Crop Progress Lower Than Expected as Traders Focus on WASDE Report 

Good Morning from Allendale, Inc. with the early morning commentary for May 12, 2020.

Grain Markets were mixed with corn and wheat futures slightly lower on energy prices pulling back and large number expected for today’s WASDE report.  Soybean futures were higher on Chinese export purchases, but gains were capped as trading volumes remained light from position uncertainty and trade repositioning.

USDA Weekly Crop Progress Report showed corn planting at 67% complete (71% expected, 51% last week, 28% last year, 56% average).  Soybean planting at 38% complete (42% expected, 23% last week, 8% last year, 23% average).  Hard red Spring wheat planting at 42% complete (49% expected, 29% last week, 38% last year, 63% average).  Winter wheat conditions at 53% GTE (54% expected, 55% last week, 64% last year).  Cotton planting at 32% complete (18% last week, 24% last year, 27% average).  

President Trump said he is not in favor of the U.S. reopening negotiations with China on Phase 1 of a trade deal, which the two countries already agreed on at the beginning of this year.  “No, not at all, not even a little bit,” Trump said when asked if he would entertain the idea of reworking Phase 1, as some Chinese advisers have reportedly urged.  “I’m not interested. We signed a deal. I’ve heard that too – they’d like to re-open the trade talks to make it a better deal for them,” he added.

USDA Monthly Supply and Demand report will be released this morning at 11 a.m. CDT.  They expect to see 2020/21 corn ending stocks at 3,389 million bushels (if seen this would be the largest supply since 1988 and 4th biggest ever), soybeans 430 mb, and wheat 814 mb. 2019/20 ending stocks are estimated at 2,224 mb for corn (132 mb over last month), 488 MB for soybeans, and 969 MB for wheat.

USDA weekly grain export inspections showed corn exports at 1,335,000 tonnes (900,000 to 1,200,000 expected), soybean exports at 496,000 tonnes (350,000 to 700,000 expected) and wheat exports at 340,000 tonnes (400,000 to 650,000 expected).

Chinese importers bought at least four cargoes (roughly 240,000 tonnes) of U.S. soybeans yesterday for shipment beginning in July, two traders familiar with the deals said.  More sales are possible as a Chinese state-owned firm had sought offers for as much as 20 cargoes to be shipped during July to November of this year from terminals along the U.S. Gulf Coast or the Pacific Northwest, the traders said.

Saudi Arabia will voluntarily deepen oil output cuts from June as low oil prices are causing huge pain to the kingdom’s budget as global demand remains weak due to lockdowns from the coronavirus pandemic.  Saudi Energy Minister Prince Abdulaziz said the deeper oil output cuts in June are designed to expedite draining of a global supply surplus and rebalancing the oil market.

March cattle sale barn volume was -47.7% lower than last year, as sale barn volume makes up roughly half of the monthly placements.  Total March placements fell by -22.7% over last year, with completed April sale barn volume -24.4% under last year.  Contrarily, May sale barn action has been accelerating, giving hope we may have lower placements only from February through April.

U.S. pork supplies have tightened as the number of pigs slaughtered each day has plunged by 40% since mid-March, shipments of American pork to China more than quadrupled over the same period, according to USDA data.  These disruptions mean consumers could see 30% less meat in supermarkets by the end of this month, at prices 20% higher than last year, according to Will Sawyer, lead economist at agricultural lender CoBank.

Dressed beef values were higher with choice up 7.70 and select up 3.98.  The Feeder cattle index is 122.60.  Pork cut-out values were up 5.16.

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