Good Morning from Allendale, Inc. with the early morning commentary for June 17, 2020.
Grain Markets slid lower in anticipation of larger global supply and demand concerns as coronavirus cases surge higher in some U.S. states. Wheat and corn futures felt pressure as U.S. weather maps improved and harvest of wheat crops in top exporting countries has picked up.
New coronavirus infections hit record highs in six U.S. states yesterday, marking a rising amount of cases for a second consecutive week as most states moved forward with reopening their economies. Arizona, Florida, Oklahoma, Oregon and Texas all reported record increases in new cases after recording all-time highs last week. Nevada also reported its highest single-day tally of new cases yesterday.
Prior to 2012, the last time corn ratings fell 4% or more in June was in 2007 (a year with average corn yields). That 7% decline to 70% GTE also happened in the second week of this month. The latest cut to corn conditions was largely driven by deteriorating crops in western states such as Nebraska, Kansas, Colorado and the Dakotas, as weather has been unusually hot and dry.
China sharply ramped up restrictions on people leaving the capital in an effort to stop the most serious coronavirus flare-up since February from spreading to other cities and provinces. The decision to impose fresh curbs and raise the city’s emergency response level back to II from III came as Beijing’s current outbreak rose to 106 infections since last Thursday.
Bayer AG said it will scrap a nearly $1 billion project to produce the chemical dicamba in the U.S., but said the move is unrelated to a federal court decision that blocked sales of weed killers based on the product. The company said it is halting work on a new dicamba plant in Luling, Louisiana, because global overcapacity for producing the chemical made the investment less attractive.
Russia’s grain exports will not be subjected to any quotas from July to December, the ag ministry said. However, the ministry said it plans to impose grain export quotas in the second half of the season (from January – June 2021) in order to ensure that the domestic market is adequately supplied.
The Ukrainian government has raised its grain crop forecast for this year to 68 million tonnes from 65-68 million tonnes, said Economy Minister, Ihor Petrashko.
USDA Cattle on Feed report will be released this Friday at 2p.m. CDT. May placements are expected 0.2% under last year at 2.060 million head. It would be the lowest May placement in four years. Allendale anticipates a Marketing total in May of 24.3% under last year at 1.567 million. Total Cattle on Feed as of June 1 is expected 1.0% under last year at 11.617 million. This would be the lowest June 1 total in two years.
Monthly USDA Cold Storage report will be out Monday, June 22nd at 2 p.m. CDT. Allendale projects a 580 million lb. total pork stock level for the end of May (622 million lbs. five-year average). Our estimate represents a decrease of 35 million lbs. from the previous month. Beef stocks are estimated at 457 million lbs. (five-year average of 444 million lbs.). This would be a decrease of 33 million lbs. from the previous month (five-year average for this month is a 19 million lb. decrease).
Dressed beef values were lower again with choice down 0.72 and select down 1.18. The Feeder cattle index is 128.78. Pork cut-out values were down 1.19.