Morning Commentary

July corn up 2 ¼ at $3.215

July beans up 6 at $8.565

The DOW is down

USD is stronger

Crude oil up $.16 at $24.90

Good morning,

Bitcoin jumped above $10,000 last week as Paul Tudor Jones bought it as an inflation hedge.  The level of the money supply, M2, has grown to over 18.5% per annum.  Even at its height during the Great Recession, money supply never jumped above 10% and Japan’s money supply during it’s 20 year swoon never got above 5%.  The last time M2 grew at such a pace was during WW ll when it peaked at almost 27%.  It would not be surprising for M2 to get well above 30% before the end of the year as the FED injects massive amounts of stimulus, ie asset price reflation.  The bank of Canada has already tripled its balance sheet and the Reserve Bank of Australia has allowed its balance sheet to climb by 43%.  Gold, over the last 12 months, has increased over 25% while the Goldman Sachs Commodity Price Index is down 24% over the same period.  Once the current short-term deflationary period subsides, the GSCI should move sharply higher in line with gold and bitcoin.

Corn traders are wondering if the recent cold temps did much damage to the early planted U.S. acres? Early talk is probably not enough widespread damage to move the trade in any significant manner. There’s talk that rains in Brazil this week should start easing the concerns about dry conditions but at the same time that doesn’t repair the yield drag that has already occurred. The trade is thinking the USDA will show around 70% of the U.S. crop now planted which is well ahead of schedule.  Tomorrow the USDA will release its highly anticipated May supply and demand report. This could be a very big report for the market so pay extremely close attention. Talk inside the trade is that the USDA could lower corn used for ethanol by another -100 to -300 million bushels. As for corn export demand, most are thinking the USDA leaves its current estimate “unchanged” to perhaps +50 million bushels larger.  As usual, feed and residual is expected to be a wild-card just depending on how the USDA wants to interpret or forecast corn used for livestock in the wake of corona related meat processing plant closures.

Soybean traders are thinking the USDA will show around 40% of the U.S. crop is now planted and well ahead of schedule. More importantly, will be tomorrow’s May USDA supply and demand report. Exports seem to be creating the biggest demand debate. Obviously, the Chinese are the big wild-card that nobody is certain about. How the USDA plays that card is still somewhat unclear? Most of the traders are looking for the export estimate to range from “unchanged” or lowered by -100 million bushels.

Last season’s corn and soybean crop will be included in the USDA’s report out next Tuesday. USDA Outlook Board Chairman Mark Jekanowski says, “If you’ll remember, there was a lot of crop that wasn’t harvested by the end of the year. Especially up in North Dakota, South Dakota, Minnesota, Wisconsin, a little bit in Michigan as well. So, NASS is resurveying a lot of those areas to get a better handle on how much crop was harvested from the 2019 year.” Jekanowski says he doesn’t expect big changes in production numbers but they’re important because they could affect ending stocks for 2019 and beginning supply numbers for 2020. The first 2020 production estimates for wheat will also be reported Tuesday. (Source: Brownfield Ag)

The United Food and Commercial Workers International Union (UFCW), which represents more than 250,000 meatpacking and food processing workers, said on Friday it opposed the reopening of plants. According to their statement, at least 30 meatpacking workers have died of the novel coronavirus and more than 10,000 have contracted it. The pandemic caused around 30 meatpacking plants to temporarily close over the past two months, resulting in a -40% drop in pork production capacity and a -25% drop in beef production capacity, the union said. UFCW on Friday said that urgent action was still needed to increase safety standards and called the reopening move “reckless.” (Source: Reuters)

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