Ami Heesch

Jun 25, 2020

Ami L Heesch

 

Highlights

The grain markets were mostly a sea of red with forecasts for favorable weather conditions and reports that a number of corn and bean fields look the best they have seen in several years. The one bright spot was Chicago wheat, which was in the green. July options expire tomorrow after the close. Position squaring ahead of the weekend and next week’s USDA was noted. Uncertainty over the next expected episode of the CoronaVirus had the energy and equity markets on edge. The US$ showed strength as concerns mount about whether the economy can bounce back to pre-COVID-19 status anytime soon.  

  • Quarterly Hogs and Pigs report viewed as mostly negative, with all hogs at 105% (103.7), kept for breeding at 99% (98.2) and kept for marketing 106% (104.2).
  • July options expire at the close tomorrow. FND next Tuesday with long positions being reported after the close on Monday.
  • USDA and StatsCan acreage reports are scheduled for release next week.
  • The energy markets are mostly higher with nearby crude oil up 1 buck at 39.01/barrel.
  • The US$ is up 218 at 97.365, the gold market is down 3-4 bucks at 1765/ounce and the CD$ is off 0.0017 at 0.73305.
  • DJIA up 243 at 25654, S&P up 15-16 at 3064 and the NASDAQ up 71-72 at 9980. 

Corn

The corn market lost ground amidst mostly favorable weather conditions and big crop ideas.  The average trade estimated for acres planted came in at 95.2 million acres. That, combined with two crop years looking at heavy ending stocks, does not seem low enough to rally prices significantly. 

  • Closes: July at $3.16 ½, down 7 ¾ cents, September at $3.19 ½, down 7 ½  cents, December at $3.27 ½, down 6 ¼ cents.
  • Dec 20 through July 21 made new contract lows.
  • CIF premiums were mostly unchanged.
  • Weekly export sales were disappointing at 539 tmt, near the low end of what the trade
  • The quarterly stocks estimate, at 4.951 billion versus 7.953 billion in March 2020 and 5.201 bb a year ago), seems interesting given the amount of demand destruction that was seen during the past three months (ethanol, feed, export).
  • Spreads: N/U 3 carry, U/Z 7 ¾ carry, Z/H 11 ¾ carry, Z/N 25 ½ carry. There was some chatter in the market that China may be interested in US corn for this fall/winter, although the Z/H did not seem to notice or be interested. 

Oilseeds

The soy complex slumped on favorable conditions for the crop to grow, reports that many fields look pretty darn good and ideas of additional acreage planted to beans. Crop conditions are expected to improve from last week in Monday’s crop progress/conditions report. 

  • Closes: July at $8.68, down 2 ¾  carry, August at $8.65 ¼, down 2 ¼ cents, November at $8.67 ¼, down 2 ¾ cents. The products were lower with meal down 1-2 bucks and oil down 14 points.
  • The July climbed above its 100-Day MA of $8.68 ¾ but failed to hold at or above that level. The November fell a couple cents short of its 20-Day MA but managed to close above its 30-Day MA.
  • CIF premiums were mostly unchanged.
  • Weekly export sales estimates were 1.2 mmt, in-line with trade expectations.  
  • The average trade estimate for soybean acreage seen at 84.716 million versus USDA’s March forecast for 83.510 million.
  • Quarterly stocks are estimated at 1.313 bb versus 1.339bb three months back and 1.290 bb a year ago.
  • The canola market traded lower on improving crop conditions, technical selling and spillover weakness in the US soy complex. Warm/wet conditions across Saskatchewan have been beneficial to the developing crops. Nearby canola closed down 2.30 at 472.50.
  • Spreads: N/Q 2 ¾ inverse, N/X ¾ inverse, Q/X 2 carry, X/F 3 carry, X/H ½ inverse, X/N 7 ¾ carry.

Wheat

And then there is wheat! A battle to rally toward higher prices amidst US harvest activity, strength in the US$ and increasing world supplies. Chicago dis get a bit of a lift form a bout of short covering, which drew support for the nearby contracts. Mpls settled 3-4 cents above contract lows from Dec 20 through Sep 21. Kansas City made new contract lows Dec 20 through Dec 21. 

  • July closes: Mpls at $5.11, down 5 ¼ cents, KC at $4.29, down 2 ½ cents, Chicago at $4.85 ¼, up 4 cents.
  • The average trade estimate for Other spring wheat acreage is at 12.551 million acres, slightly below the USDA March forecast for 12.590 million acres.
  • All wheat estimated at 44.718 million acres, all winter wheat at 30.849 million acres and durum at 1.313 million acres.
  • Quarterly stocks are estimated at 0.980 mb versus 1.412 bb in March and 1.080 bb last year.
  • EU wheat prices were steady, near 3-month lows, while the trade awaits the first assessment of the French wheat crop. Harvest is expected to get underway in a couple of weeks. Early reports of their barley harvest indicate good quality with varying yields.
  • Weekly export sales were reported at 519 tmt, in-line with trade ideas.
  • IGC raised their world wheat production estimate form 766 mmt to 768 mmt, based on increased Australian and Chinese wheat production totals (26.2 mmt and 135.0 mmt respectively).
  • Spreads: Mpls N/U 8 carry (48.5% of full carry at 16.49 cents)......Kansas City N/U 8 carry (66% of full carry at 12.04 cents).......Chicago N/U 2 carry.