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Morning Commentary

July corn up 3 ¼ at $30175

July beans up 5 ¾ at $8.3825

The DOW is up

USD is stronger

Crude oil up $.2.15 at $26.14

Good morning,

Corn continues to struggle as the bears understand “demand” will take time to rebuild and that weather remains mostly cooperative. Bulls are pointing to improved gasoline demand, meat processing plants mostly back online, some cold temperatures in a few key U.S. locations to the east, and still a few dry areas of concern in Brazil that could drag on second-crop yield. U.S. Energy Information Administration showed an increase in weekly ethanol production for the first time since early-March as gasoline demand starts to pick back up.  At the same time, ethanol stocks were trimmed by -725,000 barrels to 25.6 million, but unfortunately still remain almost +15% larger than last year. The trend for July corn is negative. Dropping below 309 signals a test of 300. Sustained action over 328.75 is the minimum needed to improve the outlook.

Soybean bears continue to point towards the USDA lowering demand estimates, record South American exports, and U.S. acres moving higher. There’s continued talk of reduced domestic crush and no real major story for U.S. exporters. The trend for July beans is neutral. Stable action outside 832.75-867 will provide fresh trending targets. Non-index funds are thought to be short 7,000 beans.

Bunge reported a first-quarter loss on Wednesday and lowered its full-year forecast as the coronavirus crisis hammered demand for fuel and upended global food supply chains. Bunge forecast a particularly challenging year for its edible oils unit as the pandemic diminishes demand from restaurant and food service customers. Demand for edible oils fell toward the end of the January-to-March period as the crisis shuttered restaurants and suspended travel, while crashing Brazilian ethanol prices and whipsawing currency markets dented Bunge’s outlook for its sugar and bioenergy unit. Retail demand for oils from at-home chefs would only partly offset the hit, the company said. Slumping fuel consumption, including for soybean oil-based biodiesel and corn- and sugar-based ethanol, created further headwinds for Bunge as pandemic lockdowns continue to limit travel. Bunge’s adjusted first-quarter net loss came to $181 million, or $1.34 a share, compared with year-earlier profit of $59 million, or 36 cents a share. (Source: Reuters)

There’s momentum in Congress to expand the borrowing authority of USDA’s Commodity Credit Corporation, the Depression-era agency that’s funding part of the department’s stimulus payments to farmers and ranchers. It’s one of the primary funding options on the table as lawmakers consider more agricultural aid in their next coronavirus response package. A House bill introduced on Tuesday, backed by Reps. Austin Scott (R-Ga.), a senior House Ag member, and Sanford Bishop (D-Ga.), who chairs the House Appropriations panel that oversees USDA’s budget, would lift the CCC’s annual borrowing cap from $30 billion to $68 billion. The proposal would essentially give USDA a green light to send far more money to struggling producers who are rapidly losing money. Scott said his legislation would help mitigate long-term damage to the food supply chain and insulate annual farm bill programs that are also paid through the CCC. Congress in March considered hiking the agency’s borrowing limit to $50 billion. But if such a boost is back on the table, Democrats could again demand a 15% increase in Supplemental Nutrition Assistance Program benefits in exchange. Sen. Joni Ernst (R-Iowa) is pressing USDA to include egg producers in its $19 billion aid package and to consider directly buying and redistributing liquid egg products. Sen. Kirsten Gillibrand (D-NY) this week introduced a bill that would dole out $8 billion in block grants to the top specialty crop states so their food banks can connect with the excess supply of produce in their area. The money would be used to cover the cost of food as a way to help farmers with lost markets, as well as to cover the cost of logistics. (Source: Politico)

 

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