China Still a Major Focus

Good Morning from Allendale, Inc. with the early morning commentary for July 24, 2020.

Grain Markets traded mixed overnight with most looking to headlines for their next move. Traders will continue to monitor weather, diplomatic relations with China, as well as morning export sales for the days direction.

Overnight Soybean sales continued yesterday for now eight straight business days. Yesterday’s 132,000 tonne sale brings the total old + new overnight sales, for both China and Unknown to 1,622,300 tonnes since 07/17. Traders would like this trend to continue.

Weekly export sales had corn sales of 2,547,772 metric tonnes, 220,585 old and 2,327,187 new crop. This was within the 1,900,000 – 4,000,000 trade expectation. Soybean export sales during this period totaled 2,665,503 metric tonnes, 365,169 for old and 2,300,503 for new. That was within the 1,300,000 – 2,700,000 trade expectation. Wheat sales of 616,663 tonnes of current crop-only sales were over the 300,000 – 600,000 trade estimate.

Celeres estimates that Brazil’s 2020/21 soybean production at 130.8 million tonnes on an increase in acreage. Last year, the country produced 124.7 million tonnes.

The Buenos Aires Grains Exchange said that dry weather in central and northern parts of Argentina will likely reduce the amount of wheat planted in the area, and is impacting the development of what is already planted there.

The International Grains Council cut its global wheat production estimate to 762 million tonnes, a drop of 6 million. The cut came from lower outlooks in the E.U. and Russia.

U.S. Secretary of State Mike Pompeo took fresh aim at China on Thursday and said the United States and its allies must use “more creative and assertive ways” to press the Chinese Communist Party to change its ways. Separately, China said the U.S. move to close its Houston consulate this week had “severely harmed” relations and warned it “must” retaliate, without detailing what it would do. (Reuters)

Cattle on Feed, is due for release on Friday. Allendale sees June feedlot placements 2.8% over last year. This would stop five months in a row of lower than last year placements. With a June marketing at 3.1% over last year we compute the starting On Feed as of July 1 at 0.7% under last year.

Cattle, the bi-annual survey of cow/calf producers, is also set for a Friday release. Allendale sees this as confirming the narrative from the January report, the ending of five years of expansion. We see the beef cow herd as of July 1 at 1.2% under last year. On this interest the focus will not be on the breeding herd but the implied market cattle backlog as seen from the steer and “other heifer” groupings, +2.8% and +3.3% year/year respectively.

Beef export sales of 15,646 tonnes were positive at 63% over last year. Sales have been good for two weeks now. US pork export sales of 31,816 tonnes were 52% over last year in the same week. The prior three weeks ran +66% to +180% year/year. Year to date sales are running 39% over last year.

China’s General Administration of Customs reported pork imports in June at 400,000 tonnes. This was 128% over last year. Though an exciting sounding story, it is completely expected. This new number brings the first six month import figure to 2.12 million tonnes, 143% over last year.

Dressed beef values were higher with choice up 1.11 and select up 1.51. The Feeder cattle index is 137.96.  Pork cut-out values were up .34.

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