentally, the outlook for soybean prices leans bearish as long as China holds a 25% tariff over U.S. soybeans. Technically, this week's rally has turned the trend in cash soybeans to sideways. DTN's National Soybean Index closed at $8.07 Thursday, $0.82 below the July futures contract.

Wheat:

July KC wheat traded both sides of Thursday's close and finished down 6 cents Friday at $4.73, down from its highest close in over three months while heavy rain is expected in the seven-day forecast for Kansas and Oklahoma. The region has already seen its share of flooding and these new forecast amounts are likely to drag crop conditions down further. Unwelcome moderate amounts are also expected for SRW wheat crops in the eastern Midwest. To the north, the western Canadian Prairies are dry with little rain in the seven-day forecast. Canadian wildfires are creating smoke issues in the northwestern U.S. These North American problems may not have much impact on world wheat prices, but they have given U.S. wheat prices a lift the past several weeks. Fundamentally, higher world wheat production is still a reasonable expectation in 2019, but some weather problems are worth watching. Technically, the trends are up for all three U.S. wheats even though the fundamentals continue to lean bearish. DTN's National HRW Index closed at $4.61 Thursday, down 18 cents from the July futures contract. DTN's National SRW Index closed at $4.92 Thursday, up from its lowest prices in over a year and above its 100-day average.

Midday Livestock Comments - Cattle Futures Trickle Higher

General Comments

Narrow moves in live cattle trade is limiting volume through the entire complex. This may add increased uncertainty through the market during early June. Hog futures remain focused on increasingly bearish market direction. Corn futures are lower in moderate trade. July corn futures are 4 1/4 cents lower. Stock markets are lower in light trade. Dow Jones is 249 points lower with NASDAQ down 82 points.

LIVE CATTLE:

Light gains have slowly developed in live cattle trade late Friday as traders try to adjust following the tumble lower over the past couple of days. August futures are barely holding above long term support levels as prices have tested contract lows through the morning. Limited activity is seen through the complex, which is likely to keep prices in a narrowly mixed range through the end of the session. Cash cattle is quiet following moderate activity over the last couple of days. Most trade needed for the week is done, although there could be a few clean up deals before the end of the day, but prices are expected to have been set. Boxed Beef cut-outs at midday are mixed, $0.66 lower (select) and up $0.24 per cwt (choice) with light movement of 89 total loads reported (40 loads of choice cuts, 16 loads of select cuts, 3 loads of trimmings, 30 loads of ground beef).

FEEDER CATTLE:

Strong follow-through losses have quickly developed through feeder cattle trade despite the pullback in corn markets. The strong surge higher in grain prices through the week is driven by uncertainty and confusion on the amount of corn available through the end of the year. This may spark some additional underlying weakness through all cattle trade, which is driven by feeder cattle trade.

LEAN HOGS:

Moderate to firm pressure continues to develop through lean hog trade Friday morning with increased concerns that additional pressure may develop through early June. June futures continue to lead markets lower, but the inability to draw any late month support to the complex may add increased volatility to the entire market. Strong export sales to China were not enough to bring buying interest back to the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.07 at $75.33 per cwt with the range from $71.00 to $77.00 on 3,116 head reported sold. Cash prices unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values bounced higher Friday due to mixed primal trade. Pork cutouts added $1.21 per cwt at $83.06 per cwt with 147 loads traded. Lean hog index for 5/28 is $82.56, down 0.75, with a projected two-day index at $82.22, down 0.34.

Midday Grain Comments - Grains Trending Lower at Midday

General Comments

The U.S. stock market indices are weaker with the Dow 200 lower. The dollar index is 20 lower. Interest rate products are weaker. Energies are weaker with crude 1.50 lower. Livestock trade is mixed. Precious metals are mixed with gold 11.50 higher.

CORN

Corn trade is 4 to 6 cents lower at midday with concerns about trade issues with Mexico along with potential progress for some of the Belt in the near term with user margins compressing. Wet weather will linger in the short term, but warmer drier weather looks possible for more areas in the week ahead, with the rains concentrating south and east. The ethanol margins are steady this morning with ethanol futures holding at $1.53. Basis has seen selling pressure from farmer movement and the higher board, but yield uncertainty and acreage uncertainty have bullish control of the market here at midday. The US export competitiveness is limited at the moment but the weekly sales were decent at 906,800 metric tons of old crop at 76,500 metric tons. On the July nearby chart support is the $4.05 1/2 10-day moving average then the upper Bollinger Band at 4.34 and the recent high at $4.38 as resistance.

SOYBEANS

Soybean trade is 1 to 3 cents lower with trade working to defend acres with the planting delays vs. corn along with trade concerns. Meal is 1.50 to 2.50 lower and oil is narrowly mixed. Crush margins remain solidly positive overall with meal pushing back above $320 this week. South American currencies remain cheap at the end of harvest, with the export wire quiet for the US. Field work should generally remain slow today but more progress is likely into next week. The higher price of corn is pulling soybean prices higher along with fears of high prevent plant acreage. The price is pushing for acres to shift to corn or milo when possible but late plantings may still force beans as the better alternative. The weekly export sales were at 455,800 metric tons of old crop, 22,000 of new, 183,800 of new meal, 65,000 of old meal, and 35,100 of oil, inline with recent weeks. The July chart support is the 50-day at 8.72, and resistance the 100-day at 9.02 1/2.

WHEAT

Wheat trade is 6 cents lower to 1 cent higher with the higher protein wheats holding up better at midday with heavy rains expected to continue for Kansas. Europe and the Black Sea area will be watched with dryness in the Volga Valley hotter in the near term and Russian potential remaining good overall, with spring wheat planting still catching up with disease issues in the winter wheat from wet weather and a delayed harvest. The dollar has dropped this morning. Hard red wheat is working into feed rations in some areas with the bounce in corn values. Export sales continued the recent trend with sales of 153,000 metric tons of old crop, and 411,800 of new. On the July KC chart support is the 10-day at 4.45, and the 100-day at 4.59, with the next round up the $4.83 recent high.

Estimating Ending Corn Stocks, Prices

On May 10, USDA estimated a 15.03-billion-bushel (bb) corn crop planted on 92.8 million acres, resulting in a higher ending corn stocks estimate of 2.485 bb for 2019-20, the most since the 1980s. The announcement sent December corn prices lower, but the market didn't put much faith in USDA's numbers, as report day finished with a 3/4-cent loss. We can now say those estimates are obsolete.

Rain has washed the chalkboard clean, and here on the last day of May, it's a good time to start fresh and sketch our own estimates of what might be possible for corn in 2019. Among the things we do know, USDA said 58% of corn was planted on May 26, the lowest progress in USDA's Crop Progress archive.

If we look for a similar year of slow planting, 1995 stands out. In that year, 56% of corn was planted as of May 21 and reached 97% planted by June 18. Modern planting equipment could speed up the process this year, if weather would cooperate. That is still a big "if."

The latest seven-day forecast shows rain across the Corn Belt, and many of the largest producing corn states need time to dry out. Here on the doorstep of June, estimating the number of corn acres that will get planted remains a difficult call. The next few weeks of weather could decide the difference between losing 6 million acres or more.

Before I jump into the estimate process, I want to thank DTN Contributing Analyst Joel Karlin for his new matrix of corn ending stocks possibilities, seen here: https://www.dtnpf.com/…

Karlin's matrix assumes 14.375 bb of U.S. corn demand in 2019-20, which I find reasonable, given the increased export competition we expect from Brazil and Argentina. The ending stocks estimates range from a couple hundred million bushels (mb) to 2.5 bb, depending on the variables you find reasonable.

The first estimate I offer is a scenario of minimal change. In other words, if the sun comes out next week, the angels sing and planting recovers better than expected in early or mid-June, I think it is reasonable that the U.S. will lose 6 million harvested acres of corn off of USDA's May estimate. I can be wrong, but the problems appear too pervasive and widespread to allow for less.

79.4 million harvested acres times the 20-year yield trend of 174.0 bushels per acre (bpa) equals a 13.82 bb corn crop. Borrowing Karlin's demand estimate of 14.375 bb puts ending U.S. corn stocks at 1.54 bb or 11% of annual use, down from USDA's estimate of 2.095 bb in 2018-19.

When looking at previous years when ending corn supplies fell near 11% of annual use, DTN's National Corn Index prices traded a wide range, -- between roughly $2.50 and $5.00 a bushel -- but the statistical correlation of the more likely cash price fell around $4.20 a bushel for this scenario of minimal change.

What if the problem turns out worse than described above? With 39 million acres of corn left to plant on May 26 -- and rain continuing to fall across the Corn Belt this week and probably early next week -- it is not unreasonable to anticipate a loss of more than 6 million acres. For comparison purposes, let's look at what a loss of 8 million harvested acres does to the bottom line.

You may have noticed I haven't talked about yield yet. In 1995, when the corn crop was planted late, the yield came in at 113.5 bpa, roughly 13% below trend. It is understandable that corn planted late, or in less than ideal circumstances, would suffer yield loss and it wouldn't be surprising to see that in 2019.

However, the question of yield is made more difficult by the fact that farmers aren't planting 1995 corn seeds in 2019. I asked DTN Crops Technology Editor Pam Smith and DTN Staff Reporter Emily Unglesbee how 2019 hybrids might compare to 1995 in these conditions. Both agreed that today's corn genetics should handle adverse conditions better than what we saw 30 years ago. Unglesbee pointed to the fact that traits offering weed control and insect control came after 1995. Smith explained, "We have much better planters that place seed better. We also have better hybrid placement and hybrids that respond to higher plant populations. Today's hybrids utilize nitrogen better and more common use of fungicides helps preserve yield."

Putting it all together, a scenario of losing 8 million harvested acres of corn with a modestly lower yield of 170 bpa, gives us a 13.16 bb crop. Sticking with Karlin's demand estimate above, this scenario brings ending U.S. corn stocks down to 878 mb or 6% of annual use.

A chart of historical cash corn prices indexed for inflation shows a price range of roughly $6 to $8 a bushel when ending corn stocks were at 6% of annual use. The reality in this scenario is that ending stocks may not actually get as low as 6% of annual use, as rising corn prices would start to ration demand.

The main point here is that a scenario of losing 8 million harvested acres plus some yield is an extremely bullish scenario that will also have an emotional component. Until more is known, shorts should be very cautious in this market.

Late in 2018, I advocated $3.80 a bushel as a reasonable target for cash corn prices around May of 2019, the typical time when seasonal peaks are made. Obviously, I didn't know at that time that this serious of a planting problem would emerge, or that DTN's National Corn Index would have closed at $4.09 on May 30. I am not comfortable talking about $6.00 corn, and it is not my intention to fuel a bullish frenzy or talk farmers out of taking good prices when offered. Given the situation we are in, we need to be aware of what corn prices could be facing. This is no time to nod off.

Friday Watch List

Markets
USDA's weekly export sales report is due out at 7:30 a.m. CDT Friday, along with a report on U.S. personal income, and followed by the University of Michigan's consumer sentiment index at 9 a.m. CDT. Weather remains the main concern of grain markets early in 2019, while trade talks with China have turned uncomfortably quiet.

Weather
Friday will be dry over most crop areas, allowing for some field drying and improved planting conditions, especially in the Northern Plains and western Midwest. Rain is indicated for western and central Texas, along with portions of the Ohio Valley. Dryness continues in the Southeast, Northwest and Canadian Prairies.

Trump Announces New Tariff - Trump Hitting Mexico With 5% Tariff in Response to Migrants

WASHINGTON (AP) -- In a surprise announcement that could compromise a major trade deal, President Donald Trump announced Thursday that he is slapping a 5% tariff on all Mexican imports to pressure the country to do more to crack down on the surge of Central American migrants trying to cross the border.

He said the percentage will gradually increase "until the Illegal Immigration problem is remedied."

Trump made the announcement by tweet after telling reporters earlier Thursday that he was planning "a major statement" that would be his "biggest" so far on the border.

"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied," he wrote, "at which time the Tariffs will be removed."

Trump has accused the Mexican government of failing to do enough to crack down on the surge of Central American migrants who have been flowing to the U.S in search of asylum from countries including El Salvador, Honduras and Guatemala.

The announcement comes as the administration has been pushing for passage of the United States-Mexico-Canada Agreement that would update the North American Free Trade Agreement.

The White House said Trump would be using the International Emergency Economic Powers Act to implement the tariff.

"If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed," the White House said in a statement.

But if Trump is not satisfied, the 5% figure will increase to 10% on July 1, to 15% on Aug. 1, to 20% on Sept. 1 and to 25% on Oct. 1.

"Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," the statement read.

During a visit to Canada on Thursday, Vice President Mike Pence vowed the deal would be passed this year.

"Our administration is working earnestly with leaders in the Congress of the United States to approve the USMCA this summer," he said. Asked by reporters about the new tariff consideration, Pence said that both Mexico and Congress need to do more and that Trump is determined to use his authority to call on them to do so.

Trump had said Thursday morning that he was planning "a major statement on the border" later Thursday or Friday that would be his "biggest statement, so far, on the border."

"This is a big-league statement. But we are going to do something very dramatic on the border, because people are coming into our country -- the Democrats will not give us laws," he said as he headed to a commencement speech for 2019 United States Air Force Academy graduates.

White House Pushes for USMCA Approval - Pence: Trump Administration Seeking Congressional Approval of Trade Deal This Summer

OTTAWA -- The Trump administration stepped up its campaign to win support for a new trade agreement with Canada and Mexico that faces congressional headwinds.

In a visit to Canada's capital, Vice President Mike Pence said Thursday the White House was making "energetic efforts" to get the U.S.-Mexico-Canada Agreement passed through Congress this summer, calling it an "historic opportunity to strengthen the economic ties" of the three countries.

The new agreement is intended to replace the North American Free Trade Agreement.

In Washington, officials submitted what's known as the draft statement of administrative intent, an early version of a document formally laying out how USMCA will affect U.S. international obligations and domestic law.

The statement doesn't commit the administration to submitting USMCA's implementing legislation, a step that would require Congress to vote on the deal in a set time period.

Rather, the document signals to lawmakers that the Trump administration wants to resolve any disagreements on the deal and send it to lawmakers if there's a path to majority votes in the House and Senate.

House Speaker Nancy Pelosi (D., Calif.) said the administration's procedural move was premature. "It indicates a lack of knowledge on the part of the administration on the policy and process to pass a trade agreement," she said in a statement. "We all agree that we must replace Nafta, but without real enforcement mechanisms we would be locking American workers into another bad deal."

Responding to Ms. Pelosi's remarks, Mr. Pence said, "We remain very confident that the action we take today will facilitate more discussions between our administration and the Democratic leadership in the House and the Republican leadership in the Senate."

In the administration's statement sent to congressional leaders, Robert Lighthizer, the U.S. trade representative, said that the document "does not limit our ability to find solutions to address concerns members have raised about enforcement of labor and environmental provisions of the agreement and pharmaceutical pricing."

Sharp words between President Trump and Mrs. Pelosi have raised questions about whether they could work together on legislation. Mrs. Pelosi has demanded changes to tighten enforcement of new labor provisions aimed at Mexico, and Democrats have other concerns about the environment and drug affordability.

The trade agreement requires ratification from all three nations' legislatures. The USMCA is a priority for the White House, which is looking to deliver an economic victory to voters before Mr. Trump's re-election campaign kicks into high gear.

Mr. Trump had said last week he wouldn't work with the Democrats in Congress until they stopped investigating his administration following the release of special counsel Robert Mueller's report on Russian interference in the 2016 election. However, in Japan this week, Mr. Trump said, "I think that we will work with them."

"We have a deal with Canada and Mexico that everybody wants," Mr. Trump said. "It's all done. And I think they probably want to be doing that."

Mr. Pence further affirmed efforts to get the agreement passed. "I want to assure you we are making energetic efforts to move approval through the Congress of the United States this summer," he said, appearing alongside Canada's Prime Minister Justin Trudeau.

Mr. Trudeau joked that "it took some time to get it right," but ultimately, his government was looking forward to the deal's ratification.

Canada's Liberal government on Wednesday introduced legislation that would ratify the revised version of the North American free-trade pact. The action came less than two weeks after the Trump administration lifted tariffs on the country's steel and aluminum exports. The government hasn't said when a vote would be called.

Meanwhile, the Mexican government has started the process of securing legislative approval for USMCA. Mexican President Andres Manuel Lopez Obrador said officials would deliver the text and related documents to the Senate on Thursday afternoon, adding he was optimistic the deal will be ratified.

Disaster Bill Blocked - GOP Again Blocks Disaster Aid Bill in House

WASHINGTON (AP) -- Another attempt to pass a $19 billion disaster aid bill in the House has failed after Republican John Rose of Tennessee stepped in to block it during Thursday's pro forma session late Thursday afternoon.

The measure will be revived and passed next week.

The Senate passed the bill 85-8 last week before lawmakers dashed out of Washington for recess.

As it crawls through Congress, the bill is highlighting the inconsistency of lawmakers, mostly conservatives, who stood resolute against such aid six years ago after Superstorm Sandy but demand it now that their states are under water.

Then, relative GOP newcomers like Sens. Ted Cruz of Texas, Roy Blunt of Missouri, Marco Rubio of Florida and Tim Scott of South Carolina swung against a huge, $50 billion-plus Sandy relief bill that passed Congress in the aftermath of Barack Obama's reelection, lambasting Democrats and others for swelling the measure with bloat.

Last week, all of them -- and others -- cast "aye" votes in a quick tally taken as senators dashed out of Washington for recess. The 85-8 vote came after President Donald Trump's endorsement and signaled a brushback pitch of sorts to a White House that neither side saw as helpful throughout the process.

For one-time opponents of disaster largess, it's been a long, sometimes arduous trek to endorsing it so unreservedly. The path has been dictated by the hurricanes, tornados, wildfires and floods that have slammed Red State America in the years since Superstorm Sandy struck the Democratic bastions of New Jersey, New York and New England in 2012.

The same political maps that Trump likes to display that show wide expanses of less-populated regions of the country like the Midwest, the rural South, and the Gulf Coast registering solidly for him also track with recent disasters. Now, the desperate cries for help are coming from across Georgia, Iowa, Nebraska and the Florida Panhandle, whose residents and representatives tend to be Trump loyalists.

"Unfortunately, more clowns showed up today to once again delay disaster relief for the states and farmers devastated by the storms of 2018," said Georgia GOP conservative Rep. Austin Scott, who opposed the Sandy measure in a 2013 tally in which 179 House Republicans voted no. "This bill will pass the House next week, and President Trump will sign it."

Scott made his remarks on Twitter on Tuesday after House GOP conservatives for the second time held up fast-track passage of the current disaster aid bill.

Rep. Thomas Massie, R-Ky., and freshman Rep. Chip Roy, R-Texas, have both blocked passage of the measure in the past week, saying that lawmakers should be required to go on record on the legislation, which has grown at each juncture -- at least until Trump's $4.5 billion request for refugee assistance and other border aid was stripped off.

Another attempt to pass the measure was made during Thursday's scheduled pro forma session of the House, but another freshman Republican, John Rose of Tennessee, stepped in to block it. The measure will be revived and passed next week.

Opponents of the Sandy bill made the argument at the time that there were billions of dollars in unnecessary additional spending in the measure. Of particular interest was community development block grant funding that was flexible and much sought by states and local governments to rebuild in Sandy's wake.

Years later, it's exactly those sorts of funds that Texas Republicans like Cruz, Sen. John Cornyn and several Houston-area House members demanded in the aftermath of Hurricane Harvey in 2017, including "resiliency" accounts designed to prevent future floods and disasters. They also are seeking to force the administration to release previously appropriated money that has been held up.

Cruz, it could be noted, was a driving force behind the government shutdown in the fall of 2013. By 2017, facing a difficult reelection battle, Cruz was forced to go to the appropriators, hat in hand, to beg for forgiveness, or at least money.

"It's the exact same types of stuff that people in Texas, North Carolina and Georgia and everywhere else are clamoring for," said Bruce Evans, former GOP staff director of the Senate Appropriations Committee. "It was a happy, happy day when I had Ted Cruz' signature at the bottom of a letter" seeking money from the committee.

In fact, the template for disaster relief was set in the aftermath of Katrina in 2005. Former Sen. Thad Cochran, R-Miss., who died Thursday after worsening health problems, then used his post as chairman of the Senate Appropriations Committee to power through record sums to address Katrina's wreckage.

Rising Corn Prices Hurt Ethanol Margins - Heavy Midwest Rains Drive Up Corn Prices, Hit Ethanol Producers Hard

OMAHA (DTN) -- The usual driving-season bump that helps to improve ethanol profit margins faces a new headwind this year: rising corn prices from wet weather across the Corn Belt.

The latest planting progress report tells the story for worsening ethanol margins.

An estimated 58% of U.S. corn was planted as of last Sunday, the slowest progress since at least 1980. Corn planting was up 9 percentage points from 49% the previous week, but was still well behind 90% at the same time last year and 32 percentage points behind the five-year average of 90%.

DTN's hypothetical 50-million-gallon plant in South Dakota is experiencing the negative effects.

The Neeley Biofuels plant this week reported a 53.5-cent loss, a dramatic drop from a 28.3-cent loss on May 1. This number includes debt service.

Most ethanol plants are not paying debt, however. If the hypothetical plant was not paying debt, the loss would be 22 cents per gallon, compared to a 3-cent profit on May 1.

The dip was fueled by a rise in the corn price paid by the plant, this time at $4.20 per bushel based on the Chicago Board of Trade futures price. That compares to $3.53 paid on May 1.

The ethanol rack price for this update came in at $1.44 per gallon, an increase from $1.41 in our last update. In addition, the plant experienced a drop in the price received for dried distillers grains, from $130 to $120 for this update.

In the past year, ethanol companies have sold plants and others have been cutting costs, including laying off employees in an attempt to survive what has been a long downturn in the industry.

Pavel Molchanov, senior vice president and equity research analyst at Raymond James and Associates, said the industry continues to experience the same headwinds it has for the past 12 to 18 months.

That includes an increased number of small-refinery waivers to the Renewable Fuel Standard, translating to reduced domestic demand and lost ethanol sales to China as a result of the ongoing trade battle.

"In addition to those two headwinds, in recent weeks a third one has also emerged: rising corn prices," Molchanov said. "Heavy Midwestern rainfall and flooding has resulted in delayed corn plantings, pushing corn prices to multi-year highs, which is placing added pressure on ethanol production margins."

Donna Funk, a certified public accountant with K-Coe Isom based in Lenexa, Kansas, who works with ethanol plants, said she's concerned the planting difficulties will hurt ethanol producers for much of the year.

"My fear is the shortage of corn acres planted and what that is going to do to corn prices for this next year, which has the ability to keep margins low or even more negative depending on the price of fuel," she said. "The summer driving season should help, but not enough to make it a good year unless something else changes as well."

It has been a long 10 months for the ethanol industry.

Since July 2018, ethanol margins have taken a severe turn south. Neeley Biofuels reported a 22-cent per-gallon net profit as of July 6, 2018. By Sept. 20, net profits sank to 8 cents per gallon. By Oct. 16, 2018, the plant reported a net loss of 34.5 cents. Margins hit what was then a low in December, as the hypothetical plant reported a net loss of 37.9 cents.

THE DTN MODEL

DTN established Neeley Biofuels in DTN's ProphetX Ethanol Edition as a way to track ethanol industry profitability. Using the real-time commodity price data that flows into the "corn crush" in ProphetX, and some industry-average figures for interest costs, labor and overhead, DTN is able to track current profits. It also tracks how much Neeley Biofuels would make or lose under an infinite number of "what-if" scenarios.

DTN uses industry-average figures from Iowa State University economist David Swenson. Included in the figures are annual labor and management costs, transportation costs, debt-servicing costs, depreciation and maintenance costs. Although Neeley Biofuels is paying debt-service and depreciation costs on its plant, many real plants are not in debt.

Also, it should be noted the calculations include all other costs, such as chemicals and yeasts, electricity, denaturant and water. While DTN uses natural gas spot prices for these updates, many ethanol plants lock in prices on the futures market, so they are not as vulnerable to natural gas market volatility.

Flood Disasters Move South - Historic Flooding Hits Farmers in South-Central US

OMAHA (DTN) -- Farmers from Oklahoma to Mississippi are facing crop disasters as flooding continues along the Arkansas River and Mississippi River.

Arkansas Gov. Asa Hutchinson sent a federal disaster request on Wednesday to President Donald Trump, citing damage in at least 15 counties.

At a news conference Wednesday, Hutchinson said, "This is a flood of historic magnitude. It surpasses all Arkansas River flooding in our recorded history," according to the Arkansas Democrat-Gazette.

Hutchinson added, "So there is a lot of unknowns in what we face as the state. The levee system is strained to the limit. While it is holding in most areas, there are breaches and overflows, and we are watching very carefully."

The levee system along the Arkansas River was not built for the level of expected flooding, the governor wrote in his letter to the president.

Flooding has essentially struck agriculture hard throughout the Mississippi and Missouri River watersheds from Minnesota down to the Gulf of Mexico as intense storms have continued to pound the Midwest, Plains and now south-central U.S. In the latest stretch of storms along the Arkansas River watershed, thousands of people have lost their homes in Oklahoma and Arkansas.

Arkansas farmer Robert Stobaugh said the Army Corps of Engineers had warned the flooding would last weeks, or possibly months. He's already got corn under water, but he stopped planting right before the river waters rose. The crest will hit his farm on Saturday, Stobaugh said on an Arkansas Farm Bureau podcast.

"It's something I haven't seen in my farming career," Stobaugh said.

In Oklahoma, Mike Schulte, executive director of the Oklahoma Wheat Commission, told DTN, the rain, floods, tornadoes and hail have probably reduced the expected winter wheat crop as much as 20% right now. Oklahoma earlier had perfect grain-fill weather and was forecast last month at 119 million bushels of wheat crop, Schulte said.

With the crop ready to harvest in southern parts of the state, Schulte said there are serious concerns about the forecast over the next seven to 10 days.

"Across the state, it's been remarkable how the crop has held up so far," Schulte said. "If we could just not have rain, I think we would have an opportunity to have a decent crop. We are certainly concerned about what those losses could be if we have another week of rain."

Schulte noted it's unusual to see so many waterlogged fields across Oklahoma.

"There's a lot of washed-out fields on bottom land, roads are also an issue," Schulte said. "Transportation is a real issue because we've had a lot of roads and culverts washed out. It happened all across the state at one time. Usually, we'll have flooding in the east and escape it in the west, or vice versa, but that is not the case this year."

In Louisiana, Gov. John Bel Edwards announced the president had approved federal disaster aid for that state.

"I thank President Trump for recognizing the urgency of our request and responding so quickly," Gov. Edwards said in the statement.

In Louisiana, the Army Corps of Engineers is planning on Thursday, June 6, to open the Morganza Spillway along the Mississippi River. The spillway will be opened for just the third time since the 1950s, though it was last opened during the 2011 flood event. Opening the spillway will relieve some pressure on the Mississippi River, but it will send floodwaters into five parishes (counties). Once it opens, several small towns and an estimated 25,000 acres of farm ground, mostly planted already, could quickly be flooded.

"We expect a total loss of the crops planted," Louisiana Ag Commissioner Mike Strain was quoted as saying in The News-Star in Monroe, Louisiana. "There will be a loss of a great deal of crops."

Strain warned farmers to move all of their livestock and equipment out of the lowlands.

Louisiana lawmakers wrote Agriculture Secretary Sonny Perdue to highlight the impact of flooding in the state.

"Louisiana agriculture is still recoiling from the heavy hit provided by severe weather and tariffs imposed by China in the 2018 crop year," Louisiana lawmakers wrote Perdue. They added, "The opening of the Morganza Spillway will further devastate the lives and livelihoods of Louisiana farmers."

In Mississippi, Gov. Phil Bryant also calls the flooding disaster "historic," citing roughly 544,000 acres flooded, of which 250,000 acres are farm ground.

Bryant said of farmers, "Not only are their homes flooded, they won't have a crop," reported The Jackson Clarion-Ledger.

The Clarion-Ledger also interviewed Mississippi farmer Ronnie Kerr who said fields on his 6,800-acre farm have been flooded since at least January from seepage, but the flooding is getting worse.

Washington Insider: Political Fights and the New NAFTA

Several press reports are suggesting this week that the bad blood between the President and House Speaker Nancy Pelosi, D-Calif., could endanger the legislative approval of the new NAFTA.

For example, Bloomberg says that Democrats are still holding out hope they can “sculpt the new NAFTA” to their liking. The concern is that the acrimonious debate over whether to impeach President Trump — and his personal attacks on Pelosi — will undercut House approval of the deal.

An exchange of insults between Pelosi and Trump after a scuttled White House infrastructure meeting last week and the ongoing debate among House Democrats whether to impeach the president are fanning doubts about whether the two sides can cooperate enough to pass the U.S.-Mexico-Canada Agreement (USMCA) which is seen as the President’s most urgent legislative priority as he heads into 2020 elections.

Democratic lawmakers and their aides say the sides can look past the squabbling to reach a deal that can pass. Still, they are urging the White House to speed up collaboration and start addressing their concerns to get a vote on the agreement by year-end.

The infrastructure meeting was a setback for those in Congress who were hoping for more cooperation on agenda items that matter to both sides, a senior Democratic aide told Bloomberg. However, instructions from the speaker to her members haven’t changed and she’s in no way abandoning the work on USMCA, the aide said.

In a step viewed as positive, the speaker this month created working groups to negotiate with the administration on areas in USMCA they’d like to see changed, including provisions on labor, environment, pharmaceuticals and enforcement. The removal of U.S. steel and aluminum tariffs on Canada and Mexico this month also cleared a hurdle for the Democrats.

House Majority Leader Steny Hoyer. D-Md., in an interview Tuesday downplayed the effect of Trump’s angry outburst toward Pelosi on the USMCA process and emphasized the need for the White House to address Democratic policy objections.

"We are trying to get to yes," Hoyer said.

At the same time, Pelosi has made clear repeatedly that rushing a vote — like the president has said was necessary — would be a bad idea. There’s precedent for Pelosi stalling trade agreements in Congress that she felt weren’t strong enough on labor and the environment, Bloomberg said.

The risk for Democrats is that Trump may follow through on his threat to withdraw from the original NAFTA, a scenario that would increase tariffs across the continent.

Both parties realize the importance to the economy of getting the agreement approved, said Clete Willems, a former senior White House trade official who is now a partner at Akin Gump Strauss Hauer & Feld LLP in Washington. “I hope that both sides will put politics aside and get this passed," he said. U.S. Trade Representative Robert Lighthizer, who led the re-negotiation of NAFTA, and Pelosi “are professionals.”

It “would be a sad commentary on the state of our affairs’’ if Pelosi and her caucus reject USMCA because Democrats don’t want to give Trump a win for 2020, Marc Short, Vice President Mike Pence’s chief of staff, said Wednesday. Pence will be in Ottawa on Thursday to advance the deal, which the Canadian and Mexican legislatures also still need to pass. Canadian Prime Minister Justin Trudeau on Wednesday introduced legislation to ratify USMCA.

The administration is encouraging U.S. lawmakers and businesses to lobby Pelosi’s office “to ask her to bring this forward for a vote in Congress because we think we have the votes,” Short said on CNBC.

The Trump administration is eyeing a vote before the August congressional recess in order to protect it from the 2020 electoral cycle, said U.S. Chamber of Commerce’s John Murphy.

His organization remains optimistic about ratification this year. "Beneath the news of the day, there have been positive developments," he said.

While a number of outstanding issues need to be resolved before a vote can take place, the gaps between Democrats and the administration “are bridgeable” and don’t require reopening the deal, Murphy said.

“I have been doing this for 20 years and in every trade agreement there are issues that need to be addressed,” he said.

Linda Dempsey, a vice president at the National Association of Manufacturers, said outreach by Lighthizer in Congress has built momentum for a deal. "There’s a lot of goodwill," she said.

Also this week, the New York Times ran a somewhat different take on this fight which it headlined, “Pelosi ‘can get to yes’ on President’s trade deal, but not anytime soon.” It says that the “war of words with the White House stalls the legislation.”

It also notes that Democratic concerns are said to be “purely about policy but are not fully defined yet,” and it thinks that the longer Congress waits, the greater the likelihood that voting for the successor to NAFTA, a deal “criticized by Democrats and Mr. Trump alike could become a liability in 2020.” So, more than ever, the continuing NAFTA legislative debate should be watched closely by producers as it emerges, Washington Insider believes.

China Official Labels US Actions In Trade Dispute 'Naked Economic Terrorism.'

Tension between the U.S. and China is ramping up as a Chinese Vice Foreign Minister Zhang Hanhui told reporters in Beijing that U.S. actions in the trade dispute between the two sides amount to "naked economic terrorism."

China is not in favor of trade sanctions, tariffs and protectionist measures, Zhang said. "We oppose a trade war but are not afraid of a trade war," he stated. "This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying."

He also warned that the situation could have negative effects on the global economic situation. "This trade clash will have a serious negative effect on global economic development and recovery," Zhang added, noting that China will make sure to "safeguard our country's sovereignty, security, respect and security and development interests."

USDA Slashes FY 2019 US Ag Export Outlook

U.S. agricultural exports in Fiscal Year (FY) 2019 are now looked to be less than $140 billion while the value of U.S. ag imports is forecast to be at a record mark once again.

U.S. agricultural exports are now forecast at $137 billion for FY 2019, down from the February outlook for them to be at $141.5 billion. This also marks the first year since FY 2016 that exports have not been at least $140 billion.

The value of U.S. agricultural imports is now put at a record $129 billion, up $1 billion from their February forecast. If realized, this would make three years in a row for record import values.

The result of the trim to exports and boost to imports is to cut the forecast U.S. ag trade surplus to $8 billion, down sharply from $13.5 billion in February. This would mark the smallest U.S. ag trade surplus since FY 2006 when it was $4.6 billion.

Movement on USMCA - Canada, Mexico, President Trump Take Action Toward Approval of USMCA

WASHINGTON (DTN) -- The governments of Canada and Mexico and President Donald Trump have all taken action toward approval of the U.S.-Mexico-Canada Agreement to succeed the North American Free Trade Agreement.
On Wednesday, Canadian Minister of Foreign Affairs Chrystia Freeland presented a "ways and means" motion to the House of Commons in Canada's Parliament that allowed for Prime Minister Justin Trudeau to introduce bill C-100, "An Act to implement the Agreement between Canada, the United States of America and the United Mexican States" (otherwise known as the "CUSMA Implementation Act"), The New American reported. Mexican President Andres Manuel Lopez Obrador has said he is going to summon Mexican senators for an extraordinary session and officially send them to the text of the USMCA to begin ratification of what Mexico calls the "Tratado entre Mexico, Estados Unidos y Canada," which is Spanish for the Mexico-United States-and-Canada Treaty. And White House officials said Trump would send the draft "Statement of Administrative Action" on USMCA to Congress Thursday, which would allow the administration to send the full agreement to Capitol Hill within 30 days, The Washington Post said. Trump's action is controversial because House Speaker Nancy Pelosi, D-Calif., has urged Trump to allow more time for Democrats to review the deal and try to achieve changes to it. Pelosi has been planning to slow walk the agreement, in part due to her personal conflict with Trump, The New York Times reported Thursday. A group of congressional aides is traveling to Mexico to review the labor provisions in the pact, Bloomberg reported. House Ways and Means Committee Chairman Richard Neal, D-Mass., said in a statement Thursday, "Democrats have been clear about the need for improvements to the renegotiated NAFTA as it stands now." "As the committee has outlined, the current agreement does not adequately protect American workers and the environment, limits Congress' ability to address rising U.S. health care costs in the future, and fails to provide effective enforcement tools," Neal said. "The timeline for the consideration of a renegotiated NAFTA will be determined by the completion of the work that remains to be done by Democrats and Ambassador [Robert] Lighthizer to address these concerns. The premature submission of a draft statement of administrative action has no impact on that outstanding work or the timeline moving forward." Corn Refiners Association President John Bode issued a statement Thursday applauding Trump's action: "By solidifying the important trading partnerships with our neighbors, Canada and Mexico, the USMCA stands to greatly benefit U.S. farmers, ranchers, and agri-business." "With the submission of his Statement of Administrative Action, President Trump brings us one step closer to achieving this crucial agreement," Bode said. "America's corn refiners eagerly await swift Congressional consideration and ratification of the USMCA." Mexico and Canada represent the two largest markets for refined corn products, Bode noted, averaging more than $900 million in shipments a year.

Morning CME Globex Update:

After a modest 43-point bounce on the Dow Jones average on Thursday, Dow futures are down 243 points early Friday. July crude oil is down $1.26 per barrel, the U.S. dollar index is down 0.2180, and June gold is up $9.00 an ounce.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Lower
Gold: Higher
Crude Oil: Lower
Corn:

After Thursday's strong gains and challenge of recent highs, both old and new crop corn futures are plunging early Friday morning. The strong multi-year resistance on spot futures of $4.38-$4.39 has once again proven a tough obstacle to overcome. Corn weakness Friday morning is being fueled by what appears to be an ill-timed threat of a 5% tariff on all imports from Mexico just as the USMCA trade agreement was expected to be ratified by both Canada and Mexico. President Trump's willingness to lump the rapid flow of immigrants across the U.S. southern border with trade has pressured not only grains but equities and crude oil as well. The focus on Friday morning has moved away from the severely late planting issue and likely huge loss of both acreage and yield on corn to yet another stumbling block for agricultural trade. The threat of not only imposing the 5% tariff on June 10, but possibly increasing it to 25% by October unless Mexico helps to stem the constant flow of border crossers, has cast a bearish pall over the recent weather inspired rally and U.S. demand. The weather forecast, while it is warmer and drier than in recent days, still promises moderate rains in the Central and Eastern Corn Belt and heavy rains in parts of the Southern Plains, with river flooding issues expected to continue. Planting progress in the Northern Plains and upper Midwest should be able to make some strides. Managed money funds are thought to have covered nearly all of what was a once record net-short in corn, and in fact may have entered a new long. Option volume and volatility has exploded, with upside protection being taken by many. This has been a supply-driven rally and there has been no demand story for U.S. corn, and the latest move regarding Mexico has threatened trade with the largest buyer of U.S. corn. On the recent rally, U.S. corn has priced itself out of many world markets. Ethanol production fell last week, and stocks declined by 3.3%. Corn export sales for the week ending May 23 were 35.7 million bushels (mb) for 2018-2019. Shipments of 67.7 mb were above the 45 mb per week needed to reach the 2.3 billion bushel (bb) USDA projection. Total commitments of 1.899 bb are down 11% versus last year. DTN National Corn Index closed at $4.09 on Thursday, with an average basis of 27 cents under July.

Soybeans:

Soybeans are just modestly lower to begin Friday, once again falling short of the Wednesday highs on both July and November futures. Pressure on soybeans is also coming from the news of tariffs on Mexico. Though not as important as corn, Mexico is a significant buyer of both U.S. soybeans and meal, and such a threat has traders fearing a move for Mexico to seek South American alternatives. Funds have been covering part of their once record net-short in soybeans, but to begin Friday, are still thought to be net-short over 100,000 contracts. They are estimated to have bought 17,000 contracts on Thursday and over 50,000 contracts in the past three days. Although soybeans are dramatically behind the average planting pace, there remains time for soy to catch up, and analysts are plugging in higher soybean acres than the March intentions. Ag Resource, for one, suggests that soy acreage could be 1.4 million acres higher, at 86 million acres. The fact that U.S. soybean ending stocks are likely to be above one billion bushels, and South American supplies are huge, funds and traders have been more hesitant to get bulled up on soybeans. There is also the fear that in the absence of a U.S.-China trade solution, China could cancel or roll unshipped sales. Although the recent rally in soybeans and fall in South American currencies has resulted in good farmer movement from there, some analysts, such as Linn Group, estimate that Argentine farmers are still unsold on 60% of their soy crop, instead holding as an inflation hedge. Look for July soybean futures to have solid resistance at $9.00-$9.20 and November to have selling at $9.20-$9.35 on a further rally. Soybean sales for the week ending May 23 were 16.7 mb for 2018-2019, and shipments were 17.2 mb, well below the 32.5 mb needed each week to reach 1.775 bb. Total commitments of 1.699 bb are down 17% versus last year. DTN's National Soybean Index closed at $8.07, and reflects an average basis of 82 cents under July.

Wheat:

Wheat futures markets are also tumbling on the disturbing Mexico tariff implications, as well as the overall drier forecast, especially for the western Midwest and Northern Plains. However, the Southern Plains, including mature wheat in west Texas, Oklahoma and Kansas are expected to endure more heavy rains and flooding. The threat for wheat is not only from declining quantity from lodging and hail, but also the likelihood of a sharp increase in disease having an impact on quality. It is also assumed that the hard red winter (HRW) wheat crop is likely to be of the low protein variety, placing a premium on high protein milling quality in the coming year. Often low protein wheat will make its way into delivery houses, keeping pressure on spot futures. Managed funds in wheat have been covering shorts, but are thought to still be short over 40,000 contracts in Chicago and a like amount in Kansas City. U.S. spring wheat should have a better shot a finishing planting in coming days with the drier pattern. There are some problems in global wheat, with the hot and dry pattern in the Black Sea and ongoing drought in Australia possibly having an impact on those crops. However, the world is still awash in wheat supplies. Wheat export sales for the week ending May 23 were 5.6 mb for 2018-2019 and shipments were 16 mb, less than the 19.6 mb needed to reach the USDA projection of 925 mb. Total commitments of 950 mb are up 9% versus last year. DTN's National HRW index closed at $4.61, and the average basis is at 18 cents under July.

Early Word Opening Livestock - End of Week and Month Shifts Likely

GENERAL COMMENTS: 

Prices appear to be set in cash cattle trade following trade Wednesday and Thursday. This is expected to spark limited additional end-of-the-week movement with some cleanup activity possible, but most feeders are likely to hold off until next week given the bearish moves in futures trade at the end of the week. Live trade was at $115 in the South and $116 in the North, which is generally steady with last week's levels, while dressed trade developed late Thursday at $186 to $187 per cwt, $1.50 to $2.50 per cwt lower than last week. Futures trade remains under pressure following limit losses of $4.50 per cwt in feeder cattle trade, sparking additional bearishness in the entire cattle complex. A combination of follow-through selling pressure and an attempt to cover short positions at the end of the week and month is likely to keep markets moving in a potentially mixed and volatile range.

Mixed trade at the end of the week continues as traders focus on wide market swings through the week and underlying pressure in neighboring cattle trade. Traders are watching for potential demand for pork from China and the ongoing trade war, and will be looking closely at the holiday-delayed release of the weekly Export Sales report. There is hope of additional strong sales of pork to China, but given the cold shoulder between the two countries, it is becoming expected less and less each week. This does not negate the fact that global demand for pork continues to grow, leaving a need to fill the gap with U.S. product in some fashion. Cash trade is called steady to $3 lower Friday morning with most bids $1 lower. Expected slaughter Friday is at 470,000 head. Saturday runs are expected near 250,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures remain oversold at the end of May, creating the potential for active noncommercial buyer interest to reenter the market in the upcoming weeks.	1)	Active gains in grain trade have quickly put cattle futures into panic selling mode with feeder cattle futures closing limit lower with $4.50 per cwt lower. The sharp gains in corn markets is causing uncertainty of further production costs and feed availability long term.
2)	Beef demand continues to remain strong, allowing for expectations of active domestic and export movement in the summer months.	2)	Live cattle futures quickly followed feeder cattle lower Thursday with $2.80 per cwt losses seen in August contracts. August futures settled at $105.05 per cwt, which is testing contract lows set in May last year. A move below these support levels would likely spark additional liquidation at the end of the month.
3)	Traders look for the potential of moderate-to-strong pork sales to China in the weekly Export Sales report. Sales last week would indicate a two-week stretch of product movement, causing expectations that further sales will steadily develop in the summer months.	3)	End-of-month positioning is expected to develop Friday, allowing further weakness to develop in lean hog trade.
4)	Underlying short-term support in July futures remains at $85 per cwt, allowing traders to rebuild on these market lows through the end of May. If this price is able to hold, firm underlying buyer interest is likely to redevelop in the coming days and weeks.	4)	Sharp double-digit losses in belly primal cuts Thursday caused the pork cutout value to move sharply lower. A lack of support in bellies is causing concern that demand for traditional summer pork products is not growing at the end of May.

Closing Livestock Comments Feeder Cattle Futures Tumble to Limit Losses

GENERAL COMMENTS: Sharp losses swept through cattle trade Thursday with feeder cattle futures falling limit lower in late-day trade. The continued weakness in feeder cattle trade and uncertainty about corn supplies sparked additional pressure in live cattle futures. Hog futures closed mixed Thursday after regaining limited support from morning losses. Light-to-moderate trade has developed through the South at $115 per cwt. This is steady with Wednesday's price levels and generally steady with last week. A few deals were seen in the North on a live basis with prices $116 per cwt also steady. Bids are seen at $185 to $186 dressed through the North, although limited activity is seen at this point. There is talk about a few deals for delayed delivery developing at $186 per cwt through late afternoon. Asking prices remain firm at $117 dressed and $188 live despite the sharp futures losses. The National Daily Direct afternoon hog report was unreported at this time due to delays. Corn futures surged higher in active trade with July up 17 cents per bushel. The Dow Jones Index was 43 points higher with the NASDAQ up 20 points.

LIVE CATTLE: Cattle futures tumbled lower in late-day trade, closing $2.20 to $2.80 lower. Despite moderate gains in the complex early Thursday, traders backed away through the last half of the session. Feeder cattle quickly turned sharply lower based on continued buying in grain trade, which pushed corn and soybean prices 17 cents per bushel higher. This shift lower quickly sparked active selling in all live cattle trade, with the August futures contract limit down at one point Thursday afternoon. Although markets were able to move back from limit losses at closing bell, concerns remain about additional losses through the next couple of week. The August futures tested contract lows Thursday afternoon, with a move below that level in upcoming sessions likely to lead to active liquidation and further market losses. The higher corn and feed prices are causing much more concern than just higher feed prices, which traditionally support deferred futures trade. Current planting delays and growing conditions are causing uncertainty about grain price projections as well as short- and long-term feed supplies. Beef cut-outs: mixed, down $1.12 (select, $208.87) to up $0.05 (choice, $223.58) with good demand and moderate offerings, 154 loads (77 loads of choice cuts, 25 loads of select cuts, 16 loads of trimmings, 35 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL: Steady. Additional trade seen Thursday at $115 in the South and $116 live in the North further establishes the tone of steady cash prices. Trade in the South may be wrapped up for the week, but additional business may develop in the North. It is uncertain if the freefalling futures trade will spark panic cash selling at the end of the week, allowing for lower price levels Friday.

FEEDER CATTLE: Further weakness continued in feeder cattle trade Thursday following active gains in grain trade. Futures closed $3.07 to $4.50 lower. Nearby feeder cattle futures tumbled to limit losses as aggressive liquidation moved through the complex following double-digit gains in grain futures. The feeder cattle complex was already weakened over the last six weeks by increased placement levels over the past two months sparking additional supply concerns. But planting delays that have caused corn and soybean prices to surge higher through the end of May have left the complex with little to no stability. This is causing traders to liquidate positions due to uncertainty of feed costs and the impact this will have on beef values through the next several months. CME cash feeder index for 5/29 is $135.00, down $1.65.

LEAN HOGS: Aggressive pressure quickly moved into the lean hog complex on outside market concerns. Futures closed mixed, $1.52 lower to $0.20 higher. The strong support seen Wednesday quickly evaporated as traders moved back into the complex and gains swept through the grain trade. The concern about higher feed prices is just another item added to the list of concerns in the hog complex. The lightly traded June contract maintained triple-digit losses, while the rest of the complex steadily regained limited support through the end of the session. Following extremely wide price shifts over the last two weeks, traders seem to be focusing on squaring positions at the end of the month, while still eyeing downside market potential through early June on global market concerns. Pork cutouts are unreported at this time due to reporting delays. CME cash lean index for 5/28 is $82.56, down $0.75. DTN Projected lean index for 5/29 is $82.22, down $0.34.

FRIDAY'S CASH HOG CALL: Steady to $2 lower. Additional pressure is expected through the cash hog market Friday following lighter procurement runs earlier in the week due to mechanical issues. This will further limit the need to secure additional hogs through the end of the week. Friday's slaughter is expected at 470,000 head. Saturday runs are expected at 250,000 head.

Closing Grain Comments - Crop Prices Higher Across the Board

General Comments: 

July corn closed up 17 1/2 cents per bushel and December corn was up 16 1/2 cents. July soybeans closed up 17 cents and November soybeans were up 17 cents. July Kansas City wheat closed up 25 3/4 cents, July Chicago wheat was up 24 cents and July Minneapolis wheat was up 14 cents.

The June U.S. dollar index is steady at 98.035. The Dow Jones Industrial Average is up 23.43 points at 25,149.84. June gold is up $6.40 at $1,287.40, July silver is up $0.09 at $14.51 and July copper is down $0.0150 at $2.6490. July crude oil is down $1.69 at $57.12, July heating oil is down $0.0437, July RBOB is down $0.0526 and July natural gas is down $0.072.

Corn:

July corn continues to push higher with scattered showers on Thursday's weather map and more rain falling on wet fields in the Eastern Corn Belt. Prices finished up 17 1/2 cents at $4.36 1/4, their highest level since June 2018. The extended forecast is looking somewhat more favorable for planting, but the seven-day forecast still shows moderate rain amounts across the Corn Belt, making already soggy fields even wetter. The obvious issue is that corn planting is being pushed well into June, adding to the risk of losing yield as well as the risk of acres not getting planted. Clearly, the new situation supports higher corn prices than we have seen the past four years, but just how high is the impossible question of the moment with so many important pieces of the puzzle missing. Earlier Thursday, the Department of Energy said last week's ethanol production slipped from 1.071 to 1.057 million barrels per day, a slight change given corn's higher price. Ethanol inventory fell from 23.4 to 22.6 million barrels, a sign of decent demand as the driving season begins. Fundamentally, the price outlook for corn remains bullish with potential for a significant reduction in ending corn stocks in 2019-20. Technically, the trend is up and DTN's index of cash corn prices will settle well above $4.00 on Thursday evening. DTN's National Corn Index closed at $3.92 Wednesday, priced 27 cents below the July contract and near its highest level in nearly three years. In outside markets, the June U.S. dollar index is unchanged after the Commerce Department said U.S. GDP was up 3.2% in the first quarter from a year ago, a slight downward adjustment from last month.

Soybeans:

July soybeans closed up 17 cents at $8.89 Thursday, continuing to put noncommercial shorts under pressure to cover their positions while the market shows concern about this year's planting potential. The trickier thing about soybeans is that they have the ability to be planted later than corn and still do well, if weather cooperates the rest of the summer. Of course, there is no guarantee of that happening, and as mentioned above, the current seven-day forecast remains wet for most of the Midwest. Also offering some bullish help to U.S. soybean prices, Brazil's FOB soybean prices had a big gain in May and are now 55 cents above FOB prices in New Orleans. The difference doesn't cover China's tariff, but it does give the U.S. a better shot at non-Chinese business. Fundamentally, the outlook for soybean prices remains bearish even though this year's production may be limited by adverse weather. A trade agreement with China has the potential to change the bearish outlook, but is looking unlikely at the moment. Technically, Wednesday's higher close changed the trend in soybeans to sideways, reflecting uncertain planting conditions and crop season ahead. DTN's National Soybean Index closed at $7.90 Wednesday, priced 82 cents below the July contract and up sharply from its lowest prices in 12 years.

Wheat:

Wheat prices have been accused of suffering from multiple personalities, and it seems true again this week. July KC wheat closed up 25 3/4 cents at $4.79, erasing Wednesday's big loss with help from another rally in corn and more rain in the seven-day forecast for the southwestern U.S. Plains. Flood advisories remain in effect from Nebraska to Oklahoma where good-to-excellent crop ratings were high just a few weeks ago and the SRW wheat crop has suffered a long, wet spring in the eastern Midwest. Outside of the U.S., the western Canadian Prairies need rain as does eastern Australia. Eastern Ukraine and southern Russia are expecting hot and dry weather to stress crops in the week ahead. Overall, world wheat production still looks mostly favorable at this early stage. Earlier Thursday, the International Grains Council (IGC) increased its estimate of world wheat production from 762 million metric tons (mmt) to 766 mmt (28.15 billion bushels). That would be a new record high, if true, but recent weather challenges are apt to trim that lower next month. It is impressive that July KC wheat is trading above its 100-day average and noncommercial shorts have likely run for cover, but it is difficult to see fundamental support for a significant wheat rally yet. Technically, the trend is currently up for all three U.S. wheats, helped by reduced crop conditions and corn's planting problems. DTN's National HRW index closed at $4.35 Wednesday, up sharply from its lowest close in over a year and 17 cents below the July contract. DTN's National SRW index closed at $4.66, near its highest prices in three months.

Midday Grain Comments - All Grains Higher at Midday

General Comments

The U.S. stock market indices are flat with the Dow 3 points higher. The interest rate products are weaker. The dollar index is 2 higher. Energies are weaker with crude 0.90 lower. Livestock trade is mostly lower. Precious metals are mixed with gold 5.50 higher.

CORN

Corn trade is 14 cents higher at midday and near the daily highs with steady buying after trade tested the $4.30 lows again overnight. Wet weather will linger in the short term, but warmer drier weather looks possible for more areas in the week ahead. The weekly ethanol report showed production down 14,000 barrels per day, and stocks down 758,000 on the week, helping to push ethanol futures over $1.52 as blender margins narrow. Basis has seen selling pressure from farmer movement and the higher board, but yield uncertainty and acreage uncertainty have bullish control of the market here at midday. The US export competitiveness is limited at the moment. On the July nearby chart, support is the $3.99 1/2 10-day moving average then the upper Bollinger band at $4.24 which is just below market, resistance is now the new high printed yesterday at $4.38.

SOYBEANS

Soybean trade is 14 cents higher with trade working to consolidate recent gains and defend acres. Meal is $8 higher, and oil is flat. Crush margins remain solidly positive overall with meal pushing back above $320. South American currencies remain cheap at the end of harvest, with the export wire quiet for the U.S. Field work should generally remain slow today but more progress is likely into next week. The higher price of corn is pulling soybean prices higher along with fears of high prevent plant acreage. The price is pushing for acres to shift to corn or milo when possible but late plantings may still force beans as the better alternative. The July chart support is the 50-day at 8.73 with the upper Bollinger Band at 8.63 below that, and resistance the 100-day at 9.03 1/2.

WHEAT

Wheat trade is 11 to 15 cents higher with Chicago trade leading as it attempts to defend the spreads that have narrowed recently and spring wheat the weakest side of the equation. Europe and the Black Sea area will be watched with dryness in the Volga Valley hotter in the near term and Russian potential remaining good overall, with spring wheat planting still catching up with disease issues in the winter wheat from wet weather and a delayed harvest. The dollar moved back into the upper part of the range. Hard red wheat is working into feed rations in some areas with the bounce in corn values. On the July Kansas City chart, support is the 10-day at 4.38, and the 100-day at 4.60 the next round up, which we are just above at midday, then the $4.80 that stopped trade yesterday.

Midday Livestock Comments - Livestock Futures Redevelop Market Pressure

General Comments

Sharp losses once again quickly developed across feeder cattle and lean hog trade with increased selling pressure following the renewed surge in grain trade. Corn futures are higher in moderate trade. July corn futures are 12 1/4 cents higher. Stock markets are higher in light trade. Dow Jones is 2 points higher with NASDAQ up 11 points.

LIVE CATTLE:

Live cattle futures have given back early gains following a strong shift lower in feeder cattle trade once again. Lightly traded June contracts are still holding a 5 cent gain, although the rest of the complex is trading consistently lower with losses of 27 to 50 cents per cwt at midday. The underlying pressure is driven by sharply higher corn market prices with traders not only concerned about the amount of corn that is not yet, or may not get planted. But late planting traditionally lowers yield on acres that do get planted. This will dramatically affect production costs of beef through the next year. Cash cattle trade has not yet been seen Thursday morning, although scattered bids are available in most areas. Live trade in the South on Wednesday developed at $115 per cwt. This is generally steady with last week and could set the tone for the market, despite the underlying pressure in futures trade. Bids are seen at $115 to $116 live and $185 to $186 dressed. Asking prices are holding firm at $117 to $118 live and $188 and higher dressed. Boxed Beef cut-outs at midday are lower, $0.58 lower (select) and down $0.13 per cwt (choice) with light movement of 89 total loads reported (40 loads of choice cuts, 16 loads of select cuts, 3 loads of trimmings, 30 loads of ground beef).

FEEDER CATTLE:

Feeder cattle markets have responded to the aggressive double-digit gains in corn prices Thursday morning by posting sharp triple digit losses in all contracts. August and September contracts are most affected due to the immediate impact that rising feed costs have on spot-month futures. Each of these contracts are posting $2 per cwt losses as increased underlying pressure is seen across the complex. The expectation that additional pressure will develop is not only going to affect futures trade, but will be carried through cash feeder cattle prices through the end of the month and well into June. This aggressive pressure continues to set contract lows in all contracts.

LEAN HOGS:

Lean hog futures remain lower at midday. Although nearby contracts have pulled back from sharp initial losses reaching $2 per cwt, the focus on market unrest exists as the one day bounce in prices seen Wednesday is becoming a distant memory. Traders continue to remain extremely concerned about the trade relationship with China, which initially sparked the spring market rally due to expectations that trade would quickly develop. But the further the process moves along, the harder it is to see a positive short-term resolution as traders continue to back away from April highs and struggle with the potential that domestic supply may continue to be contained by current pork demand. The volatility of pork cutouts over the last few days is adding even more uncertainty to the complex at a time when seasonal support is typically developing in products like ribs and bacon. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.07 at $75.33 per cwt with the range from $71.00 to $77.00 on 3,116 head reported sold. Cash prices unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values posted sharp losses following a $17.09 loss in belly cuts. Pork cutouts fell $2.39 per cwt at $82.09 per cwt with 171 loads traded. Lean hog index for 5/28 is $82.56, down 0.75, with a projected two-day index at $82.22, down 0.34.