Good Morning from Allendale, Inc. with the early morning commentary for October 16, 2019.
Grain markets settled lower yesterday with corn and soybean futures leading the way on technical selling, seasonal harvest pressure, and uncertainty regarding the terms of “Phase One” of the U.S. – China trade pact. Overnight, markets were mostly mixed following the same signals.
If you missed our Fall Corn and Soybean Outlook Update yesterday, you missed a look at what might be coming our way in these markets. What should we expect for harvest this year, and what could that mean for pricing? What will be the next catalyst to move markets? The recording of yesterday's presentation is available here, now.
Trump administration, in an effort to mend fences with the powerful corn lobby, proposed a new formula on Tuesday to boost biofuels demand, but the proposal instead only provoked more aggravation from the industry. "Only 11 days after President Trump’s landmark announcement, the EPA proposal reneges on the core principal of the deal. Instead of standing by President Trump’s transparent and accountable deal, EPA is proposing to use heretofore secret DOE recommendations that EPA doesn’t have to follow," said Iowa Renewable Fuels Association Executive Director Monte Shaw.
USDA weekly crop progress report showed corn harvest rating at 22% complete (24% complete expected, 15% last week, 38% last year, 27% 5-year average). Corn condition rating at 55% GTE (55% GTE expected, 56% last week, 68% last year, 70% 5-year average). Soybean harvest rating at 26% complete (25% expected, 14% last week, 65% last year, 56% 5-year average). Soybean condition rating at 54% GTE (52% GTE expected, 53% last week, 65% last year and 60% 5-year average). Winter wheat plantings at 65% complete (66% complete expected, 52% last week, 65% last year and 66% 5-year average).
September NOPA Crush report showed crush sharply lower at 152.566 million bushels (expecting 162.2 million bushels, 168.1 mb last month, 160.8 mb last year). Soy oil stocks were sharply higher at 1.442 billion lbs. (expecting 1.320 billion lbs., 1.401 billion lbs. last month and 1.531 billion lbs. last year).
Chinese firms have already purchased 700,000 tonnes of pork and 700,000 tonnes of sorghum from the U.S. this year, although U.S. government data pointed to smaller pork sales. They have also bought 320,000 tonnes of cotton, 230,000 tonnes of wheat and 20 million tonnes of soybeans from the U.S., said foreign ministry spokesman, Geng Shuang.
USDA weekly grain export inspections showed extremely weak corn exports again at 471,000 tonnes (400,000 to 700,000 tonnes expected), soybean exports on the higher at 955,000 tonnes (750,000 to 1,250,000 tonnes) and wheat exports at 463,000 tonnes (300,000 to 600,000 tonnes expected).
The USDA is considering adding revisions of the previous year's corn crop to their September quarterly grain stocks report. While this would not change their ending stock number, it could add a little more clarity by adjusting the numbers plugged in to make it.
USDA, which manages federal forests, recommended exempting Alaska's Tongass National Forest from the Clinton-era Roadless Rule that banned logging, roads, and mining in undeveloped forests. The rule applies to 9.2 million acres (55% of the forest). The USDA proposal is part of President Donald Trump's broader effort to roll back environmental regulations to boost industry.
February live cattle futures pushed to new highs today into the close at $119.62. Asking prices were seen sharply higher at $112 - $115 (last week's average trade was $109).
Dressed beef values were higher with choice up 0.80 and select up 2.15. The CME feeder index is 145.09. Pork cut-out values were up 0.12.