Morning Commentary

July corn down 9 ½ at $4.2675

July beans down 6 ¼ at $8.8275

The DOW is down

USD is weaker

Crude oil down $1.23 at $55.36

Good morning,

Corn bulls take a step back as trade with Mexico comes into question. At the same time, traders continue to debate a number of important metrics and variables associated with the U.S. crop. Most inside the trade are content using an ending stocks number of between 1.2 billion and 1.5 billion bushels, the question is not only U.S. production, but how much demand erosion will we see as prices continue to push higher. The trade count had the fund buying 48,000 corn.  Funds are now thought to be long 28,500 lots.  The short term trend for July corn is bullish.  Stable trade over 406 leaves the market in position to trade 445.  Closing under 406 signals a correction.

Soybean bulls are starting to talk about fewer acres and lower yield forecasts. Many producers point to the big yields the past few years being associated with early-planting. Extremely late-planting and prolonged wet feet brings about a much more interesting conundrum? I’m not sure we are not talking -2 to -3 million fewer soybean acres and an early-yield estimate closer to 45 bushels per acre. The USDA is currently forecasting 84.6 million planted soybean acres, down roughly -5% from last year and an average yield of 49.5 bushels per acre, also down significantly from last years 51.6 bushel per acre average yield. The trade count had the fund buying 16,000 beans.  Funds are now thought to be short 104,000 lots.  The short term trend for July beans is bullish.  Stable action over 893 signals a run to 951.  Closing under 845.75 alerts for corrective action.

Most inland waterways continue to see high-water conditions. on the Upper Mississippi River there are multiple lock closures. As of May 30, all traffic through St. Louis is stopped, as the Mississippi River gauge there was 42.4 feet and rising. The Coast Guard stops all traffic at St. Louis when the river gauge exceeds 38 feet. The National weather service’s forecast doesn’t show the river levels dropping below 38 feet until mid-June. Barge traffic is also stopped on the Lower Illinois River and much of the Arkansas River. The Ohio River and the Lower Mississippi River are open but traffic is delayed by high water conditions. The U.S. Army Corps of Engineers reports saturated soil levels throughout the Mississippi River Valley Basin are at 25 year highs. (Source: USDA, GTR)

The FDIC released its quarterly banking report on Wednesday, revealing an uptick in the rate of farm loans that are past due. Before we get too worked up here, the rate of concurrent farm loans (those that are more than 90 days late or in “non accrual” status) at all FDIC-insured lenders was 1.26% in the first quarter of 2019. Now this is the highest since early 2012, but it’s not dire straits. We do need to keep our eye on farmland values however, as the Kansas City Federal Reserve Bank has signaled they believe there’s a potential for lower farmland values moving forward.

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