Morning Commentary

May corn up 1 ½ at $3.2125

May beans up 3 ½ at $8.4025

The DOW is up

USD is weaker

Crude oil down $2.16 at $17.71

Good morning,

Corn bulls are pointing to strong weekly U.S. export sales while bears talk about global buyers soon starting to shift more purchases towards South America. Bears also continue to point to the demand setbacks associated with ethanol and the possibility of +94 million planted U.S. corn acres. Technically, the market continues to push to new contract lows with many bears thinking we could eventually test 2016 lows down at $3.01, the lowest level in over 10-years. Below that level, it was back during September 2009 that corn traded down to $2.99^6. In December 2008 the market traded down to $2.90 per bushel. If you are looking for prices lower than that we have to go back to before The Energy Independence and Security Act of 2007 which changed and broadened the original RFS guidelines. The changes required by the 2007 legislation are usually referred to as RFS2, which required the use of 9 billion gallons in 2008 and scheduled a requirement for 36 billion gallons in 2022.

Soybean bears are pointing to increased demand uncertainties, extremely weak export sales, talk of more U.S. acres in 2020, and the ongoing headwinds associated with the strong U.S. dollar in comparison to SAM currencies. There were more talks circulating yesterday that China was in the Brazilian market buying cargoes for Jul-Aug-Sep deliveries…

The Centers for Disease Control and Prevention yesterday was inspecting a closed Smithfield Foods pork processing plant in South Dakota that’s turned into a coronavirus hot spot, one day after the company announced it’s shuttering two more plants. Smithfield Foods said Wednesday it will temporarily close plants in Cudahy, Wisconsin, and Martin City, Missouri, because of the coronavirus pandemic. The plant near Milwaukee will be closed for two weeks while the facility in Missouri is closed indefinitely. The Missouri plant receives raw material from the company’s Sioux Falls, South Dakota facility, which is also closed. “Without plants like Sioux Falls running, other further processing facilities like Martin City cannot function,” Smithfield CEO Ken Sullivan said in a statement. The Sioux Falls plant has become the biggest single source of cases in the United States with 518 Smithfield Foods employees who have tested positive and 126 total cases of non-employees who became infected when they came into contact with a Smithfield employee. 

Prior to the emergence of global economic developments related to COVID-19, growth in farm lending continued to show signs of slowing, according to the Kansas City Fed’s latest Ag Finance Databook. While the volume of operating loans in the first quarter of 2020 increased slightly from a year ago, overall demand for non-real estate loans declined. At the end of 2019, delinquency rates on farm loans continued to increase slightly, but agricultural credit conditions and farmland values were holding steady. Capital cushions at agricultural banks, which have increased steadily in recent years, remained at historically high levels through 2019. As the effects of recent economic disruptions materialize in coming months, the current stability of farm real estate values and financial soundness of farm banks may be key sources of support for the sector.


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