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Morning Commentary

July corn down 7 at $3.4475

July beans down 15 at $7.9425

The DOW is down

USD is weaker

Crude oil up $.87 at $62.52

Good morning,

Corn prices continue to struggle. Bulls are pointing to more wet weather in the extended forecast, especially in the northern Plains. The USDA is now estimating 2019/20 ending stocks at almost 2.5 billion bushels, essentially the highest May ending stocks report estimate in over 30 years. With all of the extreme weather, it’s hard for many to believe the USDA is still projecting new-crop corn production at over +15.0 billion bushels. The USDA is also forecasting the season-average farm price at $3.30 per bushel, down -20 cents from last year and the lowest since 2006/07. The trend is negative.  A failure to hold 343.5 implies a probe below the 2018 low at 329.75.  Stable action over 364.5 is needed to provide fresh upside targets.

Soybean bears continue to ride the bandwagon! Soybean prices have now fallen below $8.00 per bushel for the first time in over a decade. Keep in mind, the USDA is now estimating new-crop ending stocks at 970 million bushels, up more than +550 million compared to the report last-May. The USDA is also now estimating the average median on farm price at around $8.10 per bushel vs. a median of around $10.00 per bushel in the report last May. The estimated stocks-to-use ratio is now forecast at over +23% vs. less than 10% in the report last May. The trend is negative.  Soybean futures are at the lowest level since December 2008.  Sustained action below 800 (spot) signals a drop to 762.75.  Stable action over 867.25 is the minimum needed to provide upside targets.

For the better part of a year, African Swine Fever has been roiling the global soybean complex. Now we have new data from China’s Ministry of Ag and Rural Affairs reporting that the pig herd has declined by -20% since ASF was first reported in early August 2018, and China’s feed demand and soybean imports are projected to fall dramatically from earlier forecasts. Overall, the global soybean market faces a potential -42 million metric ton accumulated decline in China’s soybean import demand through the 2019/20 year. This estimate is based on USDA’s import forecast for China from May 2018, and trend forecasts using earlier USDA baseline forecasts as a guide. (Source: USDA, May Oilseeds: World Markets and Trade)

China is planning on churning out 17.27 million metric tons of soybeans in the 2019/20 crop year, up 7.9% from the before according to its Ag ministry. That would be the highest since 2004/05 when China produced 17.4 mmts. China is also expected 2019/20 soybean imports to come in at a smilier level to the year before at 84.9 million metric tons.

U.S. Agriculture Secretary Sonny Perdue said on Friday that President Trump had asked him to create a plan to help U.S. farmers cope with the heavy impact of the U.S.-China trade war on agriculture. A new aid program would be the second round of assistance for farmers, after the Department of Agriculture’s $12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations. (Source: Reuters)

If diary didn’t already have enough problems, a new report from Rabobank says the ASF outbreak in China that has killed a million of pigs could mean less demand for ingredients used in feed, many of which are derived from cow’s milk. AS many as 200 million pigs are expected to be infected or slaughtered due to ASF, which translates to a decline in demand of lactose in piglet feed of between 54,000 metric tons and 72,500 metric tons. U.S. exports of whey and permeate to China saw a 60% decline in demand, attributed to ASF and Chinese tariffs on dairy exports. (Source: Rabobank)

 

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