June 19, 2019

Wake Up Call

Crop Progress Remains Below Expectations

Good Morning from Allendale, Inc. with the early morning commentary for June 18, 2019.

Grain markets are lower as traders weigh planting progress vs. forecasts for more rains in the Midwest where wet conditions have delayed plantings and cast doubts on production estimates. Trade will continue to focus on weather while farmers attempt to plant their remaining soybean acres.

Weekly crop progress report showed corn planting at 92% complete (92% estimated, 83% last week, 100% last year and 100% 5-year average).  Corn condition rating at 59% GTE (59% estimated, 59% last week).  The first soybean condition rating will likely be released on June 24.  Soybean planting at 77% complete (79% estimated, 60% last week, 96% last year and 93% 5-year average).  Hard red Spring wheat GTE rating at 78% (81% estimated, 81% last week). Winter wheat rating at 64% GTE (63% estimated, 64% last week).

Large farm-support plans in the U.S. and India are being scrutinized by other World Trade Organization members, questions submitted to the WTO's quarterly agriculture committee meeting showed.  The WTO has strict rules about the size and nature of payments, and member governments keep a close watch for any competitors who might be cheating.

NOPA soybean crush report showed May soybean crush at 154.8 million bushels (162.5 million bushels estimated, 160 million bushels last month, 163.6 million last year).  Soyoil stocks declined to 1.581 billion lbs. (1.776 billion lbs. estimated, 1.787 billion lbs. last month, 1.856 billion lbs. last year).  Soymeal at 617,318 tons (763,203 last month, 904,941 last year).

U.S. Defense Secretary Patrick Shanahan announced the deployment of about 1,000 more troops to the Middle East for what he said were "defensive purposes," citing concerns about a threat from Iran. "The recent Iranian attacks validate the reliable, credible intelligence we have received on hostile behavior by Iranian forces and their proxy groups that threaten United States personnel and interests across the region," Shanahan said.

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) lowered its forecast for new crop wheat exports to 11.7 million tonnes (14.2 million last report), citing drought.

Russian wheat export prices remained broadly stable, with many analysts forecasting a possible rise in prices on continued dry and hot weather in the Black Sea region.  "The market continues to watch the Black Sea weather closely where hot and dry weather continues to threaten the new crop," SovEcon said.

Lean hog futures rose sharply on bargain buying after breaking strong support levels last week, but large hog supply numbers hung over the hog market, capping any significant rally.

Live cattle and feeder cattle futures also closed sharply higher on bargain buying as larger than expected supply numbers held gains in check.

Dressed beef values were lower with choice down 0.41 and select down 0.25. The CME feeder index is 133.55.  Pork cut-out values were down 0.24.

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