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Morning Commentary

July corn up ½ at $3.255

July beans up ¼ at $8.7525

The DOW is down

USD is stronger

Crude oil down $.74 at $39.63

Good morning,

Corn bears are talking about mostly cooperative U.S. weather and the chance of record-setting crop, some talking +180 yield estimate. Currently the USDA estimate is at 178.5 bushels per acre.  Most in the trade are still deciding where we are going to put all of this corn. The trend for Dec corn is positive.  Stable action above 348.5 would support a rally to 358.5.  A close under 334.5 cautions for a retrenchment phase.  Non-passive funds are thought to be short 325,000 corn on a futures and options basis.  Friday is LTD for July options.  A July corn settle at 340 on Friday is the level that results in the lowest total intrinsic value for all outstanding July options.  The largest open interest in any nearby strike is the 320 puts.

Soybean bulls seemed a bit spooked by the recent Peter Navarro comments that the US-China Phase 1Trade Deal was “over”, despite the fact Navarro later told the press his comments were taken out of context and President Trump later confirmed the “Phase 1” deal was still intact. It’s also worth noting, China is now demanding written affidavits from exporters that shipments do not contain coronavirus. Tuesday’s June Acreage Report and Quarterly Stocks will also be of great importance. Most think U.S. soybean acres will work higher. And there’s continued talk that the USDA might have underestimated last year’s U.S. crop and will at some point need to make an adjustment and add some bushels. The trend for Nov beans is positive.  Stable action over 884.5 will position the market to trade 924.75.  Closing under 864 warns of a correction.  Non-passive funds are thought to be long 10,000 beans on a futures and options basis.  Friday is LTD for July options.  A July bean settle at 880 on Friday is the level that results in the lowest total intrinsic value for all outstanding July options.  The largest open interest in any nearby strike happens to be the 880 calls, with nearly 10,000 contracts open. 

The president of the National Corn Growers says impacts of the coronavirus pandemic will be felt for quite a while. Kevin Ross, who farms in southwest Iowa, points to the trickle-down effect of reduced fuel demand. “We’ve backed up demand for corn, and now the projected carryouts are above 3 billion after this year, with large acreage planted at 97 million acres this year.” He says 2020 was shaping up to be a relatively strong year for corn demand until COVID-19 came along. “And right now, the long-term success of our ethanol partners driving biofuels demand is definitely the best way to paint a good economic picture for agriculture. It was in 2006, and it still is today,” says Ross. He believes the federal government needs to protect the RFS and get onboard with improving and increasing demand for biofuels.

Foster Farms is introducing its new Smart Crust frozen pizza line, swapping out traditional wheat-based crust for one made of a mix of Foster Farms chicken breast, egg whites and cheese. This substitution lowers the carb count to 4 grams per serving and boosts the protein to 25 grams per serving. The frozen pizzas are aimed at the gluten-free, grain-free, and keto-certified crowd, the latter of which continues to be a hot food trend. Substituting meat for bread is not a common exchange in the consumer packaged goods space. Generally, grain-based snacks and breads are reimagined using nut flours, vegetables or seeds. By adding an extra layer of meat to an already meat-heavy dish, Foster Farms is upping the ante and appealing not only to keto consumers, but also to those who are seeking to increase their protein intake — another major eating trend.

 

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