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Fund Buying Slows on Better Weather


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Good Morning from Allendale, Inc. with the early morning commentary for June 10, 2019.

Grain markets are lower for a second straight session, with prices falling as farmers are expected to get a well-needed window of dry weather this week to complete planting. With this news on Friday, commodity funds were net sellers of corn, soybeans, soymeal, soyoil and wheat futures contracts, traders said. Traders will continue to pay attention to weather forecasts while analyzing significant amount of USDA data early this week.

Last week, July corn futures finished down 11.25 cents, July soybean futures down 22.25 cents and July wheat up 0.5 cents. Soyoil down 27 points and soymeal down $5.30.

Weekly crop progress report will be released at 3 p.m. CST. Trade is looking for corn planting at 80-85% complete (67% last week, 100% last year and 100% 5-year average). Soybean planting expected at 55-57% (39% last week, 93% last year and 84% 5-year average). Hard red Spring wheat planting at 96-97% (93% last week, 100% last year and 99% 5-year average. This report will also show the first corn condition rating around 62-63% GTE (79% GTE last year, 73.2% GTE 5-year average).

USDA June supply/demand reports will be released tomorrow at 11 AM CDT. Analysts estimate average corn production at 14.251 billion bushels (15.030 USDA May report) and average yield at 172.4 bushels (176.0 USDA May report). Analysts estimate 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 estimate all wheat production at 1.883 billion bushels (1.897 USDA May report).

CFTC Commitments of Traders report (as of 6/4/19) showed managed funds with a new net position for corn futures long +87,243 contracts, short -93,356 soybean contracts, short -13,348 wheat contracts, long +47,842 live cattle contracts and long +44,416 lean hog contracts.

U.S. and Mexico struck a deal on Friday to avert a tariff war, with Mexico agreeing to rapidly expand a controversial asylum program and deploy security forces to stem the flow of illegal Central American migrants. In a joint declaration after three days of talks, both countries said Mexico agreed to immediately expand along the entire border a program that sends migrants seeking asylum in the United States to Mexico while they await adjudication of their cases. "The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended," Trump said in a tweet.

President Trump predicted Mexico would strongly enforce the new deal to expand a controversial asylum program and boost security on its southern border to stem Central American migrants trying to reach the U.S. Trump tweeted on Saturday that Mexico would immediately begin buying "large quantities" of agricultural goods from U.S. farmers, who have been hit hard by his trade war with China.

China brought in 7.36 million tonnes of soybeans in May (9.69 million tonnes last year, 7.64 million tonnes last month) according to the General Administration of Customs. "Soybean imports were lower as the higher tariffs on U.S. shipments continued to weigh. And demand is weak due to African swine fever. Shipments from Brazil also dropped a lot," said Xie Huilan, analyst with Cofeed, an agribusiness research firm.

Weekly hog kills ran much higher than expected at 2.417 million head (6.6% over last year). This was the second week in a row with larger than expected supplies.

Dressed beef values were mixed with choice up 0.06 and select down 0.24. The CME feeder index is 131.87. Pork cut-out values were down .17.


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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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