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Tariffs in Focus as Mexico Plays Ball


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Good Morning from Allendale, Inc. with the early morning commentary for June 7, 2019.

Grain markets are lower in the overnights after yesterday's surprise rebound on poor export sales. Productive trade meetings between Mexico and U.S., along with additional precipitation in the extended forecasts throughout the majority of the central corn belt area remain items of focus.

Weekly export sales were released with corn sales of 14,670 (estimated 550,000 to 1,050,000 tonnes), soybean sales at 583,764 tonnes (estimated 250,000 to 750,000 tonnes), wheat sales of 475,910 tonnes (estimated 0 to 600,000 tonnes), soymeal sales of 112,900 tonnes (estimated 100,000 to 350,000 tonnes), and soyoil sales at 15,400 tonnes (estimated 8,000 to 25,000 tonnes).

USDA typically publishes the first condition scores on a crop in the week after national emergence has reached 45-50%. Emergence in some states may not have reached that level yet, however, so those observers may need to make some subjective assumptions at that point based on overall conditions in their county. This years first condition observations will be taken on a significantly smaller portion of the crop than in previous years. By June 9, which will be the week reflected in Mondays report, the slowest corn emergence on record is 85% in 2013.

USDA June supply/demand reports will be released this coming Tuesday, June 11 at 11 a.m. CST. Analysts estimates average corn production at 14.251 billion bushels (15.030 USDA May report) and average yield estimates at 172.4 bushels (176.0 USDA May report). Analysts estimates average Soybean production at 4.123 billion bushels (4.150 USDA May report) and average soybean yield estimates at 49.0 bushels (49.5 USDA May report). Analysts estimates average all wheat production at 1.883 billion bushels (1.897 USDA May report).

Russia's Ag Minister said that Russia will extend the zero grain export duty for the 2019/20 season. He further stated that the countries exports were on track to hit 45 billion by 2024.

Mexico will send its national guard to its border with Guatemala, in order to stem the flow of undocumented migrants who are entering Mexico on the way to the U.S., Reuters reported Thursday. Will it be enough? Time will tell.

Fund positions (estimated as of 6-5-19) show managed funds short -16,700 corn contracts, short -111,000 soybean contracts, short -33,800 wheat contracts, short -16,400 soymeal contracts and short -62,200 soyoil contracts.

China will allocate 500 million yuan ($72 million) for fall armyworm prevention and control, to secure its grain production throughout the year, China's ag ministry said. The emergency fund is issued after the destructive worm spread to 18 provinces, regions and municipalities in China last year.

Canada has shipped the most wheat to China in 14 years, contrasting a sudden halt in canola trade amid a diplomatic dispute between the countries, as Chinese buyers ignored the U.S. The 42,000 tonnes of U.S. wheat exports to China this year (as of April) are the lowest in 11 years, according to U.S. Census Bureau trade data. China did not purchase any U.S. wheat in the month of May, USDA data showed.

Ukraine's grain exports have risen to 47.3 million tonnes this season (37.4 million tonnes last season), the agriculture ministry said. Ukraine had exported almost 27.9 million tonnes of corn and 15.1 million tonnes of wheat as of June 5, the ministry said.

Beyond Meat, Inc. and its new meatless burger rivals are counting on going head to head with meat inside stores. They avoid terms such as vegan or vegetarian, and request retail stores do not place their products in the supermarket vegan aisle where non-meat eaters traditionally buy other plant-based alternatives. Investors are bullish on the business model, boosting Beyond Meat's valuation to more than $6 billion from $1.5 billion when it went public on May 2.

Dressed beef values were mixed with choice up 0.14 and select down 0.02. The CME feeder index is 131.73. Pork cut-out values were up .18.


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Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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