Export Demand in Focus

Good Morning from Allendale, Inc. with the early morning commentary for June 4, 2020.

Grain Markets are mixed as traders look to this morning’s export sales report and also hope to see additional 8 AM export sale announcements again today.

Weekly export sales will be released today at 7:30 AM CDT. Analysts expect to see corn sales of 450,000 to 1,200,000 tonnes, soybeans 600,000 to 1,550,000, and wheat 150,000 to 850,000.

World Weather, Inc. is tracking dryness in parts of Russian wheat areas and noted, “The first half of June is expected to expand the drier biased areas to include most of Russia’s eastern New Lands while continuing a dry bias in Kazakhstan and eastern portions of Russia’s Southern Region.”

The Wall Street Journal ran a headline yesterday that stated China canceled 23 cargoes of US soybeans, but Rich Nelson pointed out that upon closer inspection of the story, they didn’t cancel previous orders. They chose not to buy more U.S. soybeans at this time.

Weekly ethanol production rose from 724,000 barrels per day up to 765,000. Last week’s run was 26.7% under last year. An increase is positive but we still have not changed the general market concern. The months of June and July is where the big questions will be answered.

Brazil has exported 40% of what it has produced this year.  They were at 28% exported  during the same period over the last two years.  It’s possible they could go through their supply’s by the time harvest starts here.

Four chicken company executives, including the current CEO of Pilgrim’s Pride, were indicted on anti-trust charges. There are accused of conspiracy to fix prices and rig bids for broilers chickens for actions from 2012 – 2017.

Brazilian labor prosecutors on Wednesday filed a petition with a local court demanding closure of a JBS SA pork plant in the southern state of Rio Grande do Sul due to an outbreak of the novel coronavirus (Reuters).

June hog futures settled down the 3.75 limit yesterday. All others were only mixed, from -1.07 to +1.02. All contracts will have a 5.50 expanded limit today.

August cattle dipped a little more into that gap, 95.82 lows yesterday on the chart. The gap is open down to 95.45.

Tomorrow is Last Trading Day for June live cattle options. Monday is First Notice Day for June live cattle futures.

Dressed beef values were sharply lower again with choice down 22.83 and select down 13.80.  The Feeder cattle index is 128.65.  Pork cut-out values were up 0.64.

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