World Weather Concerns Remain

Good Morning from Allendale, Inc. with the early morning commentary for October 21, 2020.

Grain Markets were mixed/higher overnight as a mixture of demand and weather concerns lead markets higher. On Tuesday’s session, both wheat and corn prices pushed to new highs for the uptrend. Traders remain focused on weather for South America and Ukraine/Russia. Expectations for continued Chinese buying support the trade.

Corn basis improvements from 2 to 15 cents were noted across the cornbelt on Tuesday. Harvest in now moving into its later stages. There were sales when futures broke $4 but some producers may want to hold back for a little more.

Conab, Brazil’s agricultural agency, indicated Tuesday afternoon it did not expect any large corn or soybean import increases after the government temporarily removed import tariffs on specific ag products on Friday. They also indicated they did not see a significant impact on soy productivity from the current late planting.

Overnight export sales this week so far total 468,000 tonnes of corn (Monday) and 132,000 for soybeans (Tuesday).

Open interest continues to increase on the rallies for corn and wheat. New money continues to enter the market. On Monday’s trade open interest increased 22,451 contracts for corn and another 5,410/1,038/1,347 contracts for Chi/KC/MN wheat. For soybeans Monday’s 3 3/4 cent higher trade only saw an open interest increase of 156 contracts. Some may suggest the soybean market will pause over the next two weeks as rains improve the Brazilian/Argentine situation.

Northern Plains/Upper Midwest winter conditions will be apparent this week after two snow systems come through. The current system will push Eastern South Dakota/Southern Minnesota totals up to 10 inches. A second system will be seen Wednesday afternoon through Thursday. Portions of Upper South Dakota and Lower North Dakota will pick up 4 to 8 inches. Livestock stress may be seen. Field work will be limited.

US winter wheat producers in the Central Plains will be monitoring a third snow system coming this weekend. 1 to 5 inches may fall in portions of Nebraska and Kansas with a moisture equivalent of 0.25 inch. Dry conditions are forecast afterwards.

Last Trade for November options is on Friday. This includes November corn, canola, wheat, soybeans, soymeal and soyoil.

Wholesale beef ended up 0.86 on Tuesday. That stopped five days in a row of losses. It is the best one-day jump since October 1. Many have been hoping a change in this portion of the beef market may stop pressure on cattle futures.

Cattle on Feed will be out Friday at 2 pm Central. Estimates from Urner Barry show Oct 1 On Feed at 103.2% of last year, September placements 102.4% and September marketings 105.8%. Allendale sees those numbers at 102.7%, 98.9% and 105.2% respectively.

Cold Storage will be out Thursday at 2 pm Central. We expect end of September meat stocks at 470.0 million lbs. of beef and 467.7 for pork.

Wholesale pork prices have declined 4.51 over the past three days. Many have been looking for a peak as Q4 supplies build in the weeks ahead.

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