January 28, 2020

Spotlight on USDA as Trade Worries Persist

Good Morning! From Allendale, Inc. with the early morning commentary for June 29, 2018.

Grain markets have a lot to follow today with two major USDA reports out this morning, the ongoing trade/political tensions, and the volatility that can accompany them both.

Average estimates for today's important USDA reports were released by Reuters. Traders estimate corn stocks at 5.268 billion bushels, soybeans 1.225, and wheat 1.091. Corn acreage is estimated at 88.562 million, soybeans 89.691, and all wheat at 47.124. The Planted Acreage and Grain Stocks reports are both due at 11:00 AM CDT today.

Volatility is the norm following today's reports. Rich Nelson did a price study covering the last 15 years and found that corn was lower in 10 of the last 15 years following the release of the reports. The average lower close was down 18.1 cents, while the average close higher was 15.8 cents. Soybeans were lower 8 of the last 15 years with an average of 24.3 cents, while the average for the up years is 31.3 cents.

Weekly export sales for the week of the 15th through the 21st had corn sales of  1,486,641 metric tonnes (849,871 for 2017/18 and 636,770 for 2018/19), over the 800,000 – 1,400,000 trade estimate. Year to date sales now come to 2.254 billion. Soybean sales totaled 1,000,783 metric tonnes (358,513 for 2017/18 and 642,270 for 2018/19), also over the 400,000 – 1,000,000 trade expectation. YTD sales now total 101% of USDA's recent Supply and Demand estimate.

The U.S. Department of Agriculture's monthly oilseed crushings report is expected to show that 5.218 million short tons, or 173.9 million bushels, of soybeans were processed in May, according to the average forecast of nine analysts surveyed by Reuters on Thursday. (Reuters)

Managed money funds were mostly sellers yesterday as one might have expected. Traders estimate they sold 13,000 corn contracts, 5,000 soybeans, 4,000 wheat, and 2,000 soymeal. Much of the selling seemed to come near the close. They were thought to be buyers of 2,500 soyoil.

USDA's Ag Attache to China estimates the Chinese soybean imports at 100.5 million tonnes, below the USDA's own estimate of 103. The report also noted that soybean demand continues to grow and that the government continues to push for increased domestic production.

President Donald Trump will meet with Russian President Vladimir Putin next month in Finland, the White House announced Friday, setting up a historic summit between two presidents who have often spoken warmly of one another even as their nations have become increasingly at odds. "President Donald J. Trump and President Vladimir Putin of the Russian Federation will meet on July 16, 2018, in Helsinki, Finland," White House press secretary Sarah Huckabee Sanders said in a statement Thursday morning. "The two leaders will discuss relations between the United States and Russia and a range of national security issues." (Politico)

Quarterly Hogs and Pigs, out yesterday, reported All Hogs at 103.4% vs. last year, right about inline with the 103.0 trade estimate. Kept for Markets was reported at 103.4%, also about inline with the 103.1 estimate. The surprise was in Kept for Breeding at 103.5%. Analysts were expecting 101.7%.

Pork export sales totaled 24,263 metric tonnes, or 7% under last year. Beef export sales totaled 18,418 metric tonnes this morning. That would be 64% over last year.

Actual Slaughter out yesterday showed the average cattle carcass weights rose by 2 pounds,  steers rose by 5 pounds, and heifers were up by 4. Weight increases are normal for this time of year, but the year over year comparison fell.

Dressed beef values were lower with choice down 2.06 and select down .22. The CME Feeder Index is 142.55. Pork cutout value is down .07.

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