Morning Commentary

July corn down 1 ½ at $3.2275

July beans up 4 ¼ at $8.5475

The DOW is up

USD is weaker

Crude oil down $.14 at $36.67

Good morning,

Corn bulls are pointing to a few uncertainties in the U.S. forecast and some companies using high-tech geospatial and remote sensing technology that are forecasting the early U.S. yield at between 172 and 175 bushels per acre vs. the USDA’s current 178.5 yield forecast. Bulls also point to the continued talk of more unplanted acres shifting to soybeans or “prevent planting”. Bottom-line, bulls are thinking the USDA’s May total production forecast will be the largest of the year and the balance sheet should start shrinking a bit from here forward. Unfortunately, with ending stocks forecast at +3.3 billion bushels it is going to take a sizeable weather worry to put the balance sheet in a forward-looking position to attract larger bullish fund interest. On the demand side of the equation, data is showing ethanol demand improving as the U.S. economy comes back online, but many inside the trade suspect the USDA still has another -50 to -100 million bushels to cut from their demand estimate.

Soybean traders are now caught trying to differentiate what’s real and what’s “fake news”. One minute the Chinese are suspending U.S. purchases, the next minute the USDA is announcing confirmed purchases by the Chinese. In the best volume in nearly a month, open interest was little changed. It could reflect fund shorts shifting to commercial hands. The trend for July beans is neutral. The market closed well above the upper boundary of a 6-month trend channel on Tuesday. The move alerts for a potential improvement in the trend. Closing outside 834.75-864.25 would provide fresh trending targets. Non-passive funds are thought to be short 11,000 beans.

Businesses in agriculture, forestry, hunting and fishing have received nearly $7.6 billion so far in Paycheck Protection Program (PPP) loans, which are forgivable loans to small businesses that keep their workers on the payroll for eight weeks. That’s 1.5% of the $510 billion approved by the agency as of May 30. Other sectors like health care, construction and professional services had each received more than $50 billion in loans. Now, lawmakers are on track to ease the restrictions surrounding how employers use the loans, with the Senate expected to soon take-up House-passed legislation that would give borrowing businesses extra time to spend the money and more flexibility to use it on a variety of expenses. If no senators raise objections, the Senate might quickly pass the legislation by unanimous consent, according to a Republican aide. Farms with fewer than 500 employees also qualify for the program, though it wasn’t designed with agriculture in mind. (Source: Politico)

The Trump administration said this week it will temporarily allow some impurities in alcohol-based hand sanitizer to ensure access to the product during the coronavirus pandemic, reversing course after having tightened restrictions in April. The move will provide clarity on impurity limits for a slew of fuel ethanol companies that had switched to producing hand sanitizer during the outbreak, after regulators discovered some of the impurities several weeks ago. The new FDA guidance allows up to 2 parts per million of benzene and 50 ppm of acetaldehyde, according to the web site. The ethanol industry invested millions of dollars since March to ramp up the output of corn-based alcohol sanitizer at a time when fuel demand has slumped from the pandemic. Twenty-seven plants are currently producing ethanol for sanitizer, the Renewable Fuels Association said.

Farmer sentiment improved slightly in May after falling sharply in both March and April. The Purdue University-CME Group Ag Economy Barometer reading in May was 103, up 7 points from the April reading of 96. The barometer’s small improvement left the gauge of farmer sentiment nearly 40 percent below its February peak of 168. This month’s survey also indicated that farmer sentiment was virtually unchanged from May 2019 when the index reached its lowest reading of 2019 as U.S. farmers were in the midst of struggling through a historically difficult spring planting season. Although overall sentiment improved during May, farmers continue to be concerned about the impact of coronavirus on their farms. Over 70 percent of farmers responding to our May survey said they were either very worried (34 percent) or fairly worried (37 percent) about the impact of coronavirus on their farms’ profitability, up somewhat from a month earlier. Finally, two-thirds of farmers in the May survey said they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers

Zoom reported revenue growth of 169% from the previous year in its first-quarter earnings report on Tuesday, and nearly doubled its revenue guidance for the full year, as the coronavirus pandemic drove millions of new customers to the video calling service and turned it into a household name. However, shares rose less than 2% after hours, as investors had already sent the stock up more than 200% this year. The company reported earnings of +20 cents per share on revenue of $328.2 million, which handily topped analyst estimates. The company also significantly increased its guidance for the fiscal year. It now expects $1.21 to $1.29 in adjusted earnings per share on $1.78 billion to $1.80 billion in revenue. In keeping with its previous practices, the company did not disclose active user numbers. However, Bernstein analysts Zane Chrane and Michelle Isaacs, who have the equivalent of a buy rating on Zoom stock, estimated that the Zoom’s mobile app had 173 million monthly active users as of May 27, up from 14 million on March 4.


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