Covid-19 Continues to Weigh Down Ag Markets

Good Morning from Allendale, Inc. with the early morning commentary for July 20, 2020.

Grain Markets were mixed overnight with soybean futures pushing higher for the fifth session on strong demand, while corn and wheat eased lower on expectations of crop-friendly weather and large global supplies.  Trade will continue to watch precipitation coverage throughout the Midwest this week as only 15% of the Midwest is short moisture at this time.

Last week, September corn futures were down 3.75 cents, August soybeans were up 11.00 cents, September wheat down 3.75 cents, September soymeal was down 5.30 and September soyoil was up 178 points.

USDA Weekly Crop Progress Report will be released this afternoon at 3 p.m. CDT.  Trade is expecting corn crop conditions to decline 1-2% to 68% GTE (69% last week, 71% average).  Soybean crop conditions expected to decline 1% to 67% GTE (68% last week, 70% average).  Hard red spring wheat is expected to be stable to down 1% to 67% GTE (68% GTE last week).

CFTC Commitments of Traders report showed funds new net position short -133,625 corn contracts, long +65,975 soybean contracts, short -8,327 wheat contracts, long +21,678 live cattle contracts and long +10,460 lean hog contracts.

Private exporters reported large export sales on Friday to the USDA of 126,000 metric tons of new crop soybeans to China.

Florida reported over 12,000 new cases of COVID-19 on Sunday (the fifth day in a row the state has announced over 10,000 new infections), even as President Trump pledged that “it’s going to be under control.”  He added, “We have embers and we do have flames. Florida became more flame-like, but it’s – it’s going to be under control.  I’ll be right eventually.  It’s going to disappear, and I’ll be right.”

Brazil’s soybean production for 2020/21 is expected to reach 131.7 million tonnes (5.4% increase over last year’s crop), consultancy Safras & Mercado said.  This is the first prediction for Brazil’s new crop year.

 JBS and Tyson Foods, the world’s largest meatpackers said they have installed ultraviolet air cleaning equipment in some U.S. plants, as pressure mounts on food companies to protect workers amid growing concerns about airborne transmission of the coronavirus.  The moves underscore the mounting pressure to protect workers in the U.S. meat industry, which has seen more than 16,000 plant employees in 23 states infected with COVID-19 and 86 worker deaths related to the respiratory disease.  (Reuters)

USDA’s estimated slaughter report this week showed 2.518 million head. That was on our morning expectation. It is a dip from 2.593 million last week.  Compared with last year, this week was +10.0% higher. The previous week was +7.2% higher. Allendale has pushed back its backlog cleanup expectations to October (previously beginning of 2021).

Dressed beef values were lower with choice down 0.33 and select down 0.99. The Feeder cattle index is 136.61.  Pork cut-out values were up 3.84.

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