Good Morning from Allendale, Inc. with the early morning commentary for September 30, 2020.
Grain Markets were quiet overnight as traders prepare for two USDA’s reports for release later this morning. Traders continue to monitor Monday’s lows of $3.60 1/5 for December corn and $9.91 1/2 for November soybeans as key support.
Quarterly Grain Stocks will be released at 11 am CT. The average trade estimate is to see final old crop ending stocks at 2.250 billion bushels for corn (USDA 9/11 WASDE 2.253). Soybean ending stocks are expected at 576 million (USDA 9/11 WASDE 575). These corn and soybean ending stock changes will be reflected on the coming 10/9 WASDE report in the form of new crop beginning stocks. For wheat, September 1 stocks represents left over supplies after one quarter of usage. The trade sees that at 2.242 billion. One year ago September 1 wheat stocks totaled 2.346 billion.
USDA has had to adjust its September WASDE estimates quite a bit from the 9/30 Grain Stocks numbers. Over the past 10 years old crop corn stock revisions ranged from -331 million bushels to +322. Soybean ending stock revisions ranged from -92 million up to +43.
Annual Small Grains Summary is also set for a 11 am CT release. The trade expects the 2020 wheat crop at 1.841 billion bushels (winter 1.198, other spring 0.577 and durum .062). USDA’s most recent estimate is 1.838 for the total crop. Over the past 10 years wheat production revisions have ranged from -84 million to +16.
September 30 also marks end of the month as well as end of the quarter position squaring.
New crop export sales to China could total up to 13.543 million tonnes for corn (10.157 China + 3.386 Unknown) and 31.327 mt for soybeans (20.167 China +11.160 Unknown).
South American rainfall will continue to be monitored. Aside from the far-Southern state of Rio Grande do Sul the next 10 days for Brazil will be generally dry. Argentina will see 0.6″ – 2.2″ of rain in the Southeast portions of the grain belt.
Brazilian real depreciation against the US dollar may hinder export sales later in the fourth quarter. The real has depreciated 7.5% since the 16th of this month. US soybeans are cheaper than Brazil for only one month out at this time.
The first presidential debate was held last night at 8 pm Central. There were no issues directly impacting agriculture in this discussion.
Cash cattle bids were raised to $105 in the Southern Plains. Along with confirmed reports of higher prices paid today over last week in the North, the trade expects cash to gain $1 this week.
First Notice Day for October live cattle futures is Monday the 5th.
CME Group announced a new agricultural trading contract will start on November 9. The Pork Cutout futures and options contracts will be cash settled, just like the current Lean Hog futures contracts. The size will be 40,000 lbs. The cash settlement will be to the CME Pork Cutout Index, a five day weighted average of USDA’s afternoon wholesale pork report. Many suggest this contract may eventually outpace the Lean Hog contract.