Good Morning from Allendale, Inc. with the early morning commentary for June 21, 2019.
Grain markets are mixed with corn higher and moving towards its highest price in nearly five years as rains continue to pour increasing fears farmers will be prevented from completing their planting intentions and that yields will drop. Trade will continue to focus on upcoming weather forecasts as well as any improvements in trade negotiations with China, Japan, Canada, Mexico and/or the European Union.
President Trump played down Iran's downing of a U.S. military surveillance drone, saying he suspected it was shot by mistake and "it would have made a big difference" to him had the remotely controlled aircraft been piloted. While the comments appeared to suggest he was not eager to escalate the series of incidents with Iran, he also warned: "This country will not stand for it."
Top Chinese and U.S. officials will hold trade talks following instructions from their leaders, the Chinese commerce ministry said, adding that China hoped the U.S. would create the necessary conditions for dialogue. China hopes the U.S. will listen to its industry and stop threatening tariffs and waging a trade war, commerce ministry spokesman Gao Feng told reporters.
USDA announced a new measure to help farmers who were unable to plant corn and soybeans due to widespread flooding across the U.S. Midwest. The USDA's change (which is only for 2019) means growers can hay, graze or cut cover crops for silage on prevented plant acres on or after Sept. 1 and maintain eligibility for their full-year 2019 prevented planting indemnity. University of Illinois ag economist, Scott Irwin said the changes should encourage farmers to file for prevented-plant claims and seed cover crops on more acres. With the new rule, Irwin said farmers may be able to get three types of income from on prevent-plant acres, including an insurance indemnity, plus the value of the silage produced, as well as a potential payment from the USDA's $16 billion farm aid package announced on May 23rd.
Weekly export sales showed corn sales of 399,236 tonnes (estimate 300,000 to 900,000 tonnes), soybean sales of 771,539 tonnes (estimate 200,000 to 800,000 tonnes), wheat sales of 187,567 tonnes (estimate 200,000 to 500,000 tonnes), soymeal sales at 110,000 tonnes (estimate 100,000 to 400,000tonnes), and soyoil sales at 4,500 tonnes (estimate 5,000 to 25,000 tonnes).
Funds (as of 6-19-19) are long 176,200 corn contracts, short -46,200 soybean contracts, long 10,700 wheat contracts, long 6,700 soymeal contracts and short -35,800 soyoil contracts.
Russian agriculture consultants IKAR and SovEcon said they downgraded their forecasts for Russia's wheat exports in the new 2019/20 marketing season (starting July 1) due to dry weather. IKAR downgraded its forecast for Russia's 2019/20 wheat exports by 500,000 tonnes to 36.5 million tonnes. SovEcon said it downgraded its wheat export forecast by 600,000 tonnes to 37.6 million tonnes.
Allendale's estimates for today's Cattle on Feed report show feeder and calf placements into feedlots at 6.8% under last year. We see May marketings at 0.2% under last year. At 2.052 million, that would be the second highest in eleven years for May. That helps bring June 1 Cattle on Feed to 1.0% over last year.
USDA's Cold Storage report will also be released today. Allendale sees May beef stocks at 404.135 million lbs. That would come from a 26.211 million decline from the previous month. We see May pork stocks at 610.516 million lbs. on an 11.347 million lb. decline during the month.
Dressed beef values were lower with choice down 0.87 and select down 0.76. The CME feeder index is 132.99. Pork cut-out values were down 0.25.