Crop Conditions Above Market Expectations

Published on: 05:39AM Sep 17, 2019

Good Morning from Allendale, Inc. with the early morning commentary for September 17, 2019.

Grain markets are lower overnight after USDA's conditions report showed a stable crop. Trade will continue to react to any weather concerns, trade developments and crop condition updates as farmers head into harvest.

USDA weekly crop progress report showed corn condition rating at 55% GTE (54% GTE expected, 55% GTE last week, 68% last year).  Soybean condition rating at 54% GTE (54% GTE expected, 55% GTE last week, 67% last year). Spring wheat harvest at 76% complete (82% expected, 71% last week and 96% last year).  Winter wheat planting at 8% complete (8% expected, 12% last year and 12% 5-year average).

U.S. and Chinese officials are expected to meet this week in Washington before talks between senior trade negotiators are scheduled to begin in early October.

President Trump said the U.S. has reached initial trade agreements with Japan on tariff barriers and digital trade that will not require congressional approval.  In a letter to Congress, Trump said he intends to enter into the agreements "in the coming weeks" and was notifying lawmakers the tariff deal would be made under a trade law provision allowing the U.S. president to make reciprocal tariff reductions by proclamation.  "In addition, I also will be entering into an Executive Agreement with Japan regarding digital trade," Trump said.

USDA said private exporters reported the sale of 256,000 tonnes of soybeans to China.  This is the second trading day in a row China has made soybean purchases from the U.S.

President Trump has tentatively approved a plan to increase the amount of biofuels that oil refiners are required to blend each year to compensate for exemptions handed out to small refiners by the EPA, two familiar sources said.  Under the plan, the EPA will calculate a 3-year rolling average of total biofuel gallons exempted from the mandates under its Small Refinery Exemption program and add that figure to its annual biofuel blending quotas each year, the source said.  For 2020, that figure would be 1.35 billion gallons, according to Reuters.

USDA has paid $4.07 billion of its latest round of compensation for farmers suffering from the trade war with China, said Michawn Rich, USDA Communications Director. USDA has received 302,397 applications for the program since enrollment opened, Rich said.

August NOPA soybean crush report showed soybean crush at 168.085 million bushels (162 million bushels expected, 168.1 million bushels last month).  Soybean oil stocks at 1.401 billion lbs. (1.410 billion lbs. expected, 1.467 billion lbs. last month, 1.623 billion lbs. last year).

South Korea has raised its animal disease alert to the highest level after its first outbreak of African swine fever has been detected at a pig farm in Paju, a town near the border with North Korea, its agriculture ministry said.  Kim Hyeon-soo, South Korea's agriculture minister, said in addition to raising the alert level, nearly 4,000 hogs would be culled to prevent further spread of the virus.

Dressed beef values were lower with choice down 0.26 and select down 2.03. The CME feeder index is 136.09.  Pork cut-out values were up 0.45.