China to Halt U.S. Ag Purchases

Good Morning from Allendale, Inc. with the early morning commentary for June 2, 2020.

Grain Markets were stable considering the news of China halting U.S. ag purchases.  Corn and wheat futures were slightly lower on favorable planting progress and short-term weather maps.  Soybean futures were slightly higher on an unexpected purchase from China and lower than expected planting progress.

State-owned Chinese firms bought at least 180,000 of U.S. soybeans yesterday, even as sources in China said the government had told them to halt purchases.  The purchases are for shipment in October or November of this year.

USDA Weekly Crop Progress Report showed corn planting at 93% complete (94% expected, 80% last week, 64% last year, 89% average).  Corn conditions seen at 74% GTE (71% expected, 70% last week).  Soybean planting at 75% complete (79% expected, 53% last week, 36% last year, 68% average).  Soybean conditions at 70% GTE (68% expected).  Hard red Spring wheat planting at 91% complete (91% expected, 60% last week, 90% last year, 96% average).  Hard red Spring wheat conditions at 80% GTE (66% expected, 74% last year).  Winter wheat conditions at 51% GTE (54% expected, 54% last week, 64% last year).  Cotton planting at 66% complete (53% last week, 67% last year, 66% average).  

USDA Soybean Crush report showed April soy crush at 183.4 million bushels (expected 182.5 mb, 171.6 mb last year, 192.1 mb last month).  Oil stocks showed 2.602 billion pounds (expected 2.532 billion lbs., 2.328 billion lbs. last month and 2.258 billion lbs. last year).

The U.S. is considering the option of welcoming people from Hong Kong in response to China’s push to impose national security legislation in the former British colony, U.S. Secretary of State Mike Pompeo said.  Asked if the Trump administration was considering welcoming Hong Kong people “to come here and bring their entrepreneurial creativity,” Pompeo replied, “We are considering it. I don’t know precisely how it will play out. The British have, as you know, a different relationship. A lot of these folks have British national passports. There’s a long history between Hong Kong and the United Kingdom; it’s very different. But we’re taking a look at it.”

USDA weekly grain export inspections showed corn exports at 1,128,000 tonnes (800,000 to 1,200,000 expected), soybean exports at 396,000 tonnes (350,000 to 600,000 expected) and wheat exports at 499,000 tonnes (350,000 to 600,000 expected).

Ukraine’s wheat harvest this year is likely to fall about 18% to 23.2 million tonnes and exports by more than a quarter to 14.9 million tonnes, Ukrainian traders quoted preliminary data from the economy ministry.  Ukraine harvested 28.3 million tonnes of wheat last year, and exports were estimated at a record of 20.5 million tonnes this season (which ends June 30th).

Hog slaughter dropped to 403,000 head yesterday, Friday was noted at 419,000. The Storm Lake, Iowa plant will be down until Wednesday according to several sources.  They have capacity to slaughter 17,250 head per day.

Last week’s average cash cattle price was 116.90 for the 35% – 65% group (116.13 average last week).  Using the All Cattle designation last week averaged 115.71 (117.06 the previous week).

Dressed beef values were sharply lower with choice down 22.19 and select down 23.24.  The Feeder cattle index is 128.96.  Pork cut-out values were down 7.16.

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