Morning Commentary

Sept corn up 4 ¾ at $4.565

Aug beans up 4 ½ at $9.1925

The DOW is down

USD is stronger

Crude oil up $.03 at $57.93

Good morning,

Corn  traders are digesting the latest weekly USDA crop progress numbers. Planted acres jumped form 92% to 96% complete. States running the furthest behind are Ohio with 20% still left to plant; Indiana and Michigan 9% left to plant; Illinois and Missouri 8%; Wisconsin 7%; Colorado and South Dakota 5%; Pennsylvania 4%. Corn listed as “emerged” at 89% vs. 99% complete. Again, states like Illinois, Indiana, Michigan, Missouri, Ohio, South Dakota and Wisconsin seem to be the furthest behind. Interestingly, crop conditions dropped from 59% “Good-to-Excellent” down to 56%. The “Excellent” category actually jumped from 7% to 8%, while the “Good” category fell from 52% down to 48%. Any way you want to slice it, condition ratings are much lower than last year. One of the biggest questions in the market is how many corn acres will actually be planted? The USDA lowered their forecast in June from 92.8 million down to 89.8 million planted acres. A Bloomberg survey recently released showed most in the trade are thinking the USDA could again cut the number of planted corn acres down to around 87 million.

Soybean  traders are digesting and debating an extremely slow planting pace, burdensome supply and trade negotiations with the worlds top buyer of soybeans. The USDA showed planting jumped from 77% to 85% complete vs. the 5-year average of 97% by this date. Ohio still has 35% of their crop left to plant; Indiana 25% left to plant; Missouri 24% left to plant; Illinois and Michigan 21% left to plant; Kentucky 20% left to plant; North Carolina 18% left to plant; Kansas and South Dakota 16% left to plant; Wisconsin 12% left to plant; Arkansas 11% left to plant. The USDA estimates 71% of the soybeans are now “emerged” vs. the 5-year average of 91%. Ohio only has 45% of their crop considered “emerged”. Missouri just 51% emerged; Indiana just 56% emerged; and South Dakota just 57%. The USDA estimated the initial soybean condition at 54% rated “Good-to-Excellent” vs. 73% of last years crop rated “Good-to-Excellent” at this time. Again, similar to corn, Nebraska, Kentucky and Tennessee seem to be in the best condition.

The Federal Reserve is poised to cut interest rates, in part, to avoid a recession because the global economy is slowing down. But the farming economy is speeding up, which is prompting Wall Street analysts to upgrade shares of tractor makers Deere and Agco. On Monday, Jefferies analyst Stephen Volkmann raised his rating on Deere (ticker: DE) and Agco (AGCO) shares to Buy from Hold. His Deere stock price target went to $190 from $150, while his Agco stock target went to $90 from $70. Those prices imply gains of 16% and 18%, respectively. chemical analysts are also recognizing value in the farming sector JPMorgan analyst Jeffrey Zekauskas upgraded shares of seeds and crop chemical producer Corteva (CTVA) on June 21. Zekauskas wasn’t as concerned with the cycle, but noted shares were trading at a discount to historical averages and a discount to other specialty chemical producers. His target for Corteva stock is $30 a share, 10.7 times his estimated 2020 earnings. (Source: Barron’s)


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