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E-Visor Reports: Market Watch

 
Monday, August 17, 2020
Values rallied overnight as we see the addition of risk premium due to the dry conditions being reported across the Corn Belt, especially in soybeans. Unless rains develop soon, crop loss is expected. At the very least the dry conditions could lead to crop quality loss. This evenings crop progress and condition report may be one of the most closely watched of the growing season to date. This is from the windstorms that moved through Iowa and Illinois last week, causing widespread damage, especially in Iowa. Initial reports indicated upwards of 10 million acres of farmland were impacted by this event, and loss of production could hit 400 million bu on corn. While possible, this great of a loss on corn production seems like a bit of a stretch at this time. Most field scouts claim losses may be closer to 200 million bu after walking impacted regions. While still a large amount, the affect this may have on balance sheets may be limited. The USDA is expecting ending stocks to increase nearly 600 million bu from old crop to new, so while this amount would tighten balance sheets, new crop ending stocks will still be more than enough to satisfy demand. What may be more of an issue, especially in the immediate future, is the loss of storage facilities. This will likely cause logistic issues across the region once new crop bushels are harvested. As a result we may see more bushels move right to the supply line if possible, and weigh on basis as they do. Trade will also monitor the developments between the US and China after the weekend’s trade talks were postponed indefinitely. 

Highlights
* US/China trade talks canceled
* Considerable doubt over Phase 1 projections
* China to launch measures to become self-supportive on needs
* Full extent of US crop damage not known until harvest
* Investment firms to limit commodity participation
* Ukraine grain exports to decline 23% in 2020/21 
* US farmland values hold steady in 2020
* US dollar continues to weaken
* Pro Farmer crop tour starts today
* Fresh news becomes sparse
 
Corn
* Lower corn rating expected
* Corn rating remains +4% from 5-year average
* Corn rating +15% from last year
* Ukraine lowers crop estimate 2.5 mmt
* Iowa losses being debated
 
Soybeans
* Steady rating expected tonight
* Current rating +10% from average
* Crop rating +20% from year ago
* NOPA crush today; est for 172 mbu soy usage
* Market now focuses on Brazil production
 
Wheat
* Spring wheat rating +6% from ave
* Spring wheat -4% from last year
* Demand for US wheat is slowing
* High quality reported on US spring/durum crops
* Reports China is shopping for French wheat
 
Livestock
* China hog herd building faster than thought
* China reports Covid in Brazil poultry imports
* Traders looking at large fall cash supply
* Higher weights expected
* Consumer demand remains active

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