Will Chinese Buying Continue?

Good Morning from Allendale, Inc. with the early morning commentary for July 17, 2020.

Grain Markets were mixed overnight as the trading week comes to a close. 8:00 AM CDT will be watched closely today for new signs of Chinese export buying as this has been a good week of sales to China.

Weekly export sales reported corn sales of 1,636,508 metric tonnes, 981,068 for old and 655,440 for new crop. This was within the 1,500,000 – 2,900,000 trade expectation. Soybean sales totaled 1,080,546 metric tonnes, 312,950 for old and 767,596 for new, within the 700,000 – 1,850,000 trade expectation. Wheat sales of 764,835 tonnes were over the 250,000 – 650,000 trade estimate.

World Weather, Inc., who will headline our Outlook Conference in less than two weeks noted, “There will be an opportunity for some rain in Cordoba and immediate neighboring areas Sunday into Wednesday that will alleviate a minor amount of dryness, but the region will remain too dry to significantly improve wheat and barley production prospect.”

Farmers in Brazil are expected to plant 38 million hectares or 93.9 million acres of beans, setting a new record if achieved.  Exports have been strong, leaving inventory levels extremely low.

Strategie Grains lowered their estimate of the EU soft wheat crop from 130.9 million tonnes to 130.3 million. That figure would be 11.5% below last year.

It will be interesting to see this afternoon’s Commitments of Traders report after traders estimate they sold 50,000 corn contracts, 16,500 soybean contracts, and bought 25,500 wheat contracts in the last week.

The University of Michigan’s Consumer Sentiment report will be released today at 9:00 AM CDT. It is expected at 77.6 as cases of COVID 19 continue to increase in the U.S.

China’s National Bureau of Statistics reminded the trade they are not out of the woods yet. Q2 pork production ran 9.6 million metric tonnes, 4.7% under last year’s Q2. They report the first half production at 19.1% under last year. Officials continue to suggest Q4 will be the quarter of change.

After adding in Wednesday’s cash hog trading we compute the Lean Hog Index at 47.49. That will be the figure CME releases today and which expired July futures will be cash-settled to.

Weekly pork export sales ran 38,488 tonnes. That was 76% over last year. Beef export sales were great at 27,767 tonnes. This was 40% over last year in the same week.

Cash cattle traded up up to $99 in Nebraska in limited numbers. Most other trades were at $96. Kansas and Texas sold at $95. This comes despite the fact we have not even started in on the market cattle backlog.

Dressed beef values were mixed with choice up 0.04 and select down 0.07. The Feeder cattle index is 135.68.  Pork cut-out values were down 1.60.

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