Traders Hope for Signs of More Demand

Good Morning from Allendale, Inc. with the early morning commentary for July 31, 2020.

Grain Markets were higher overnight as signs of strong demand lifted sentiment with hopes for continued Chinese buying. End of week, end of month position evening could also be seen today.

If you missed our Grain and Livestock outlooks this week, recordings are still available for you to watch. Call us at 800-262-7538 to get access.

Weekly export sales reported corn sales at 609,000 tonnes, below trade expectations. Soybeans surprised at 3,602,000 tonnes. The estimate was 1,800,000 to 2,500,000. Wheat sales were reported at 677,000 tonnes. Traders were expecting between 250,000 and 650,000.

Yesterday, the USDA reported overnight export sales of 1,937,000 tonnes of new crop corn for delivery to China, the third largest overnight corn sale in history. New crop corn sales to China and Unknown (assumed China) now total 6.373 million tonnes.

Brazil’s soybean production is expected to jump to a record of more than 130 million tonnes next season (up 8% over last year), according to analysts’ estimates polled by Reuters.

USDA’s ag attache to Argentina estimates that the country will harvest 20 million tonnes of wheat in 2020/21, 1 million tonnes less than USDA’s last office numbers from the latest Supply and Demand report. The corn crop was also cut to 47.6 million tonnes from 50 million.

The Buenos Aires Grains Exchange added frosts to the list of woes impacting Argentina’s wheat crop. Earlier this month, they warned that dry weather would reduce total wheat acreage in the country.

The European Commission cut its 2020/21 wheat estimate in the EU to 116.6 million tonnes from 117.2 million estimated a month ago. That would be almost 11% under last year.

China’s factory activity expanded in July for the fifth month in a row and at a faster pace, beating analyst expectations despite disruptions from floods and a resurgence in coronavirus cases around the world. (Reuters)

The economic calendar has Personal Income & Spending out this morning at 7:30 CDT, Chicago PMI at 8:45, Consumer Sentiment at 9:00. The data will be view in light of yesterday 32.9% drop in U.S. GDP.

Weekly pork sales were reported at 39,600 tonnes. China and Mexico accounted for most of the sales. Beef sales were reported at 29,500 tonnes, a marketing-year high. South Korea and Japan were the largest buyers.

Yesterday hog slaughter was estimated at 443,000 head.  This is sharply lower than yesterday’s count of 477,000 head

More $97 cash cattle trades were seen in KS yesterday which is $1 over last week levels. This is seen as a bit more supportive to futures as we would normally expect given that backlogged cattle was expected to limit upside movement in cash for weeks yet.

Dressed beef values were higher with choice up 0.69 and select up 2.01. The Feeder cattle index is 139.24.  Pork cut-out values were down .34.

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