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Demand & Weather Remain Key

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Good Morning from Allendale, Inc. with the early morning commentary for June 5, 2020.

Grain Market traders hope to end the week on a positive note as recent demand indicators have been supportive. Weather maps also remain a focus as some areas look to be turning a bit too dry.

The Buenos Aires Grains Exchange reported Argentinas soy harvest 98.6% complete and left the total crop size unchanged at 49.5 million tonnes, said on Thursday. After harvesting the oilseed, wheat plantings jumped 16.6% week over week to a total of 30% planted as farmers race against coming rains.

Overnight soybean sales of 120,000 metric tonnes were reported again yesterday morning for delivery to unknown (likely China). The sale was split evenly between old crop and new. This was the second day in a row of overnight sales and traders would love to make today number three.

Weekly export sales were reported at 664,976 metric tonnes of corn, 637,467 for old and 27,509 for new crop. Soybean export sales were reported at 1,102,571 metric tonnes, 495,171 for old and 607,400 for new. Wheat sales totaled 616,795 metric tonnes, 179,498 for old and 437,297 for new.

Managed money funds were thought to have been players in yesterdays rally, buying an estimated 15,000 corn contracts, 11,000 soybeans, and 11,000 wheat. These numbers are based on estimates in a Reuters poll, however, and not official.

The dryness in parts of Canada and the U.S. northern Plains has recently been exacerbated by strong wind speeds with very low humidity and above normal temperatures. The environment has been stressful for young crops in light soil resulting in poor emergence and establishment, according to World Weather, Inc.

The U.S. Senate introduced a bill that would direct the USDA to help farmers and ranchers generate carbon credits through carbon dioxide-absorbing practices which would help them access funds from greenhouse gas offset credit markets.

Bayer AG has been blocked from selling an agricultural weed killer in the United States, the latest setback for a business already fighting an expensive legal battle over another product. A three-judge panel ruled the U.S. Environmental Protection Agency (EPA) substantially understated the risks related to the use of dicamba, a chemical found in herbicides sold by Bayer and rivals that are sprayed on genetically engineered soybeans and cotton. The herbicides are known to drift away and damage other crops that are not resistant. (Reuters)

U.S. Trade Representative Robert Lighthizer said he feels very good about the progress of the phase one trade agreement with China, which he said is honoring the pact amid the coronavirus pandemic. (Bloomberg)

Today is Last Trading Day for June live cattle options. Monday is First Notice Day for June live cattle futures.

Beef export sales ran 12,287 metric tonnes in this week, technically the best in seven weeks, but 26% under last year. Year to date sales of 463,901 tonnes are 7.3% under last year. Pork sales rebounded this week, to 17,335 tonnes, but 49% under last year. Year to date sales of 1,134,649 tonnes are 37.0% over last year, however.

Cash hogs are falling. The LHI has dropped $8.00 over the past seven days. This includes cash hog trading through yesterday. June futures are implying there is another 6.96 decline from Wednesdays cash hogs to next Friday.

Hog slaughter is picking up and reached 439,000 head today. That was over private market estimates of 431k-435k. Hogs are still a bit behind cattle in getting back to normal.

Dressed beef values were sharply lower again with choice down 23.64 and select down 16.37. The Feeder cattle index is 128.65. Pork cut-out values were down 0.16.

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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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