September 15, 2019

Traders Turn to Export Sales

Good Morning from Allendale, Inc. with the early morning commentary for June 13, 2019.

Grain markets are higher as traders monitor the latest in weather map updates looking to see if farmers will get a chance to finish planting before it no longer makes sense. This morning's export sales report will show the latest in world demand later this morning.

A few clues about this year's acreage may be found in a comparison to 1995. Allendale's Rich Nelson explored this possibility in a free webinar, here. Take a look.

Lanworth estimates US corn acreage at 84.7 million, a drop of 8.1 million acres from the March Prospective plantings report. They estimate yield at 170.2 and production of 13.268 billion bushels. As a reminder, USDA estimated yield at 166 and a total production of 13.680 in Tuesday's report.

Weekly export sales will be released this morning at 7:30 AM CDT. Analysts expect to see wheat sales of 200,000 to 500,000, corn sales of 350,000 to 850,000, soybeans 300,000 to 800,000, soymeal 100,000 to 350,000, and soyoil 8,000 to 25,000 (all new crop/old crop combined).

Weekly ethanol production was strong for the week at 1.096 million barrels per day. That was the best of the marketing year that started in September. It was also the best since August 2 of last year. It is normal for production rates to rise at this time of year but this was quite strong.

Managed money funds were thought to be buyers in yesterday's trade of 16,000 corn contracts, 15,000 soybeans, 9,000 wheat, 7,000 soymeal, and 5,000 soyoil.

U.S. President Trump declined to set a deadline on Wednesday for levying tariffs on another $325 billion of Chinese goods and called the relationship with Beijing good but "testy" after China walked back commitments for a trade deal. (Reuters)

The economic calendar is busy at 7:30 AM CDT this morning with Initial & Continuing jobless claims and Export/Import Prices all out. EIA's Natural Gas Inventories will be released at 9:30.

The weekly Iowa/Southern Minnesota hog weight report had the average liveweight market hog at 285.2 lbs. That is down 2 lbs. from the previous week. However, this is a time if year when weights should be sliding hard.

Chinese pork suppliers are still pulling product out of storage before the whole-country testing program becomes mandatory. The US belief is that export sales to China will pick up after that point.

Wholesale beef has stabilized over the past few weeks. Current prices for choice are 2.84 over the May 16 low. Select is 1.62 over the May 22 low. That does not guarantee a drop in cash cattle though. Often, cash beef and cash cattle diverge in pricing at this time of year.

Last week's cash cattle trade averaged $113. June futures are implying $109. August futures, which will have a slightly larger supply offering than June or July, are implying $106.

Dressed beef values were lower with choice down 0.24 and select down 1.52. The CME feeder index is 133.29.  Pork cut-out values were down. 1.25.

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