Weekly market review
Crop condition ratings on Monday, July 22nd showed corn fell one point in good/excellent to 57 percent and soybeans were unchanged at 54 percent good/excellent. Corn rated at 35 percent silking versus 66 percent for 5-year average.
Silking fell 7 percent further behind average from the prior week, while corn in the dough stage is at 5 percent , versus 10 percent for the 5-year average.
Soybean crop progress showed 40 percent of the crop blooming, 26 percent behind the 5-year average, about equal to the previous week compared to the 5-year average.
China, the world’s largest meat consumer, has hit an all-time high for beef imports for the country due to the spread of African swine fever.
Beef shipments rose 61 percent from a year ago and pork purchases rose 63 percent from the previous year. Beef imports have climbed significantly due the virus driving up pork prices and consumers changing their diets due to safety concerns, even though the virus cannot be spread to humans. Australia is the largest shipper of beef to China, increasing shipments by 55 percent compared to last year. If China allows supplies from 25 meat-processing plants, exports could increase to 70,000 tons/month compared to an average of 24,000 tons/month in the first half of the year.
The Chinese government approved an allocation of 6 million tons of U.S. soybeans without the 25 percent retaliatory tariff to private companies for December. The first round would amount to 2.2 million tons and the second round of 3.8 million tons allocated to foreign companies. Traders continue to monitor sales in hopes of new Chinese purchases. Year to date soybean sales to China are 531 million bushels, compared to 1.03 billion last year. Obviously, a large reduction is attributed to the trade war and African swine fever. Traders are also closely monitoring cancelations as current unshipped sales to China account for 57 percent of total this year compared to less than 10 percent last year.
The USDA offered details on their 2019 Market Facilitation Program (MFP2) payments. The first of three possible payments will be made in August. The first payment will make up approximately 50 percent of their payment or $15/acre. However, the next two payments will be based off market and trade conditions. In Iowa, county payment rates range from $50 to $80/acre. States like Minnesota that have some lower producing counties are seeing payments range from $15 to $70/acre.
Thursday the USDA released their drought monitor report. The updated report is now showing portions of the Corn Belt that are abnormally dry. The new areas formed this week are in Eastern Iowa, Central Illinois and Northern Indiana. The poor conditions many of these crops were planted in could lead to poor root development and more vulnerable to adverse weather than most years.
The struggling ethanol sector has been catching headlines for the last several months. This week a large ethanol company released their earnings reports confirming the claims. Their quarterly data showed operating income falling to $7 million dollars from the previous year’s $43 million. This is estimated to be a decrease of 10 cents per gallon from the prior year.
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