Scott Strand

Jun 1, 2020

By Bryant Sanderson

  • A weekend of protests across the country caused some major retailers to close stores in cities where protests have been most intense, but equities look to start the week higher.
  • Experts are worried the large protests continued the spread of the coronavirus, raising the possibility of a slower re-opening in certain areas.
  • The relationship between the US and China continues to be strained as the Chinese state media, People’s Daily, said US putting sanctions on Hong Kong is a show of political posturing and that Washington should focus on their own problems at home.
  • Outside markets as of 7:15 am CT: Dollar down 206 points at 98.135, mini-dow futures are up 29 points at 25,407 and July WTI oil was down $0.13 at $35.36.
  • Corn is down around four cents this morning as grains are weaker across the board.
  • Weather forecasts call for above normal temperatures and dry conditions for the 1 to 5-day timeframe but extended forecasts are calling for rains in the western Corn Belt.
  • Funds continued to sell with the Commitment of Trader’s report showing managed money shorted an additional 30,817 contracts to take their net short position to 276,203 contracts. Record short is 322,215 contracts.
  • It is peculiar to see the funds this short the corn market as of May 26th given the crop has just gotten into the ground and there is still plenty of weather to get through.
  • Spreads are wider this morning: July/Sep at 4 ¼ carry, July/Dec at 13 ¼ carry, Sep/Dec at 9 cent carry. 
Outlook: Lower with US-China relations in a poor state.
  • Soybeans are weaker to start as China asks their state firms to halt purchases of soy from the US in response to the US’ threat to act on Hong Kong’s special treatment as a separate customs and travel territory.
  • Funds sold an estimated 6,251 contracts to take their net position to long 5,813 contracts.
  • Soybeans in China were up $0.09 ½ a bushel, while soybean meal was up $0.60 a ton trading at 2,798 yuan per ton.
  • Malaysian palm oil traded down 9 ringgits at 2,285 ringgits overnight. Palm oil on the Dalian exchange was up 29 cents trading at 4,786 yuan per tonne.
  • Spreads are wider this morning: July-Sep at 5 ¾ cent carry, July-Nov at 12 ½ cent carry, Sep-Nov at 6 ¾ cent carry.
Outlook: Lower with China stopping their state-owned companies from buying soybeans out of the US.
  • The wheat complex is lower led by Kansas City down 12 cents. Chicago and Minneapolis wheat are down around 5 to 7 cents.
  • Harvest in the winter wheat areas is ramping up with Texas and Oklahoma leading the charge. KC market is going to be focused on yield reports in the areas that experienced cold and dry weather of western Kansas and Colorado.
  • Matif wheat was off 2.25-euro trading at 186.00 euro/tonne.
  • The EU continues to be dry across major growing areas in France, Germany and the UK. Rains in the Black Sea growing areas last week were much needed with more rain in the forecasts.
  • APK-Inform showed grain exports out of Ukraine slowed for the second half of May. Wheat exports decreased 304,000 tonnes to 724,000 tonnes the two weeks prior. However, grain exports for the year have been at 52.7 million tonnes vs. 42.1 million tonnes at the same point last year.
  • Funds bought 4,272 contracts in Chicago wheat to take their net short position to 12,204 contracts. Funds were sellers of 10,705 contracts of KC wheat with their net position at 25,743 contracts short.
  • Spreads are quiet this morning: KC July-Sep at 6 ½ cent carry, Chicago July-Sep at 2 ¾ cent carry, Minneapolis July-Sep at 11 ¼ cent carry.
Outlook: Weaker across the board led by the KC market.