Morning Commentary

July corn down 2¼ at $3.22

July beans down 3 ¼ at $8.675

The DOW is down

USD is stronger

Crude oil down $.81 at $37.20

Good morning,

Corn traders have very little fresh news to digest. The U.S. weather is mostly cooperative with bulls keeping an eye on some dry pockets of concern. Many bulls are hinting to perhaps a higher U.S. yield forecast if overall crop-conditions remain at these levels. Some bears thinking this might be the first year we see the +180 average yield estimate. There’s also the ongoing U.S. acreage debate. The USDA has had the U.S. planted corn acreage forecast at just under 97.0 million acres, most inside the trade think that’s a bit overly optimistic, with perhaps a more realistic number somewhere between 94.0 to 96.0 million planted. Overall, demand remains somewhat suspect, especially with the renewed headline fears surrounding coronavirus and Chinese uncertainties. The trend for Dec corn is neutral-negative.  An inability to reestablish above 334.5 cautions for a setback to 325.  Stable action over 342.75 would improve the outlook.  Non-passive funds are thought to be short 330,000 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.   

Soybean traders continue to debate Chinese demand and total U.S. new crop production. Bears argue that China is using its latest “must be coronavirus free guarantee” to provide the leverage to kick or cancel imported cargoes if need be. Bulls believe China is going to fulfill its “Pahde 1” trade agreement but a large chunk of the Chinese soybean purchases probably will not come until late-2020. Here at home, the weather is mostly cooperative and the crop in fairly good condition. Bears are thinking the average yield estimate could actually push higher to around 50 bushels per acre. At the same time, most inside the trade think U.S. planted acreage is somewhere between 84.0 and 87.0 million acres vs. the current USDA forecast of 83.5 million acres vs. 76.1 million planted last year vs. 89.1 million soybean acres planted the year prior. The trend for Nov beans is neutral-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 5,000 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. 

U.S. poultry production was down from May 2019 to May 2020 as some plants reduced schedules or closed because of COVID-19 infections. The USDA says the total of 4.037 billion pounds was -8% lower than a year ago, with a -7% decline in chicken at 3.601 billion and a -13% drop for turkey production to 427.474 million pounds. The chicken slaughter was -9% lower than last year at 740.989 million head and the turkey slaughter was down -14% to 16.483 million head. Average live weights for all chickens and turkeys were up modestly. All chickens averaged 6.46 pounds, +2% heavier, and all turkeys averaged 32.48 pounds, +1% higher. The USDA says poultry stocks in cold storage at the end of May were -4% below the year before, with a -15% decrease in turkey cancelling out a +3% increase in chicken. (Source: Brownfield Ag)

Refiners such as HollyFrontier Corp and CVR Energy are exploring opportunities to produce renewable diesel to save money on less profitable refineries and offset compliance costs associated with U.S. blending laws. The product, however, currently only occupies a tiny corner of diesel production – and logistical hurdles are likely to limit its growth in coming years. Just 1.3 million barrels of renewable diesel were produced in 2019, compared with 4.5 million barrels of conventional distillate fuel oil produced every day. Still, investors anticipate strong growth in output because of policy incentives that encourage production.

Bayer has reached a multi-billion-dollar, wide-reaching settlement agreement on Wednesday to end Roundup cancer lawsuits, dicamba drift litigation and polychlorinated biphenyls, or PCB, water litigation. Most notably, the company announced in a news release a total payment of between $8.8 billion and $9.6 billion to “resolve current and address potential future Roundup litigation.” By the company’s estimates, the settlement will “bring closure” to about 75% of current Roundup litigation involving about 125,000 filed and unfiled claims. The company will also pay up to $400 million to resolve litigation pending in the U.S. District Court for the Eastern District of Missouri on claims of crop injury and harm from Bayer’s dicamba herbicide, XtendiMax.


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