August 26, 2019

US Crops Off To A Great Start

Good Morning! From Allendale, Inc. with the early morning commentary for June 5, 2018.

Grain markets are taking a breather after the sharp decline on Monday. Today’s question is will commodity markets in general be met with further long liquidation and technical selling? Fundamental news such as weather forecasts, crop conditions and export sales are taking the back seat with money flow driving.

Weekly crop progress and condition report for corn was inline with trade estimates. Planting is virtually done for corn at 97% with 78% good/excellent. Soybean planting was 87% complete versus 75% average. Soybean conditions first report of the year showed 75% good/excellent compared to the trades 74% estimate. The soybean crop starts the year at record conditions tied with 2010. Spring wheat conditions start at 70% while winter wheat conditions fell by1% to 37% good/excellent.

Rich Nelson, Allendale’s Chief Strategist suggest trade should not get completely caught up in the great crop conditions we have in early June. The real determinant of yield is the temperature during pollination (usually the month of July). Checkout the full conversation at

Farmer selling is absent as reported by cash grain merchandisers throughout the Midwest. The weakness in futures has nearby contracts below breakeven levels.

Drew Lerner, World Weather Inc. talks about his summer forecast, “Overall, the bottom line is that the western Corn Belt and Great Plains will continue with some of the driest and warmest bias this summer. However, the farther east one travels in the Midwest the more cooling that will take place. Rainfall will be a little better distributed in the eastern U.S. during the late summer, as well, but dryness in the Plains and western Corn Belt is bound to restrict summer crop production.”

China stresses that if US implement the tariffs on metals on June 15th they will cancel their agreement to purchase US products which they agreed to in Washington a few weeks ago. However, they want to keep an open dialogue to find a solution to the trade disagreements.

Funds were estimated to have been net-sellers on Monday of 30,000 corn, 12,500 soybeans, 13,000 wheat, 5,000 soymeal and 3,500 soyoil contracts.

Paraguay overtakes Argentina’s soybean exports in 2018/19 marketing year. USDA expects Paraguay to export 6.3 mmt compared to Argentina’s 4.2 mmt.

Cash cattle trade is thought to be steady firm this week as packers build inventory. They have record profit margins and can afford to pay up a bit for inventory. However, trade is still expecting larger numbers of market ready cattle on the horizon and only a few weeks before we get into the “dog days of summer” for beef demand.

June live cattle contract remains caught in the trading range between 102.85 and 106.65.

Cash hog supplies tighten as temperatures rise causing lighter weights coming to market. Trade retaliation has hog traders concerned as some countries are threatening tariffs on pork.

July lean hog futures dropped below the 20-day and 50-day moving averages on the close Monday. July futures has resistance at 80.00 and support at 76.25. Expect choppiness to continue.

Dressed beef values were mixed with choice up .04 and select up 1.45. The CME Feeder Index is 139.23. Pork cutout value is up .84.

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