Good Morning from Allendale, Inc. with the early morning commentary for July 8, 2020.
Grain Markets were slightly lower overnight with weather forecasts improved from the previous day. As crops get closer to the important reproductive period, hot and dry weather is a concern.
COVID-19 cases have now topped 3 million for the US. California, Hawaii, Missouri, Montana, Oklahoma and Texas broke previous daily high records. Rising virus cases threaten the economic recovery.
Concerns with China Continue. Secretary of State, Mike Pompeo, noted the US will begin restricting visas for some Chinese officials due to actions in Tibet. The FTC and DOJ are also investigating concerns the popular video app, TikTok, may have violated a 2019 agreement to delete videos and personal information from those under 13.
Pollination is the Main Topic in agriculture right now. Allendale notes Monday’s 10% silking rate was behind the 16% five year average 2015 – 2019. It is behind the 23% rate for this week for 2014 – 2018. A routine emergence to silking rate would suggest as of 7/12 that Iowa would be 50%, Nebraska 47% and Minnesota at 36%. As a whole, the WCB should be quicker than the ECB.
Yield Changes for Friday’s WASDE are unusual, only 4 of the past 20 years for corn and 3 of the past 20 for soybeans.
New Crop Ending Stock Estimates for Friday’s WASDE suggest a decline for corn from 3.323 billion in June to 2.683 and soybeans from 395 million to 414. Allendale is at 2.806 and 414 respectively.
New Crop Wheat Production is expected on Friday to decline from 1.877 billion to 1.848. The drop will come from “other spring”. Allendale sees the total at 1.856.
CFTC Commitments of Traders report was released Monday afternoon due to the holiday. Fund position changes from 6/23 to 6/30 are as follows…corn, +75,831 contracts with a 13.75 cent gain in CZ, beans +23,551 contracts with SX +8.25 cents and wheat +9,401 contracts with WU +4 cents. The market was accepting of fund buying through last Tuesday.
Chinese Buying in Soybeans, 2/13 – 6/25, totals 7.660 million tonnes (3.6 old + 4.0 new). There is another 522,000 tonnes in overnight sales since 6/25. Additionally, there’s another 4.6 on top of that listed under “unknown”. However, Chinese buying is nowhere near the 30 – 45 million tonnes envisioned for a trade deal. It is nearing the minimum expected annual level of 12 – 15.
Chinese Buying in Corn, despite hope from some in US agriculture, remains weak. 2/13 – 6/15 buying totals 2.113 million tonnes. Add in unknown at you get 3.247. Add in 528,000 in overnight sales since 6/25 and you’re still not looking at a market moving issue.
Cash Cattle yesterday traded $94 to $95 live. That was within last week’s $93 – $96.
US Market Hog Backlog, currently at 2.479 million head, could be eliminated by 9/12 according to Allendale. A new high in the packing plant recovery was made on Tuesday, 469,000 head vs. normal at 488,000.