News

Morning Commentary

July corn down 1 at $3.2025

July beans up 3 ¾ at $8.4625

The DOW is up

USD is weaker

Crude oil up $.78 at $32.74

Good morning,

Corn bulls continue to wonder if most all of the bad news is priced in? In simple terms, if we’ve seen the USDA’s highest production number of the year i.e. 97 million planted acres with an average yield of 178.5 per acre, and we start to work lower, while at the same time having seen the worst of the demand headlines, meaning ethanol, exports and feed demand all start to improve, then yes perhaps most of the worst news is already priced in and prices theoretically could start to work higher.  Bears aren’t really wanting to make big bets or add aggressively to their position if we are near the bottom of the barrel. At the same time, bulls have been badly beaten up and still licking their wounds on the sideline and not in a hurry to place big bullish bets with ending stocks forecast +3.0 billion bushels.

Soybean bears continue to point to record exports out of South America, a massive jump in U.S. acres compared to last year, and ongoing demand uncertainty. Brazil blew its previous soybean export record away during the month of April and all indications are they will do the same in the month of May. Yes, it appears the Chinese are buying a few more bushels form the U.S. but the trade obviously needs to see confirmation of more interest before prices move much higher. The other big headwind remains the strength of the U.S. dollar vs. the Brazilian real, it has eased a bit this week, but is still making it very difficult for U.S. exporters to compete.

U.S. farmers that grow crops including corn and soybeans will receive coronavirus assistance payments based on either half of their 2019 production or the supplies they had on hand as of Jan. 15, the government said on Tuesday. The payments were set at 45 cents per bushel for soybeans, 32 cents per bushel for corn and 18 cents per bushel for hard red spring wheat, the U.S. Agriculture Department said. Other crops such as barley, canola, cotton and oats also were eligible for payment under the plan. Farmers can start enrolling next week on May 26 for $16 billion in coronavirus relief payments, but the Agriculture Department has decided to prorate the aid to ensure there is enough money to go around, according to Agri-Pulse. (Sources: Reuters, Agri-Pulse)

The latest beef production estimates from the USDA show a decline in the third and fourth quarter of this year and a decline in overall beef production as a result of the COVID-19 outbreak. University of Missouri’s Scott Brown says if production does decline that much there could be some pretty good price strength late in the year. “USDA would say that’s about 1.5 or 2-pounds less,” he says. However, Oklahoma State University’s Derrell Peel says he’s not revised his beef production outlook for 2020 — yet.  “It’s really more a matter of timing,” he says.  “Those animals are still out there somewhere and they’re still going to come to town. I think a lot of what we’ve done is dramatically revise the timing of things between Q2, Q3, and Q4.” Peel says there are concerns if the economy and domestic demand can’t recover quickly. “That’s where the potential is, I think, to see some real pressure in the market,” (Source: Brownfield Ag)

 

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