Supply & Demand Data on Tap

Good Morning from Allendale, Inc. with the early morning commentary for September 11, 2020.

Grain Markets are mixed as traders await this morning’s USDA Supply and Demand report. Before that report, however, traders will have an eye on the weekly export sales numbers, as well as the overnight export data.

Allendale released a new product this week 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.

Corn estimates for today’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 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 today 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.

Sovecon raised its estimate for Russia’s 2020 wheat crop to 83.3 million tonnes from 82.6 million. USDA is still at 78.0 million tonnes and will likely need to revise their estimate higher.

Weekly export sales will be released this morning, a day late due to Monday’s holiday. Traders expect to see corn sales of 900,000 to 2,000,000 tonnes (combined old and new crops), soybeans 1,000,000 to 2,000,000 tonnes, and wheat 250,000 to 600,000 tonnes.

The EIA reported ethanol production for the week at 941,000 barrels per day. That was over the previous week’s 922,000 pace. This was the best production run in six weeks. Production was 8.0% under last year, better than the prior week’s -9.0%.

The Brazilian government is planning to extend a tariff-free ethanol import program for three months after a non-tariff quota for imports of 750 million liters per year of ethanol to expire at the end of August, resulting in U.S. producers’ having to pay a 20% tariff. (Reuters)

Argentina’s soybean harvest is estimated at 50 million tonnes for 2020/2021 compared to 2019/2020 harvest of 50.7 million according to the Rosario Grains Exchange. They see the country’s corn crop at 48 million tonnes.

CONAB revised Brazil’s completed 2020 harvest numbers to corn at 102.5 and beans at 124.8. USDA has them at 101.0 and 126.0 respectively.

Germany found dead wild boar with African Swine Fever near its border with Poland. This puts exports for Europe’s largest pork producer at risk. South Korea already announced a ban for the whole country. We assume Japan will also join in with a ban. The question is whether China will do so as well.

Rich Nelson noted, “Our count of August sale barn volumes, a factor for August placements into feedlots, came to 22.4% over last year. They were big. Now, let’s be clear this is only placements via feedlots. Lower numbers for direct placements, farm to feedlot, will offset a portion of this large number. But it will be higher than last year. August placements determine a part of February through June beef supplies.”

Cash cattle traded $1 to $2 lower than last week’s average on a live basis. Choice beef is down 5.02 through yesterday’s morning report.

Dressed beef values were lower with choice down 2.12 and select down 0.19.  The Feeder cattle index is 141.10.  Pork cut-out values were up 0.73.

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