Hot, Dry Weather Extends Grain Price Rally

Good Morning from Allendale, Inc. with the early morning commentary for July 6, 2020.

Grain Markets were sharply higher overnight with soybean futures edging higher to a 4-month high while corn futures pushed higher as the crops get close to pollination and are sensitive to hot and dry weather.  Traders will continue to remain focused on weather maps this week as they try to decide how much weather premium should be added to these markets.

Last week, September corn futures were up 37.75 cents, August soybeans were up 31.50 cents, September wheat up 16.25 cents, September soymeal was down 10.80 and September soyoil was up 62 points.

USDA Weekly Crop Progress Report will be released this afternoon at 3 p.m. CDT.  Trade is expecting corn crop conditions to remain around 73% GTE (73% last week, 71% average).  Soybean crop conditions expected remain stable at 71% GTE (71% last week, 68% average).

President Trump signed the PPP loan-extension law passed by Congress last week, which extends the deadline to apply for a PPP loan until August 8. There is $130 billion of unused PPP loan money remaining.

CFTC Commitments of Traders report was delayed until after market close today.

Trump Administration is considering two or three actions against China that could be taken within a matter of days, not weeks.  One action is President Trump could announce sanctions against Chinese officials that the U.S. believes are responsible for the repression of minorities in Xinjiang.  On the brighter side, the US-China phase-one trade deal so far remains on track.  White House advisor, Larry Kudlow last week said the trade deal “is proceeding.”

Private exporters reported last Friday to the USDA export sales of 202,000 metric tons of corn for delivery to China during the 2020/2021 marketing year.  They also reported 126,000 metric tons of soybeans to China during the 2020/2021 marketing year.

Cash cattle traded down to $93 at the end of last week. This was lower than the $94 to $96 trades noted earlier in the week.  Conversely, live cattle futures rallied around $2.50 higher.

China’s Ministry of Ag and Rural Affairs said the so-called “G4” strain of swine flu virus is not new and does not infect or sicken humans and animals easily, rebuffing a study published earlier last week.  The ministry said added that the study has been interpreted by the media “in an exaggerated and nonfactual way.”

Dressed beef values were higher with choice up 0.06 and select up 0.33. The Feeder cattle index is 129.05. Pork cut-out values were up 2.84.

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