Can This Export Sales Pace Continue?

Good Morning from Allendale, Inc. with the early morning commentary for August 28, 2020.

Grain Market traders continue to monitor U.S. weather forecasts as important crop areas still need rain. At the same time, all eyes will be on 8:00 AM overnight export sales for more U.S. sales to China.

Allendale’s Nationwide Producer Survey ends TODAY! This two-week long survey will include over 25 states. Please make sure your local area is represented, here Plus, don’t forget to register for the live results webinar  due September 2, 2020 at 10:00 AM CDT.

Weekly Corn export sales were reported at 1,450,498 metric tonnes, 270,350 old and 1,180,498 new crop. This was within the 700,000 – 1,500,000 trade expectation. Soybean sales totaled 1,924,878 metric tonnes, 50,447 for old and 1,874,431 for new, also within the 1,200,000 – 2,200,000 trade expectation. Wheat sales of  776,002, almost all current crop, were over the 400,000 – 700,000 trade expectation.

China was a buyer of 19,397 tonnes of old crop and 666,000 new crop. Their old and new purchases from 2/13 total 10.125 million tonnes listed as China and another 1.755 listed as Unknown. In Soybeans, China purchased 168,626 for old and 592,000 new. Sales since 2/20 for old and new + overnight sales come to 18.361 million tonnes for China and 8.285 for Unknown. In wheat, they were responsible for 123,000 tonnes of today’s sale. Chinese buying since 2/13 totals 1.772 million tonnes, completed old crop + current crop.

Brazil announced that it will temporarily lift import tariffs on corn, rice, and soybeans.  Prices have been rising and this is a move to fight inflation.

The Buenos Aires Grains Exchange warned that dryness in Argentina could impact 2020/21 wheat yields by as much as 50% in important parts of the ag regions. Frosts were also blamed for some of the damage.

The International Grains Council raised its estimate for 2020/21 world corn production by 2 million tonnes to 1.166 billion. They raised their 2020/21 world wheat production by 1 million tonnes to 763 million tonnes. USDA is currently at 1.171 billion and 766 million, respectively. 

The Federal Reserve Chairman, Jerome Powell, outlined a new approach for monetary policy which will now focus more on adding liquidity to the economy with a focus on unemployment rather than inflation. Speculative markets will call this new Fed policy to be quite bullish for the stock market, gold and other very specific markets. The positive for grains/livestock is that we’ll continue to see the US dollar devalued (helping our exports). Whether this brings the hoped for inflation into grains/livestock is an unknown at this time.

China has suspended imports of beef from an Australian firm after it detected a banned substance in some of the company’s products, the country’s customs administration said. China has requested a full investigation and a report back within 45 days from the company after it detected a banned substance in the company’s beef.

Today’s weekly beef export sales were reported at 11,789 tonnes which was 14% under last year. Pork export sales last week ran 39,443 metric tonnes. This was 39% over last year. Sales have been over last year in eight of the past nine years. China purchased 11,216 tonnes this past week.

From two weeks ago, market hog weights were unchanged from the prior week at 209 lbs. Compared with last year weights fell from +2.0% to +1.5%. steer carcass weights grew 3 lbs. over the prior week to 909. Heifer carcasses increased 1 lb. from the prior week to 833.

Dressed beef values were higher with choice up 0.09 and select up 0.15  The Feeder cattle index is 143.02.  Pork cut-out values were up 0.88.

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