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Morning Commentary

July corn up 1 ¾ at $3.21

July beans up 6 ¼ at $8.4475

The DOW is up

USD is weaker

Crude oil up $2.73 at $32.16

Good morning,

Corn bulls are pointing to flooded fields and cold temperatures in some key production areas here in the U.S.. There are also dry weather concerns continuing for parts of southern Brazil’s second-crop corn. Bears are saying there’s plenty of time here in the U.S. to replant if need and suspect to see the USDA report the crop now over +80% planted and running well ahead of schedule vs. sub-45% planted this time last year. Bears are also pointing to warmer weather in the U.S. forecast which could prove to be perfect timing for early planted corn development. Outside of weather, the biggest wild-cards are obviously exports, ethanol, and feed demand.

Soybean prices have tumbled aggressively during the first quarter of 2020. The JUL20 contract has fallen from a high of $9.84^2 on the first trading day of the new year to around $8.40 per bushel this morning. The South American weather has mostly cooperated and the Chinese have yet to be aggressive U.S buyers. The USDA was forced to raise the U.S. balance sheet to more burdensome levels at 580 million bushels. And the fund trading world is now massively uncertain about global growth and overall political relations between the world’s top two economic powerhouses.

The CEO of R-CALF USA says he worked closely with U.S. Senators Chuck Grassley (R-Iowa) and Jon Tester (D-Montana) on their recently introduced bill to increase transparency in cattle pricing. Bill Bullard tells Brownfield Ag News, “One of the first things we need to do is restore the integrity of our price discovery market and that’s what this bill does by requiring the packers to purchase at least 50% of their procurement needs in the competitive cash market.” Bullard calls the cash market the holy grail for the cattle industry because it helps formulate the base price of all livestock regardless of weight, “So this is a very important piece of legislation. It’s the first step towards restoring competition in a broken marketplace.” Bullard says the second step is to reinstate the tool producers need to compete in the marketplace – mandatory Country of Origin Labeling.

The U.S. ethanol industry is showing some signs of recovery. As restrictions ease and gasoline demand inches higher, about 140 facilities are idled or running at reduced rates, Renewable Fuels Association President Geoff Cooper said on Friday. “It seems the worst may be behind us,” Cooper said in a call with reporters. “But make no mistake, we still have a very long way to go to climb out of the hole that COVID-19 put us in.” U.S. production of ethanol has increased since the start of May but is still down more than -40% from year-ago levels. (Source: Reuters)

 

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