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Traders Position for Latest USDA Data

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Good Morning from Allendale, Inc. with the early morning commentary for July 11, 2019.

Grain markets are lower as traders even positions ahead of the 11:00 AM CDT release of USDA's latest Supply and Demand numbers. After the data release, expect weather forecasts to dominate trade.

Weekly export sales are due this morning at 7:30 AM. Analysts expect to see corn sales of 250,000 to 700,000 tonnes, soybeans 250,000 to 750,000, wheat 250,000 to 550,000, soymeal 50,000 to 300,000, and soyoil 5,000 to 25,000 tonnes. The soybean numbers are of interest this week as last week had big numbers (including a 867,564 old crop sale). Any hint of China purchases would be encouraging (in daily or weekly reports).

China's agriculture ministry has lowered its estimate for corn usage in the 2019/20 marketing year due to cases of African swine fever.They now see usage at 280 million tonnes, a drop of 2 million tonnes from last month.

Strategie Grains reduced its monthly estimate of the EU's soft wheat crop to 140.6 million tonnes, down from 142.8 million as a heat wave late last month hit western Europe.

Ethanol production in the latest week fell from 1.081 million gallons per day to 1.047. A decline in this specific week was also seen last year. This year's number was 1.4% over last week. In the past 13 weeks production has run 1.5% over last year, which is good to see. However, we remain concerned about the strong efficiency rates these plants are running.

USDA's July WASDE report will be released today at 11:00 AM. Average trade expectations for 2019-2020 ending stocks show corn at 1.692 billion bushels (1.675 billion bushels last month), soybeans at 812,000 million bushels (1.045 billion bushels last month) and wheat at 1.043 billion bushels (1.072 billion bushels last month). Rich Nelson remind's us that the June 28th acreage numbers will be used on today's report, and that an further acreage drop should not be expected.

Managed money funds were estimated buyers of 8,000 corn contracts, 6,500 soybeans, 2,000 wheat, and 1,500 soymeal in yesterday's trade. They were neutral in soyoil.

Federal Reserve Chairman Jerome Powell on Wednesday set the stage for the first U.S. interest rate cut in a decade later this month, pledging to 'act as appropriate' to defend an economic expansion threatened by trade disputes and a global slowdown. (Reuters)

Livestock and meat tables are on the monthly WASDE report, but we are not expecting to see many changes to USDA's beef numbers that would give us a market move. Recent slaughter numbers are right on target. Weekly beef exports are a little disappointing but not worthy of a major change in USDA's whole-year projections yet.

This week's Oklahoma City feeder cattle trade noted a $3 jump from the previous week. They are now $10 off their lows in June. It appears the seasonal, that of rising prices into August, is back on track. However, we still expect a good rise in corn prices later this year. Additionally, feedlot margins have been notoriously poor this year.

Yesterday's IA/S MN numbers covering hog slaughter for the week of 7/6, were only 0.6% over last year. This is good to see as four weeks ago this report showed live hog market weights at 2.3% over last year, the peak of our backed up marketing problem.

New pork sales to China of 39,118 metric tonnes, 17,394, 2,365, -75, 10,399 and last Thursday's +45 were reported over the last six weeks. This is good to see, but at this time we'd like to see shipments pick up. Unshipped sales total 157,849 tonnes as of last week, traders are hoping to see that number improve.

Dressed beef values were lower with choice down .31 and select down 1.20. The CME feeder index is 135.76. Pork cut-out values were down 2.17.

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Allendale Inc. was established in 1984 in a country grain elevator located in Crystal Lake, Illinois. The first-hand experience with agricultural and financial markets has worked with Allendale’s combined foresight, ingenuity and expertise to make it the successful firm that it is today. Allendale’s goal is to provide its customers the expertise and service they need to grow their agricultural businesses. Allendale’s staff is called on to provide their commentary for TV, radio and newswires on a daily basis.

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