Market Turns to Weather Post USDA

Good Morning from Allendale, Inc. with the early morning commentary for July 1, 2020.

Grain Markets were mixed overnight as trading begins in the new month and new quarter. With the USDA reports out of the way, traders will focus on weather forecasts and Chinese demand for the next direction. Markets will close at 12:05 tomorrow, and will not reopen until Sunday night due to the 4th of July holiday.

USDA’s Grain stocks report had old crop corn stocks at 5.224 billion bushels, over the 4.951 trade estimate. Soybean stocks were 1.386 billion, near the 1.392 trade expectation. Wheat stocks were reported at 1.044 billion in old crop ending stocks, over the trade’s 984 estimate.

Acreage numbers were where all the action really came from yesterday. Corn acres were counted at 92.006 million, much under the 95.207 trade expectation, and a 4.984 million acre decline from the March Prospective Planting numbers. Soybean acres were reported at 83.925 million, slightly below the 84.716 million trade guess. All-wheat acreage was lowered from 44.655 million in March to 44.250. The trade was expecting an increase to 44.718.

World Weather, Inc. (hear them live at our Outlook Conference later this month!) warns that, “July promises to be a warmer than usual month with more limited rainfall resulting in net drying and the dryness that evolves in July will set the tone for crop development the remainder of summer.” We will be monitoring map updates closely.

The May U.S. soybean crush is expected to drop to 180.7 million bushels, according to the average forecast of seven analysts surveyed by Reuters ahead of a monthly USDA report.

Anec estimates that Brazil exported 11.9 million tonnes of soybeans in June based on strong demand from China. The figure is 37% above June of last year. They said corn exports were 774,850 tonnes.

Ukraine’s 2019/20 wheat exports increased to 20.5 million tonnes up from 15.6 million tonnes last year according to the country’s economic minister.

The economic calendar today has MBA Mortgage Applications Index at 6:00 AM CDT, ADP Employment Change at 7:15, ISM Manufacturing and Construction spending at at 9:00, EIA Crude Oil Inventories at 9:30, and FOMC Minutes at 1:00.

A new flu virus found in Chinese pigs has become more infectious to humans and needs to be watched closely in case it becomes a potential “pandemic virus”, a study said, although experts said there is no imminent threat. (Reuters)

The Lean Hog Index improved from 45.23 to 45.24. Anything stable is considered good news. The 44.87 low from last Wednesday’s cash hog traded, posted on Friday, did not take out the April low of 44.55.

Q3 beef production is expected to be a record. Not just a lot more animals, but at +5% to +6% higher weights. Q4 production could post a good year/year discount though.

Dressed beef values were lower with choice down 1.39 and select down 0.81. The Feeder cattle index is 129.42. Pork cut-out values were down 2.09.

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