Good Morning from Allendale, Inc. with the early morning commentary for May 21, 2020.
Grain Markets are mixed as traders await this mornings export sales report for the latest in demand numbers. After yesterday’s wheat led rally, trade is trying to figure the true size of the world’s wheat crop.
Export sales will be out this morning at 7:30 AM CDT. Traders expect to see corn sales of 700,000 to 1,400,000 tonnes, soybeans 800,000 to 1,600,000, and wheat 200,000 to 650,000.
The Kansas Wheat Tour estimated west-central Kansas wheat yields of 42.5 bushels per acre and 32.9 bpa in the southwest portion of the state. That brings their two day state average to 42.0 bpa. The tour will wrap up later today.
Russia’s Ag Minister cut the country’s grain crop forecast to 120 million tonnes from the previous estimate of 125.3. Last year’s crop was 121 million tonnes. Rumors circulated that the actual wheat production may fall by 30% in the largest wheat regions.
Ethanol production picked up a little from 5/8 to 5/15, going from 617,000 barrels per day up to 663,000. Compared with the previous year the improvement was from -41% to -38%. That’s not the improvement we were hoping to see. Weekly gasoline demand, product supplied, slipped this week from 7.398 million barrels per day to 6.790. Compared with last year that faltered from -19% as of 5/8 to -28% as of 5/15.
Initial and Continuing Jobless Claims will be released this morning at 7:30 AM CDT. Traders will be interested to see if the claims are stabilizing or getting worse. Existing Home Sales will be out at 9:00 and Natural Gas Inventories will be out at 9:30.
Cold Storage report will be released today at 2 P.M. CDT. Allendale sees end of April pork stocks at 604.588 million lbs. (17 million lbs. less than last month). The five-year average for April is a 12 million lb. increase. We see beef stocks at 469.277 million lbs. (33 million under last month). The five-year average is a 6 million lbs. decline.
Cattle on Feed will be released tomorrow at 2 P.M. Allendale sees feedlot placements at 13.3% under last year. This is after seeing -22.7% under last year in March and -7.6% year/year in February. With packers still down last month, Allendale estimates marketings at 15.3% under last year and May 1 Cattle on Feed at 4.9% under last year.
There were no sales on the 2,782 head of cattle offered on the weekly Fed Cattle Exchange. In fact, there were no bids. This continues to the discussion in the industry that headline sales of $120 do not represent the trade very well.
Dressed beef values were mixed with choice down 5.54 and select up 2.31. The Feeder cattle index is 126.89. Pork cut-out values were up 2.22.