AgriVisor Morning MarketWatch

Tuesday, July 28, 2020
The ratings of the US corn and soybean crops improved last week, and while expected, the improvement was greater than expected. Both crops improved 3% in the Good/Excellent range, putting them each at 72% G/E. Furthermore, just 7% of the corn and 6% of the soybean crops are rated as Poor/Very Poor, indicating the crop is quite healthy. In turn, trade is taking this as a sign of high yield potential. Spring wheat is also highly rated at 70% G/E. Elevated positioning ahead of month end will likely take place today. This will be more of a factor for the soy complex as the August contract will go into delivery. We will also see more attention on weather as forecasts have turned more favorable for much of the Corn Belt. One area of concern is western Iowa where rains are needed. This is not a huge area though and unlikely to cause much reaction in the market unless it spreads out. Elevated trade tensions between the US and China will also be monitored today as even though both the US and China are taking political shots at each other, China does continue to make purchases of US products, mainly soybeans. The question is how long this demand will last though, as China is making it well-known they would rather source soybeans from Brazil if possible. The US dollar is now trading at its lowest value in two years which is offsetting the political differences. Rising Covid cases and reports that some states may again close down some parts of their economies are impacting trade as well, especially in the energy complex, which includes ethanol. 

* US ethanol margins under pressure
* Virus testing slows Chinese imports
* Drought continues to impact Argentina
* China increases import forecast, may surpass quotas
* Corn values at record highs in China
* US soy sales to China a 6 year high
* US dollar at 2 year low
* Gold values at 9 year high
* Safrinha harvest pressure building
* US weather mostly favorable
* Corn 72% G/E; +3%
* Corn 22% in dough stage, normal is 17%
* Lack of weather threat for ear fill
* Brazil 2020/21 crop may reach 116 mmt
* Global production to decline
* Soybeans 72% G/E; +3%
* 43% setting pods, 36% is average
* China filling non-GMO import quota
* Brazil to expand plantings 2%
* Brazil likely to surpass export estimate
* Winter wheat 81% harvested
* Spring wheat 1% harvested
* Spring wheat 70% G/E
* Russian crop size is questioned
* Only 22% of Argentine crop is G/E
* SAM struggles with Covid at packing plants
* Chinese yearly pork production -19%
* China continues to favor SAM meats over US
* Trade remains uncertain on consumer demand
* US cattle herd at 103 million head

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