Morning Commentary

Sept corn down 2 ¾ at $3.3025

Nov beans up 3 ¼ at $8.9825

The DOW is down

USD is weaker

Crude oil down $.33 at $40.26

Good morning,

Corn traders will again be debating U.S. yield and demand from the Chinese. Bears want to believe the U.S. crop could push towards an average yield of 180 bushels per acre. Bulls believe we are much closer to 175 bushels per acre. The bull argument is that Illinois and some other key areas struggle late and the yield comes in 175 or perhaps a bit lower. At the same time, the Chinese continue to purchase U.S. corn to the tune of 6 to 10 MMTs. All of a sudden the trade could start getting out a pencil and lowering the USDA current new-crop ending stock estimate from +2.6 billion bushels perhaps eventually down to sub-2.0 billion bushels, and all of a sudden we have a much more interesting story.

Soybean bulls are hoping to see the USDA make another slight reduction in overall U.S. crop-conditions this afternoon. It was estimated last week that 68% of the U.S. crop was rated GD/EX vs. 71% the week before. The previous year 54% of the U.S. crop was rated GD/EX at this stage and ended up with an average yield of 47.4 bushels per acre. The year before that, mid-July 2018, the U.S. crop was rated 69% GD/EX and the final yield was estimated at 50.6 bushels per acre. Bears are quick to point out the USDA current yield estimate is 49.8 bushels per acre and might eventually need to be bumped higher.

Overall unit sales of agricultural tractors and self-propelled combines in June 2020 rose in the U.S. and, for the first time this year, grew in Canada as well, according to the latest data from the Association of Equipment Manufacturers (AEM). Total U.S. farm tractor sales rose +32.7% in June compared to 2019, while self-propelled combine sales grew +36.6%. Only four-wheel-drive tractors declined in unit sales in the U.S. in June. Total year-to-date sales of all farm tractor are up +10.5% in 2020, while combines cut year-to-date losses to only -1.7% in the same period. For Canada, June tractor sales grew across almost all segments, leading to an overall gain of +32.5%, with 100 hp-plus tractors the only segment in the red, falling -20.2% to 202 units sold. That put year-to-date unit sales for farm tractors statistically flat with 2019, while combines are down -30.8% for the year despite +14.4% growth in the month of June. (Source: Feedstuffs)

U.S. lawmakers from Iowa are trying to add aid for the biofuels industry into a pending coronavirus relief package in the Senate, U.S. Senator Chuck Grassley said on Friday. Grassley and his Iowa colleague, Senator Joni Ernst, hope to include a subsidy for feedstock for the ethanol industry in the bill. “The long-term hope for ethanol though is directly related to the extent to which the economy picks up and people start driving,” Grassley said in a call with reporters. Grassley could not say when a final bill would be ready in the Senate. (Source: Reuters)

The Kansas City Fed’s latest Ag Lending survey shows farm lending slowed in the second quarter alongside the initial effects of the pandemic and a more pessimistic outlook for agricultural economic conditions. The volume of total non-real estate farm loans continued into a yearlong trend of declines during the second quarter of 2020. The slowdown in lending generally was consistent across all types of loans. Delinquency rates on farm loans increased at a steady pace through the first quarter and agricultural credit conditions remained weak. Recently implemented government lending programs (Paycheck Protection Program (PPP) and Economic Injury Disaster Loans) likely supplemented the financing needs of some producers while direct aid payments may help offset declines in farm revenues in 2020. Despite a more pessimistic environment for farm income and credit conditions, farmland values remained relatively steady in the first quarter. Compared with the previous year, the value of nonirrigated cropland changed by less than 5% in all reporting states except Texas, which rose +9%. In states where values were lower than a year ago, the average decline was about -2%. Across all other states, values increased about +4% on average.


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