Grains Firm on Extended Weather Forecast

Good Morning from Allendale, Inc. with the early morning commentary for July 22, 2020.

Grain Markets were slightly higher overnight as the early August forecast has moved moderately drier. This would raise yield risk more for soybeans than corn.

The president restarted press briefings on COVID-19 yesterday. 29 states have seen increasing caseloads in recent weeks. Tuesday’s one-day increase was 64,734 in new findings.

Weekly ethanol production will be released this morning. This will be compared against last year’s 1.039 million barrel per day pace in the same week. The prior week’s run was 12.7% under last year. Traders note ethanol prices have fallen almost 30 cents per gallon since 7/10.

Legislators continue to discuss the next round of stimulus/virus relief. $1 to $3 trillion is the current range of talking points.

Corn export sales return after a four business day hiatus. Yesterday’s 207,880 tonne announcement brings the total old + new purchases since 7/9 at 3,466,880 tonnes.

Soybean export sales continue for now six straight business days. Yesterday’s 306,000 tonne sales bring the total old + new overnight sales, for both China and Unknown to 1,955,000 tonnes since 7/9.

Corn yield risk, as estimated by Monday’s Crop Progress silking numbers, is falling. As of Sunday IA, NE, and MN saw silking at 61% – 70% complete. Allendale sees those states at 82% – 88% complete by this Sunday. IL and IN silking was 69% and 61% complete. Allendale sees this Sunday’s rates at 73% and 75%.

Cattle on Feed, is due for release on Friday. Allendale sees June feedlot placements 2.8% over last year. This would stop five months in a row of lower than last year placements. With a June marketing at 3.1% over last year we compute the starting On Feed as of July 1 at 0.7% under last year.

Cattle, the bi-annual survey of cow/calf producers, is also set for a Friday release. Allendale sees this as confirming the narrative from the January report, the ending of five years of expansion. We see the beef cow herd as of July 1 at 1.2% under last year. On this interest the focus will not be on the breeding herd but the implied market cattle backlog as seen from the steer and “other heifer” groupings, +2.8% and +3.3% year/year respectively.

Cold Storage, the monthly assessment of food products in the nation’s freezers, will be released today. Allendale sees end of June beef stocks at 406.771 million lbs. That is a moderate 8 million decline from the previous month. We see pork stocks at end of June at 451.704 million lbs. This would be 15 million under end of May levels. We do not expect to see a repeat of last month’s sharp stock declines.

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