Can USDA Stocks Report Help Clarify Outlook?

Published on: 04:17AM Sep 30, 2019

Good Morning from Allendale, Inc. with the early morning commentary for September 30, 2019.

Grain markets continue to push higher despite fears U.S.–China trade relationships could be deteriorating again as the two sides seems to be distancing themselves from one another.  Traders will be keeping a close eye on today’s USDA quarterly stocks report for an update.

Last week, December corn futures were up 1.25 cents, November soybeans up 0.25 cents, December wheat up 2.75 cents, December soymeal was up $0.10 and December soyoil was down 63 points.

USDA weekly crop progress report will be released today at 3 p.m. CST.  Trade is looking for corn harvest rating at 14% complete (7% complete last week, 19% 5-year average).  Winter wheat plantings at 38% complete (22% complete last week, 43% 5-year average).

CFTC Commitments of Traders showed funds new net position short -159,890 corn contracts, short -41,688 soybean contracts, short -18,779 wheat contracts, short -5,817 live cattle contracts and long +21,455 lean hog contracts.

USDA's quarterly grain stocks report will be released today at 11 A.M. CDT.  Average analyst estimates are .982 billion bushels of soybeans, 2.318 billion bu. of wheat, and 2.428 billion bu. of corn.  If realized, the corn and soybean numbers would be some of the largest on record.

Canadian wheat seen at only 40% harvested (62% 5-year average).  The next five days also shows 60% precipitation across Canada with dryness continuing in Eastern Australia while beneficial rains are headed to European Union, China & Eastern half of Argentina.

China will begin their annual holiday starting tomorrow thru Monday of the following week.  China has purchased 1.823 million mt of US soybeans over the last 2 weeks (this is including 427,000 metric tonnes to unknown), but they indicate they are willing to buy more if the October trade talks go well. Meanwhile, Reuters reports “U.S. eyeing possibility of delisting Chinese firms from U.S. exchanges”.

September Hogs and Pigs report showed All hogs at 103.4% (expecting 102.8%, 103.9% last month) at 77.678 million head, Kept for breeding 101.6% (expecting 101.4%, 101.4% last month) at 6.431 million head, and Kept for marketing at 103.5% (expecting 103%, 104.1% last month) at 71.248 million head.

African swine fever has spread across Asia making traders fearful it will undermine demand for U.S. corn exports in coming months.  Reuters reports “U.S. feed crop exports to countries like Vietnam, Myanmar and the Philippines surged nearly 50% last year to a record 12.3 million tonnes.”

Dressed beef values were lower with choice down 0.93 and select down 0.53. The CME feeder index is 141.14.  Pork cut-out values were up 1.25.