Good Morning! From Allendale, Inc. with the early morning commentary for August 2, 2018.
Grain markets are continuing a choppy trade as weather and trade tariffs highlight the news wires. Producers need higher prices to breakeven and lenders need higher prices for producers to meet financial commitments. Logistics are another big concern of producers. Elevators are full in some areas, producers have on farm bins to empty and potential record yields are nearing harvest. Who will win in the waiting game? Talk to your Allendale representative for ideas on how to handle your situation.
USDA Weekly Export Sales will be released this morning at 7:30. Trade estimates are: wheat 200,000 to 450,000 mt, corn old crop 300,000 to 600,000 mt, new 400,000 to 800,000 mt, soybeans old 150,000 to 500,000 mt, new 300,000 to 700,000 mt, soymeal 50,000 to 250,000 mt and soyoil 5,000 to 20,000 mt.
INTL FC Stone Crop Survey Results projects corn yield at 178.1 bu./acre or a total crop of 14.562 billion bu. Soybean yields are projected to be 51.5 bu./acre and total crop of 4.574 billion bu.
During May USDA suggested 462 million bushels of corn were used in the nation’s ethanol production. Which calculates a conversion rate of 2.88 gallons of ethanol bushel of corn. This is below a year ago and justifies the reason for USDA’s 5.600 billion bushels of corn for ethanol.
U.S. soybean crush during June was 169.9 million bushels, slightly above average market expectations of 168.8 million and 14.4% above last year's same-month crush of 148.2 million bushels.
Brazil’s trade ministry says they exported 10.20 mmt of soybeans during July compared to 10.42 mmt in June and 6.96 mmt during July last year. Brazil exported 1,170,123 tonnes of corn in July versus 142,892 tonnes in June and 2,322,979 tonnes during July of 2017.
U.S. President Donald Trump's administration is proposing a tariff rate increase on $200 billion worth of Chinese goods to 25 percent from 10 percent as the two countries continue conversations to determine whether trade talks can be resumed, senior Trump administration officials said on Wednesday. The officials told reporters on a background call that Trump had directed U.S. Trade Representative Robert Lighthizer to consider the higher tariff rate as part efforts to ensure that it has "the right tools in place in order to encourage China to change its actions." (Reuters)
Cash cattle trade has seen some action early this week, however, packers have not been aggressive as we start a new month. Product values seem to be consolidating and packers margins remain in the black. Historically the cutout value has made a low by the first of August and instutional buyers stock up and school programs provide a rally. Can we see a rally this year with large cattle numbers ahead?
August live cattle finds support and rallies due to its discount to cash. Resistance is 110.67 and support crosses at 107.50.
Cash hog prices continue to slide as packers have the upper hand with plenty of hog supplies available. Futures set new contract lows again on Thursday which was the 7th lower close out of 8 sessions. August futures are oversold and could provide a quick rally at any time. Lean hog futures are trading at a deep discount to the cash hog index.
Dressed beef values were lower with choice down .52 and select down .80. The CME Feeder Index is 149.39. Pork cutout value is down .18.