Market Recap 7-6
Markets switched to risk on to start the first full week of July. The rally seemed to start overnight with several Chinese media outlets running stories around China’s economic recovery and it being stronger than originally predicted. US traders felt that meant continued economic stimulus for the US economy and started buying. This put significant pressure on the US Dollar down 0.68% at the time of this writing. That did little for emerging currencies though. The Russian Ruble is also 1.88% lower and the Brazilian Real is 0.32% higher.
Dry weather concerns helped to find follow through support for grains on Monday. As much of the corn crop is close to the pollination stage weather will become more of a volatility mixer for the grain markets. Forecasts continue to be dry for the next 2 weeks.
Grains were also boosted on the open with China and Mexico buying corn and soybeans. USDA announced 3 flash sales early Monday. China purchased 264,000 MT of soybeans for the 2019/2020 marketing year. China purchased 202,000 MT for the 2020/2021 marketing year. Mexico purchased 182,880 MT of corn split between the 2020/2021 & 2021/2022 marketing year.
The latest USDA grain export inspections were delayed until early afternoon due to technical difficulties. Overall the report held few surprises. Corn exports fell below a million metric tons. That widens the deficit corn is running with the previous marketing year. Sorghum also fell sharply to just over 50,000 MT. Year to date though sorghum is running almost 3 million metric tons more than a year ago. Soybean exports were strong over 500,000 MT.
Export business for US grains has been decent in 2019/2020. US soybean export commitments are 254.8 million bushels. That is up 180% from a year ago. South American grain exports though continue to grow rather than shrink. Brazil exported a record 505.1 million bushels in June vs. 314.1 million bushels last year. Argentinian and Brazilian FOB corn offers are $4-$15 cheaper per metric ton than US corn at the Gulf.
Livestock opened and stayed higher all day on Monday. Traders are expecting to see a significant increase in Chinese export business. China suspended imports from two more Brazilian meat plants on Monday. The suspension comes over corona virus concerns. Reports indicate that recent mass testing in Brazil revealed more than 1,000 positive corona virus cases at meat plants in Mato Grosso do Sul. Stone X analysts point out that the Chinese government continues to limit the sources of meat that can be imported over fears that the corona virus will be carried into the country on the meat, even though literally tens of thousands of tests of such meat in recent weeks have failed to produce a single positive test result.
Last week’s cash trade trickled in all week. Southern live business had a full range of $91 to $96, mostly $94 to $95, while Northern dressed deals have had a full range of $148 to $155, mostly $153 to $155.
For the week ending June 20, 2020, Imported Beef Passed for Entry in the U.S. totaled 40,086, 103.02% of the previous week and 100.66% of the 4-week average (note June 27 report is not available as of yet).
Expected Slaughter numbers Monday
121,000 hd today 121,000 hd wk ago 119,137 hd yr ago
453,000 hd today 476,000 hd wk ago 483,042 hd yr ago
Midday Carcass Value Monday
Choice dn 0.38 205.06
Select dn 2.27 196.49
C/S Spread 8.57
Carcass up 1.59 68.05
Bellies dn 2.24 89.96
- Corn up 1 1/4 – 4
- Soybeans 7 1/4 -9 1/2
- Chicago Wht dn 1/2 up 1 1/2
- Kansas City Wht up 4 1/4 – 5 1/2
- Live Cattle up 0.40 – 1.25
- Feeder Cattle up 0.50 – 1.37
- Lean Hogs up 0.07 -0.97
- Class III Milk up 0.09 – 0.67
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. China and Mexico are actively in the market Monday morning.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Futures could be mixed as traders look at demand after the 4th of July.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Macro and micro market movers are in play at the midday.
John Payne, Daniels Ag Marketing, looks at the grain settlements. The rally is nice, but how long can it hold?
Jack Fenske, York Commodities, looks at the closing market numbers.