Grain markets pause mid-week

Good Morning from Allendale, Inc. with the early morning commentary for September 23, 2020.

Grain Markets were mixed overnight after the markets have paused in their longer term uptrends. Daily export sales continue strong. However, the trade awaits coming South American rains, US harvest yields remain strong and there has been a moderate bump in Covid-19 cases.

From Friday’s high to Tuesday’s close December corn is -10 cents, November soybeans -27 cents and December wheat is off 20 cents.

Export sales, through Tuesday morning, show 12.988 million tonnes of new crop corn for China + Unknown. 29.723 mt of soybeans are booked under those two. The previous peak was 5.146 for Sep – Aug shipments of corn to China and 36.119 for soybeans.

U.S. winter wheat regions are expected to see beneficial rains in the coming days, however, forecasters predict that more rain will be needed to correct the recent dry-spell and put the crop in a better condition.

Argentina and Brazil are also expected to see rains in the near-term forecast, but more will be needed to improve the soil moisture content in Argentina’s winter wheat regions, and Brazil’s summer crop planting regions.

EIA ethanol production covering last week will be out at 930 am CT. The previous week’s numbers show ethanol production -7.7% yr and implied gasoline demand at -5.2%.

CDC data on COVID-19 shows a bottom of 23,301 new cases on September 8. That rose to 48,848 new cases on the 18th.

USDA Weekly Crop Progress Report will be released this afternoon at 3 p.m. CDT.  Trade is expecting corn crop conditions to stay unchanged at 60% GTE (60% last week, 63% average).  Corn harvest is expected at 13-15% complete (5% last week).  Soybean crop conditions expected to stay unchanged at 63% GTE (63% last week, 63% average).  Soybean harvest expected at 5% complete.  Hard red winter wheat planting is expected to be at 20% complete (10% complete last week).

September 30 will hold two moderately important USDA reports. Quarterly Grain Stocks will give us the revised old crop stock numbers for corn and soybeans. Small Grains Summary reports on the revised 2020 production

Cash cattle sales last week were mostly higher with Western Iowa at $104-$105’s. The average price last week was $3-4 higher from the previous week.

Beef stocks at the end of August were 460.219 million lbs. That was over our 453.159 million lb. estimate. Stocks increased by 20 million lbs. in August, near the five year average increase of 19.

Cattle on Feed will be out on Friday. The average trade estimate among the Bloomberg poll is +3.3% yr/yr Sep 1 Cattle on Feed, +5.5% August placements and -3.4% yr/yr August marketings. This returns three months in a row of higher than last year placements. Q1 and Q2 ahead will be adequately supplied.

Lean hogs touched limit up on Tuesday and the strong morning wholesale pork report and hopes for Chinese purchases.

Wholesale pork was strong on Tuesday’s morning report, +4.17 from Monday. However, after the futures close USDA’s afternoon report revised that to a 1.43 loss for the day.

Pork stocks as of the end of August came to  467.682 million lbs. This was slightly over our 471.388 lb. estimate. This represented a 7 million lb. increase for the end of July stocks. The five year average change for August is a 15 million lb. increase.

Hogs and Pigs on Thursday afternoon is expected to show September 1 All hogs at +0.1% yr/yr, Kept for Breeding of -2.5% yr/yr and Kept for Marketing at +0.6% yr/yr. The Reuters poll shows widespread agreement about the breeding herd decline but less agreement on the marketing numbers.

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