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Traders Look to Demand Reports

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Good Morning from Allendale, Inc. with the early morning commentary for August 15, 2019.

Grain markets are mixed with traders waiting for the next shoe to drop in US/Chinese trade talks after a tough week so far led by USDA data. Outside markets have all eyes on the bond market as it raised recession fears yesterday and caused the Dow to drop 800 points.

NOPA Crush numbers are set to be released today at 11:00 AM CDT. Traders expect to see July crush at 155.826. We now have three months in a row of a slowing production pace vs. last year. USDA just lowered their 18/19 crush by 20 million bushels this week.

Conab reports that Brazil is reviewing it's soybean supply amid concerns over the countries balance sheet due to strong export demand.

Export sales will be released this morning at 7:30 AM CDT. Analysts expect to see corn sales of 200,000 to 700,000 tonnes, soybeans 150,000 to 700,000, wheat 200,000 to 500,000, soymeal 175,000 to 400,000, and soyoil 8,000 to 32,000.

Weekly ethanol production increased from 1.040 million barrels per day to now 1.045. That is still a little weak at 2.5% under last year. That makes four weeks now of weak numbers, from -2.5% to -5.5% year/year. For the old crop year that ends on August 31 USDA expects corn for ethanol at 3.2% under last year. Dont forget plants are running at 3% better efficiency rates right now. That means production should be even with last year to meet USDAs corn for ethanol goal.

Managed money funds continued their selling ways yesterday selling an estimated 23,000 corn contracts, 7,000 soybeans, 4,000 soymeal, and 1,000 soyoil. They were thought to be buyers 2,000 wheat. Traders believe funds have now sold over 100,000 corn contracts this week. Tomorrow's CFTC Commitments of Traders report will likely show funds with a net-short position.

The economic calendar is busy this morning with Initial & Coninuing Jobless Claims, Retail Sales, Empire State Manufacturing, and Philadelphia Fed Index all due at 7:30 AM CDT. Business Inventories will be out at 9:00 AM. The data will be viewed intently in light of yesterday's recession fears.

Cash cattle traded yesterday in the North at $106. That was down from $112 in that location last week. A $6 cut is more than our estimate of $3 to $4. However, futures were pricing in something even worse.

With yesterday's price action, feeder cattle will still hold onto expanded $6.75 limits for Thursday's trade. Live cattle go back to their normal $3.00 daily limit tomorrow.

Hog traders continue to watch export sales with interest for signs of Chinese buying. By our numbers, China will have to import 658,000 tonnes of US pork (out of the 3.3 million tonne total import increase). Our current year to date buy of 254,686 tonnes is not quite there yet.

Dressed beef values were higher with choice up 5.98 and select up 5.94. The CME feeder index is 139.89. Pork cut-out values were down 0.31.

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About the author

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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