Morning Commentary

July corn down ½ at $3.27

July beans down 4 ½ at $8.425

The DOW is down

USD is weaker

Crude oil down $.75 at $32.96

Good morning,

Corn bulls are hoping flooded fields and delays in planting here in the U.S. will result in producers choosing “prevent plant”. With prices so low, thoughts are many producers may simply take “preventive plant” rather than battling muddy fields and replanting the acres. This would obviously reduce the supply side of the new-crop U.S. balance sheet and help offset some of the weakness in demand. There’s also some debate about longer-term weather and the fact a much more dry and hot summer might soon start to unfold.  Ethanol demand improved for the fourth consecutive week but is still down over -30% from last year, and stockpiles are still higher and total gasoline demand is still running about -25% less than last year at this time. In the best volume in a month, open interest rose 2,400 lots Thursday. Liquidation of over 11K July was overshadowed by gains elsewhere on the curve. The trend for July corn is neutral. Stable action above 328.75 would support a rally to channel resistance around 340. A close under 317.25 signals a return to 309. Non-index funds are estimated to be short 265,000 corn on a futures and options basis. During May, open interest has risen 77,000 lots while prices added just 7.5 cents.

Soybean traders continue to debate U.S. and Chinese relations. Bears believe President Trump is being pressured to take more aggressive steps towards China not only in regard to the early handling of coronavirus but also the country’s recent move to tighten its hold on Hong Kong. If the U.S. retaliates with increased and tighter sanctions against China, there’s even more questions and speculation regarding the Chinese commitment to the “Phase 1” trade agreement? China this week has been a somewhat unusual buyer of several cargoes of Brazilian beans for Fall delivery, these are generally soybean they would book from the U.S. The trend for July beans is neutral. Closing outside 834.75-864.25 would provide fresh trending targets. Non-index funds are estimated to be short 2,000 beans on a futures and options basis. During May, open interest has risen 71,000 lots while prices have fallen just 8.25 cents.

Coronavirus has swept through a Tyson pork processing plant in Storm Lake, Iowa, with 555 employees, testing positive and fueling renewed concerns over safety measures at meatpacking plants. On Wednesday, with suspicions the plant was the site of a new outbreak, Iowa’s Department of Public Health Deputy Director Sarah Reisetter said the state would only confirm outbreaks at businesses where 10% of employees test positive and only if the news media inquires about them specifically. According to the Des Moines Register, cases in Buena Vista County more than doubled on Tuesday, and Reisetter is now confirming around 22% of the employees at the Storm Lake facility tested positive.

Archer Daniels Midland Co. and Marfrig announced an agreement to create PlantPlus Foods, a joint venture for the sale of plant-based food products across South American and North American markets. The announcement builds on an earlier partnership between ADM and Marfrig to sell plant-based meat in Brazil. Marfrig will own 70% of the new venture while ADM will own 30%. Marfrig will be responsible for production and distribution while ADM will supply technical expertise, application development and plant-based ingredients and flavors.


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