Coronavirus Still Slowing Demand

Good Morning from Allendale, Inc. with the early morning commentary for June 22, 2020.

Grain Markets overnight were mixed with soybean futures lower, as it took a breather after climbing to its highest price since early April on renewed expectations of stronger Chinese demand.  Wheat futures lost more ground due to strong U.S. winter crop harvest and corn futures slid after three straight sessions of gains.

Last week, July corn futures were up 2.75 cent, July soybeans were up 4.00 cents, July wheat down 20.75 cents, July soymeal was down 2.20 and July soyoil was up 93 points.

USDA Weekly Crop Progress Report will be released this afternoon at 3 p.m. CST.  Trade is expecting corn crop conditions to stay around 71% GTE (71% last week).  Soybean crop conditions expected at 72% GTE (72% last week).  Hard red Spring wheat crop conditions expected at 81% GTE (81% last week, 69% five-year average).  Winter wheat expected to advance to 34% complete (12% last week).

CFTC Commitments of Traders report showed funds new net position short -270,751 corn contracts, long +21,183 soybean contracts, short -30,251 wheat contracts, long +17,326 live cattle contracts and long +8,156 lean hog contracts.

U.S. Trade Representative Lighthizer said after several discussions, he is confident China will meet their Phase 1 commitment to buy $36.5 billion of U.S. ag commodities in 2020, even though they have only $10B purchased so far.  Bloomberg also reported China will speed up its U.S. ag purchases over the next few months primarily in soybeans, corn & ethanol.

The World Health Organization reported a record increase in global coronavirus cases yesterday, with the total rising by 183,020 in a 24-hour period.  The biggest increase was from North and South America with over 116,000 new cases.  Total global cases are over 8.7 million with more than 461,000 deaths, according to the WHO.  The previous record for new cases was 181,232 on June 18.

China’s customs authority said it has suspended imports of poultry products from a plant owned by Tyson Inc., which has been hit hard by the coronavirus outbreak.  Imports of U.S. poultry have surged since China ended an almost five-year ban in November 2019.

USDA Cattle on Feed report showed April placements at 98.7 (96.1 expected, 77.7 last month) at 2.037 million head.  April marketing at 72.5 (73.9 expected, 75.7 last month) at 1.500 million head. Total Cattle on Feed as of May 1 at 99.5 (98.7 expected, 94.9 last month) at 11.671 million head.

Monthly USDA Cold Storage report will be out today at 2 p.m. CDT.  Allendale projects a 580 million lb. total pork stock level for the end of May (622 million lbs. five-year average). Our estimate represents a decrease of 35 million lbs. from the previous month.  Beef stocks are estimated at 457 million lbs. (five-year average of 444 million lbs.). This would be a decrease of 33 million lbs. from the previous month (five-year average for this month is a 19 million lb. decrease).

Dressed beef values were mixed with choice up 0.16 and select down 0.17. The Feeder cattle index is 128.01. Pork cut-out values were down .37.

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