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Will Managed Funds React to USDA Report?


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Good Morning from Allendale, Inc. with the early morning commentary for August 12, 2019.

Grain markets are lower overnight as traders brace for today's USDA report. This comes as markets were lifted by technical buying and spread trading last week as some index funds rolled positions forward as part of the five-day Goldman roll period.

Last week, September corn futures were up 10.75 cents, August soybeans up 25.25 cents and December wheat up 10.75 cents. October soyoil futures up 128 points and soymeal up $4.70.

President Trump said the U.S. was still continuing trade talks with China but was not going to make a deal for now. "We will see whether or not China keeps our meeting in September." "We are not going to do business with Huawei," Trump said, adding that it did not mean that would not change if a trade deal was done with China. I really made the decision it's much simpler not to do any business with Huawei", he said.

USDA August Supply & Demand Report will be released this morning at 11:00 a.m. CDT. Analysts estimate planted corn acres at 87.998 million and corn yield at 164.9 bushels per acre. Total production is estimated at 13.193 billion bushels. Soybean planted acreage is estimated at 81.006 million with a 47.6 bpa for a total production of 3.800 billion bushels.

US ending stocks are estimated at 1.620 billion bushels of 2019/20 corn, .821 bb soybeans, and .999 bb wheat. World numbers have analysts look for 290.09 million tonnes of 2019/20 corn ending stocks, 104.77 million tonnes of soybeans, and 284.08 million tonnes of wheat.

USDA weekly crop progress report will be released today at 3 p.m. CST. Trade is looking for corn condition rating at 56% GTE (57% GTE last week, 71% GTE last year, 69.4% 5-year average). Soybean condition rating at 53% GTE (54% GTE last week, 66.2% 5-year average).

China's agriculture ministry said it has revised down its estimate for 2018/19 soybean imports to 83.5 million tonnes, down 1.5 million tonnes from last month's estimate, due to lower-than-expected shipments in July. The ministry also upgraded its estimate for 2018/19 corn imports to 4 million tonnes, an increase of 700,000 tonnes from the previous month. The revised estimate for corn imports was mainly due to a significant reduction in U.S. sorghum imports, it said. (Reuters)

Armyworms in China have spread more than 1,865 miles north since migrating from neighboring Myanmar seven months ago. It has now reached over 21 provinces and regions in China and posing a significant threat to their grain output.

CFTC Commitments of Traders showed funds new net position long +79,507 corn contracts, short -72,813 soybean contracts, long +6,219 wheat contracts, long +23,185 live cattle contracts and long +40,978 lean hog contracts.

Funds were buyers of 7,000 soybeans, 0 wheat, 2,000 soymeal and 7,500 soyoil, and sellers of 3,500 corn contracts.

Tyson Foods, Inc. announced their meat-processing plant in Kansas will remain closed after a Friday night fire caused significant damage, forcing over 3,800 workers to be out of work, but the company said it will provide them "some guaranteed pay." A prolonged closure could force the company to move cattle designated for slaughter to another facility, which could result in additional cost. (Reuters)

Dressed beef values were mixed with choice down 0.51 and select up 1.44. The CME feeder index is 141.66. Pork cut-out values were up 1.75.


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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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