Good Morning from Allendale, Inc. with the early morning commentary for June 3, 2020.
Grain Markets were mixed with corn and soybean futures slightly higher on Midwest weather concerns and lower than expected planting progress. Wheat slid lower on concerns of higher global demand. Trade will stay focused on weather over the next few weeks as above normal heat and heavy rains hit most of the growing areas.
The U.S. is investigating digital services taxes being adopted or considered by Britain, Italy, Brazil and other countries, the U.S. Trade Representative's office said, a move that could lead to new punitive tariffs and heighten trade tensions. "President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies," U.S. Trade Representative Robert Lighthizer said.
Midwest states will see warmer temperatures with light precipitation over the next two weeks. A drier bias across much of the corn belt will be monitored closely. Rain will be needed in some areas and yield estimates could quickly start coming into conversations.
The Trump administration believes ahead of an expected OPEC+ meeting this week that major oil producers such as Saudi Arabia and Russia will honor their pledges to cut crude production and will not damage the global economy by changing course, a senior official said. "We trust that other major oil producers will not revert to policies that impede an orderly and swift recovery from these unprecedented global economic conditions," a senior administration official added.
Chicago wheat futures removed more weather premium this week (7.25 cents lower yesterday). Although winter wheat conditions were lower than expected domestically, it wasn’t enough to offset the improving wheat crops across the globe.
Ukrainian ProAgro ag consultancy raised its 2020 grain harvest forecast to 74.43 million tonnes (72.52 million tonnes last report) due to better weather. The consultancy also raised its estimates for Ukrainian wheat harvest to 26.65 million tonnes (25.36 million tonnes last report), and corn estimates to 37.58 million tonnes (37.3 million tonnes last month).
JBS is being sued for alleged violation of indigenous workers' rights after firing 40 members of the Kaingang tribe from a plant in southern Brazil, according to a court document. "They were dismissed in a critical period, when the return to the labor market is unlikely until the pandemic is controlled," Labor Prosecutor Edson Rodrigues Junior said.
CME Lean Hog Index peaked on May 13th at $68.87. Today’s quote will fall to $59.23, the lowest since April 30th. USDA slaughter estimates were pegged at 417,000 head and within estimates. Tyson’s Storm Lake meat plant will likely be running today.
Wholesale beef prices are falling sharply with more declines expected. Through yesterday morning, choice is down 40.98 so far this week. It has fallen 153.03 (to 322.36) since the peak price set on May 12th at 475.39.
Dressed beef values were sharply lower again with choice down 22.42 and select down 26.25. The Feeder cattle index is 128.25. Pork cut-out values were down 6.67.