Good Morning from Allendale, Inc. with the early morning commentary for November 6, 2019.
Grain markets continue to focus on harvest pressure, drier weather maps and trader positioning before Friday’s WASDE report. Soybean futures fell for the first time in four sessions as rains bolstered crop prospects in South America where farmers are struggling to plant row crops.
President Trump's suggestion that he could sign a trade deal with Chinese President Xi Jinping in Iowa has set off a flurry of excitement in Muscatine, Iowa, a city that has hosted President Xi twice since 1985. Xi received a key to the city during his first visit, after he led an agricultural study group and stayed at the home of a local family. He also met and befriended then-governor Terry Branstad, who is now Trump's ambassador to China.
After historic floods, Midwest farmers are scrambling to harvest their crops and facing a new headache: finding fuel to dry their soaked grains. Typically, farmers use propane as fuel for grain dryers to reduce moisture levels in corn crops to ready them for sale. The cool, waterlogged fall has delayed harvesting and produced wet crops, causing a surge in propane demand among crop farmers, livestock producers and rural homeowners.
Analyst estimates for this Friday’s USDA November WASDE report showed an average estimate for corn harvest at 81.3 million acres (81.8 million on last report), average corn yield at 167.2 bu./acre (168.4 bu./acre last report) with corn production at 13.604 (13.779 last report). Soybean harvest analyst average was 75.5 million acres (75.6 million acres last report), average soybean yield at 46.6 bu./acre (46.9 bu./acre last report) with soybean production at 3,513 (3,550 last report).
INTL FCStone said a poll of its clients estimated Australian wheat production during the 2019/20 season would be roughly 20% lower than official estimates. The poll of an unspecified number of clients pegged Australian wheat production at 15.54 million tonnes (19.2 million tonnes was Australia's official estimate).
Egypt's GASC has bought 175,000 tonnes of wheat in an international purchase tender for shipment over Dec. 15-25, it said. The shipment comprised of 120,000 tonnes of French wheat and 55,000 tonnes of Russian wheat, GASC said.
Seara Alimentos, a company of the JBS group, made its first sale of pork innards to China. According to a JBS statement, Seara has closed a shipment of 400 tonnes of pork. "The cargo will soon depart directly from Santa Catarina, the home state of the company's two newly authorized units," JBS said.
China will resume imports of Canadian beef and pork, Prime Minister Justin Trudeau said, four months after China blocked shipments during a diplomatic feud between the two countries. "Good news for Canadian farmers today: Canadian pork and beef exports to China will resume," Trudeau tweeted.
Lean hog futures rallied due to technical-buying and a short-covering bounce from recent lows, underpinned by hopes for accelerated pork sales to China. Hog traders are awaiting any updates from U.S.-China trade negotiations and any promises to buy larger volumes of U.S. pork.
Dressed beef values were mixed with choice up 1.24 and select down 0.56. The CME feeder index is 146.24. Pork cut-out values were up 0.75.