Traders Look to Exports for the Latest in Demand

Published on: 04:44AM Sep 19, 2019

Good Morning from Allendale, Inc. with the early morning commentary for September 19, 2019.

Grain markets are quiet, but lower as traders look to the latest in demand reports from the USDA as trade talks are set to resume between the US and China.

Weekly export sales will be out this morning at 7:30 AM CDT. Analysts expect to see corn sales of 900,000 to 1,300,000 tonnes, soybeans 700,000 to 1,100,000, wheat 300,000 to 600,000, soymeal 50,000 to 450,000, and oil 0 to 35,000.

Ethanol production for the week fell from 1.023 million barrels per day to now 1.003. This was 4.6% under last year. The year to date pace is 2.3% under between the two weeks of the new marketing year that started on September 1. Low margins have curtailed production since mid-July.

A group of U.S. senators are set to meet with President Trump later today to discuss biofuels policy as the White House continues to try and balance conflicting interests between oil and biofuel groups.

Brazil's 2019/20 corn crop is expected at 102.3 million tonnes according to average analyst estimates. If realized, the number would represent a more than 2% rise from their previous harvest. 

Trade Talks between the US and China are set to restart in Washington. These are deputy-level discussions, so a deal is not expected, but traders will watch for signs of progress as this is meant to setup larger talks next month.

The Federal Reserve announced Wednesday it would cut interest rates for the second consecutive time this year to protect a record stretch of U.S. prosperity from looming foreign risks. (The Hill) The Committee was mixed, however, on further action this year.

President Trump told Treasury Secretary Mnuchin to, "substantially increase sanctions on the country of Iran." The announcement took a little more of the fear premium out of the energy markets as some were concerned military action would be announced.

Tim Horton's restaurants said they would offer Beyond Meat (alt-meat) products in its breakfast lineup in 4,000 restaurants in Canada and the US back in July. Yesterday afternoon, the chain noted this promotion had ended at all locations except in Ontario and British Columbia. It remains to be seen if the promotion will return.

China's customs office said on Thursday it granted export licences to some Argentine meat-processing plants, as the Asian country looks to plug a supply gap after an African swine fever outbreak decimated China's pig herds. (Reuters)

Cattle on Feed will be out this Friday at 2:00 PM CDT. The average guess for On Feed at of September 1st is 99.3% of last year. Placements are expected at 93.7%, and Marketings at 98.3%.

Cold Storage is expected to show a 624 million lb. total pork stock level for the end of August. The five-year average is 593 million lbs. Beef stocks, at 471 million lbs., are over the five-year average of 454. The report will be released next Monday at 2:00 PM CDT.

The hog market continues to react to China releasing 10,000 tonnes of government pork into the marketplace. Last year's pork production in China totaled 54.040 million metric tonnes. Assuming a 30% cut this year (from ASF) the annual supply would total 37.600 million tonnes. If the government adds in 10,000 metric tonnes, that equates to 0.03% of annual production. China did state overnight, however, that they would continue to release meat from reserves.

Dressed beef values were lower with choice down 1.53 and select down 1.94. The CME feeder index is 137.33.  Pork cut-out values were down 0.10.