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Weekly market review

By Adam Suntken - Columnist | Sep 28, 2020

With China’s hog numbers continuing to grow and recover from African swine fever, this brings the increased feed demand. This is one of the major reasons we’ve seen the increase in China’s buying of U.S. corn and soybeans. It was reported that hog herds are over 30% larger than last year and sow numbers are up nearly 38%. Government officials are restricting producers from feeding food waste, which was common practice prior to the AFS outbreak. As a result, corn and soybeans are increasing in rations, boosting imports from the U.S. Even though China’s hog numbers are increasing, they still import pork from several countries. With Germany’s recent African swine fever outbreak, this has opened the door for other countries to import pork to China. The U.S. is hoping to gain some of the pork demand that Germany has lost. South Korea is the second country to ban shipments of pork from Germany after African Swine Fever was discovered in a wild boar in Germany.

NOPA released their August crush numbers, which were 4 million below the average trade estimate and a new multi-month low. This placed crush at 165.1 million bushels compared to July’s number of 172.8 million bushels.

Looking further into the September USDA supply and demand report numbers, corn production declined in several key states. The USDA lowered corn yield in Iowa 11 bu./acre, Kansas 7 bu./acre, Missouri and Nebraska both down 6 bu./acre and Ohio down 3 bu./acre. The Dakotas and Minnesota saw increases of 1-3 bu./acre. Despite large declines in several states, a record yield is still possible. The USDA reduced harvested acres by 500,000 due to the August 10thderecho storm that tracked through the Midwest. The USDA said acres would be assessed again in the October report.

Demand for corn was adjusted downward as many in the trade indicated was needed after robust 20/21 demand projections looked like an uphill climb. The one bright spot in corn demand in recent months has been exports. China looks to increase import quotas opening the door for more U.S. corn. While there are many new crop bookings, there is potential for more and if realized would help offset any further reductions in feed and ethanol demand.

Another firm released their estimates for new crop with soybeans at 50.5 bu./acre, placing production at 4.2 billion bushels. This is 1.4 bu./acre under the USDA’s September estimate. They estimated corn yield was at 178.2 bu./acre, this is close to the 178.5 bu./acre estimated by the USDA in September.

Ethanol production for the week ending September 11thdecreased 15,000 barrels per day to 926,000 barrels a day. The U.S. Grains Council stated they don’t expect production to return to levels before Covid-19 until 2022. Ethanol stocks fell 195,000 barrels to 19.8 million barrels. The Midwest region showed the largest decrease for both production and stocks.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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