USDA Acreage Report Shocks Producers & Traders

Published on: 21:36PM Jul 01, 2019

Good Morning from Allendale, Inc. with the early morning commentary for July 1, 2019.

Grain markets are mixed after showing strong volatility with the release of USDA's annual acreage report. After the report, corn futures plunged the lowest in 3 years.  At one point, corn futures were limit down (25 cents) in several contract months.  Soybeans stayed firm on the strong China purchase and lower acreage numbers while wheat finished slightly lower as well.

Last week, September corn futures were down 21 cents, August soybean futures were down 3.5 cents and September wheat futures down 4.75 cents. Soyoil futures down 17 points and soymeal down $2.10.

USDA annual acreage report was released with the USDA saying farmers seeded 91.7 million acres of corn (86.6 million acres average analysts’ estimates, 92.8 million acres on March report) and 80.0 million acres of soybeans (84.4 million acres average analysts’ estimates, 84.6 million acres on March report).

USDA said it would resurvey farmers in 14 states next month on planted acres, including for corn and soybeans, and would release updated figures on Aug. 12 if the collected data warrants an update.

USDA Weekly Crop Progress report will be released today at 3 p.m. CST.  Trade is looking for corn planting at 99% complete (96% last week, 100% last year and 100% 5- year average).   Corn condition rating at 58% GTE (56% GTE last week).  Soybean planting expected at 95% (85% last week, 100% last year and 98% 5-year average). Soybean condition rating at 55% GTE (54% GTE last week).  Hard red Spring wheat condition rating at 77% GTE (75% GTE last week).

CFTC Commitments of Traders showed managed funds new net long position 187,929 corn contracts, net short -34,042 soybean contracts, net long 31,513 wheat contracts, net long 29,406 live cattle contracts and net long 33,207 lean hog contracts.

U.S. and Chinese Presidents agreed to resume trade negotiations during a meeting at the G20 summit in Japan's Osaka.  “We had a very good meeting with President Xi of China. Excellent, I would say excellent.  As good as it was going to be" said President Trump.

Chinese state news agency Xinhua said, the US agreed to not impose new tariffs on imports from China and the two sides agreed to discuss "specific issues" to end the turbulent trade war going on between the two countries since last year.  President Trump and President Xi agreed to carry out the consultations "on the basis of equality and mutual respect," a condition put forward by President Xi for reaching a deal in earlier trade negotiations, Xinhua added.

USDA said Chinese importers bought 544,000 tonnes of U.S. old-crop soybeans before Friday’s annual acreage report.  This was the largest soybean sale to China since this March, USDA data showed.

African swine fever's death toll may be twice as high as reported, said industry insiders.  Three other executives at producers of vaccines, feed additives and genetics also estimate losses of 40% to 50%, based on falling sales for their companies' products and direct knowledge of the extent of the disease on farms across China. Profit losses are not only from infected pigs dying or being culled, but farmers also sending pigs to market early when the disease was discovered nearby, farmers and industry insiders told Reuters, which analysts say has kept a lid on pork prices in China over recent months.

Dressed beef values were mixed with choice up 0.63 and select down 1.34. The CME feeder index is 133.12.  Pork cut-out values were down 0.35.