Post Holiday Could Provide Fireworks
Jul 03, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for July 3, 2018.
Grain markets are cautious ahead of the 4th of July holiday. With no trade tomorrow and so many unknowns in weather and US trade relations, many are choosing to sit on the sidelines until after the holiday. A rush of traders back after the holiday could provide excitement. Grain markets will close at 12:05 PM CDT today and will not reopen until 8:30 AM on Thursday morning.
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Crop conditions were mostly inline with analyst expectations yesterday. Corn was rated 76% good to excellent, right on the expectation. Soybeans were rated 71% GTE, just below the 72% guess, while spring wehat was rated 77% GTE, above the 76% estimate. Winter wheat was reported 51% harvested, well below the 56% guess.
Crop ratings models would imply the corn rating for this week would mean a 5.6% increase over the 20 year trend yield. For 2018, that would imply 179.9 bpa according to a study by Rich Nelson.
The International Grains Council lowered its estimate for 2018/19 world grain production to a three year low of 2.077 billion tonnes, down 12 million from their previous May estimate. Poor weather conditions in Russia and the EU were the primary reason for the reduction. They also estimated that total grain consumption will reach another record at 2.131 billion tonnes.
May soybean crush was reported at 172.4 million bushels according to the USDA. They also said 1.969 million tons of DDGs were produced in May, and that 470.4 million bushels of corn were used to fuel alcohol.
For the second year in a row, Illinois corn farmers have invested close to $4 billion in crop inputs, supplies and services to grow their crop. That is despite the fact that the 2018 Illinois corn crop represents an estimated 200,000 fewer planted acres than last year. According to University of Illinois agricultural economist Gary Schnitkey, corn farmers from the Land of Lincoln are spending $8 more per acre in 2018 than in 2017 to grow 11 million acres of corn. (AP)
Managed money funds were estimated sellers of 28,000 corn contracts in yesterday's trade. They were also thought to have sold 6,000 soybeans, 12,500 wheat, 3,500 soymeal, and 3,000 soyoil.
USDA's Comprehensive Boxed Beef report showed that end users were still quite active in procurement for extended delivery product. Last week their purchases for short term delivery, 0 - 21 days, was 7% under the same week one year ago. Their purchases of product for 22 days delivery were strong at 79% over last year. That marks four weeks in a row of good extended delivery buying, 36% to 79% over last year.
Cattle showlist numbers were 2,300 head higher than the previous week. Some in the trade were expecting a much higher number as this showlist is for next week’s full production run (as opposed to this holiday shortened week).
Compared with yesterday afternoon's Iowa/Minnesota cash pork report, prices are now 4.98 lower than the likely June 15th peak. As we enter the month of July, the focus turns to the normal sharp increase in offered supply as well as the closely watched year over year comparison.
Dressed beef values were mixed with choice down .08 and select up .20. The CME Feeder Index is 142.67. Pork cutout value is down .73.
Have a happy and safe 4th of July holiday!