Good Morning from Allendale, Inc. with the early morning commentary for September 9, 2020.
Grain Markets are slightly lower as crop ratings did not feed the recent bull market. Yesterday’s day-session close was slightly higher as coming dryness and new corn and soybean export sales overshadowed recent rains.
Allendale releases a new product this morning called the “Allendale Snapshot”. This is a new series of discussions President Steve Georgy and Chief Strategist Rich Nelson will have before each WASDE report. A brief discussion of both the numbers, and current price action, will be covered before each month’s supply/demand report. Tied into this, Steve and Rich will also be featured today on RFD-TV for a special pre-WASDE program from 8:15 – 8:38 am CT.
Do you know Allendale’s schedule on RFD-TV? Rich is on every weekday from 8:15 – 8:28 am CT with Marlin Bohling and John Jenkinson. Greg McBride is separately on Monday and Friday. Our President, Steve Georgy has regular coverage of both RFD’s television and Rural Radio segments.
Corn estimates for Friday’s WASDE report are for yields to fall from 181.8 via USDA 8/12 to 178.3. This is inline with Allendale’s Nationwide Producer Yield Survey at 178.28. The trade expects an 83.5 million acre harvested number, 0.5 under USDA’s 8/12 report. Allendale is using the same acreage decline. Production is seen at 14.898 billion bushels, right next to Allendale’s 14.890 estimate. USDA 8/12 was at 15.278. New crop corn ending stocks are expected to fall to 2.451 billion (ALDL 2.527) vs. the 2.756 USDA 8/12. Estimates come from Reuters newswire.
Soybean estimates for Friday’s WASDE report are for yields to fall from 53.3 via USDA 8/12 to 51.8. This is inline with Allendale’s Nationwide Producer Yield Survey at 51.93. Production is seen at 4.295 billion bushels, right next to Allendale’s 4.311 estimate. USDA 8/12 was at 4.425. New crop soybean ending stocks are expected to fall to 465 million (ALDL 379) vs. the 610 USDA 8/12.
Wheat estimates for Friday’s WASDE should not surprise anyone. In every year since 2001 USDA has not changed production on this report. They generally wait for the 9/30 Small Grains Summary. Ending stocks are seen at 924 million bushels (ALDL 926). This is little changed from their 9/12 viewpoint of 925. More important for wheat will be Friday’s slight production declines coming for the EU and Argentina against sharply higher numbers for Russia, Canada and Australia.
Corn ratings fell 1% as of Sunday to 61% good to excellent. That was on the trade expectation. Current ratings are below the 69% average for this week of the last five normal years, 2014 – 2018.
Soybean ratings fell 1% from the Sunday prior to now 65% good to excellent. That was better than the trade expectation of -2%. Current ratings are just 2% from the average of the previous five normal years, 2014- 2018.
Spring wheat harvest advanced from 69% to 82% complete as of Sunday. That was right next to the 83% trade estimate. The five year average is 87%.
The first winter wheat planting estimate was released today at 5% complete. This is slightly over the trade’s 4% estimate. The five year average is 3%.
China’s Consumer Price Index rose 2.4% vs. last year. That was on the trade expectation. Their measure of wholesale prices, the Producer Price Index, fell 2.0% vs. last year which is also inline with the trade estimate.
The US has coming bans on imports of Chinese cotton and tomato imports from the Xinjiang region. This is a stepped up measure to shed light on evidence that a portion of China’s output has come from forced labor. Markets are concerned this could result in retaliatory actions. Last year China was our largest buyer of cotton at 89,500 tonnes vs. total imports of 486,600 tonnes.
Managed Money from 8/11 to 9/1 purchased 191,020 contracts of corn. The market agreed with a 34 1/2 cent rally. Soybean purchases during this time totaled 135,743 contracts with a strong market agreement of 81 1/4 cents. In wheat the fund purchasing totaled 48,01 contracts with a strong market agreement of 60 1/4 cents.
Grain inspections this morning were neutral for corn at 781,838 tonnes (500,000 – 800,000 expected). Soybeans were slightly positive at 1,295,462 tonnes (650,000 – 1,100,000). Wheat inspections ran 695,741 tonnes which were neutral against estimates of (450,000 – 700,000).
Overnight export sales reported this morning ran 400,000 + 264,000 tonnes for soybeans to China and 101,600 tonnes of corn to China. since 8/27 we count 1,114,000 in new purchase of US soybeans and 1,293,600 of corn. This brings the new current in new crop sales to China at 8.835 million tonnes for corn and 14.640 mt for soybeans. These are separate counts from any sales to “unknown”.
Cash cattle averaged $103.12 last week according to the All Grades section on the well-known 5 Area report. The previous week averaged $105.09. This was the lowest cattle trade in four weeks. On the positive side, this would suggest we didn’t move as many of those $102’s last week as we expected.
In pork much of the trade continues to question the coming supply flow. Packers have been bidding more aggressively than expected and wholesale pork gained 9.17 last week. As noted over the past two weeks it won’t be until mid-month, when the normal supply increase starts, that anyone will know what the correct belief is.