Good Morning from Allendale, Inc. with the early morning commentary for August 19, 2020.
Grain Markets are mixed as the back and forth over U.S. production continues. After crop progress data was reported better than expected this week, traders are awaiting the results of crop tours which will give a first-hand account of the situation on the ground.
The Allendale Nationwide Producer Survey opened up on Monday. This two-week long annual survey continues through Friday the 28th. Results will be released Wednesday, September 2nd. Last year’s survey covered 29 separate states with a survey volume to compute 83% of US corn and soybean production. Crop surveys receive data from every part of a state. This may shed light on important regional weather variations. Producers are encouraged to participate at www.allendale-inc.com or by calling 800-262-7538.
The ProFarmer Crop Tour on Tuesday covered parts of Nebraska and parts of Indiana. They found above average crops in those locations. This follows Monday’s similar findings for parts of South Dakota and parts of Ohio. The trade is waiting for their Wednesday/Thursday numbers where they get into the two main storm-impacted states, Iowa and Illinois.
Technically, December corn has made its short term move to fill the main upside gap left from 7/13. That $3.42 – $3.43 3/4 area is now filled. There is a small downside gap left from the Sunday night open at $3.39 1/4 – $3.40 to fill next. November soybeans have a downside gap open but the $8.99 1/2 – $9.01 1/4 area remains a bit away in the short term. Bar chart technicians could also argue the potential for a bullish formation called a Bull Flag in both corn and soybeans. September wheat may have to wait for more supportive news before filled its $5.28 1/4 – $5.28 1/2 upside gap.
Weekly ethanol production from the EIA will be out later today. Five of the past six weeks have shown a quite stable production range from -10.5% to -12.7% from last year. If this “new normal” production pace continues past September 1, quite likely, then USDA will need to rethink its new crop corn for ethanol expectations.
Soybean export sales remain quite strong. 1.940 million tonnes to China and unknown have been sold since last Monday the 10th. With US export prices over $20 per tonne cheaper, excluding shipping, it is reasonable to assume that will continue in the short term. That is over $0.54 per bushel.
The US dollar index has fallen 10.5% from its high in March.
New record highs and a new record close were made for the S&P 500 stock market index today. The Dow Jones Industrial Average is 6.1% from its high.
President Trump was in Cedar Rapids, Iowa on Tuesday to receive briefings about the storm damage from state and federal officials. This comes one day after approving Governor Reynold’s request for up to $4 billion in assistance. The state estimates more than 57 million bushels of grain bin storage had been destroyed.
August soy deliveries have not been a market factor for soybeans. Through Monday afternoon only 343 contracts have been tendered through the whole process. Numbers come to 2,037 for soybean meal and 1,062 for soybean oil.
Cash feeder cattle prices at Oklahoma City’s auction held for the lighter-weight animals but weakened slightly for the mid and heavier numbers. That stopped seven weeks in a row of gains. There is a known seasonal prices for feeders in July/August.
Beef end users have been quite active in nine of the past ten weeks. Last week, procurement for delivery from 21 – 60 days out was +27% over the prior year. For procurement from 61 – 90 days it was up 23%.
August live cattle deliveries have not been a market factor. New for yesterday’s update, six contracts were added.
Friday’s Cattle on Feed report will set the stage for a portion of January through April finished cattle offerings. Allendale sees July placements at 1.7% over last year, the average trade guess is +6.1%. This will mark two months in a row of above last year placements.
Wholesale pork prices weakened on both Monday and Tuesday. Daily gains had been noted in seven of the ten days in the two prior weeks.
Hog processing posted a new post-virus weekday high of 483,000 head. That surpassed the previous post-virus record of 481,000. Though good news in the short term, this does not dispel our concerns over processing capacity vs. offered hogs from mid-September on out.