Joe Barker

Jun 26, 2020

By: Joe Barker

 

Highlights

  • As of 6:00 am the radar summary shows rain over parts of South Dakota, Nebraska, Kansas, Minnesota, Iowa, Wisconsin and Illinois.   
  • The short-term forecast is mostly unchanged from yesterday.  Forecasters are predicting most of the corn belt will receive ½ to 1 inch of rain with 85% coverage over the next three days. 
  • This morning’s 6-10-day model is drier for the I-80 corridor than yesterday’s run, however it still shows a good chance of rain for the Dakotas over that time period.
  • The 11-15-day forecast is also drier in the central and southern parts of the corn belt, but it has a little higher chance for rain in the spring wheat growing areas. 
  • The outside markets are mostly quiet this morning: as of 6:00, Dow Jones futures are down only 10, S&P 500 futures are up just 6, and gold is up 3.70.  Crude futures are up another $0.31/barrel. 
  • The last trading day for July grain and oilseed options is TODAY
  • First notice day for deliveries against July grain and oilseed futures is next Tuesday, June 30th.  Those deliveries will be based upon your positions as of the close next Monday. 
  • The June Quarterly Stocks and acreage reports are will be released Tuesday, June 30th.

 

Corn

  • The Hogs and Pigs report, released yesterday afternoon, showed the inventory of all hogs up 5% from last year.  The details showed the breading herd down 1%, while the market hog inventory was up 1% from last year.  This consistent with the increase of 350 million bushels in feed demand that the USDA has built into their 2020-21 balance sheets.   
  • Open interest in July corn futures declined to ~160K contracts during yesterday’s session, the delivery cycle will start based on trader’s positions as of Monday’s close. 
  • Corn basis was flat to higher in couple locations in this morning’s Dow Jones basis survey.  Truck bids into Chicago are now posted at +19CN, and St Louis still posted at +24CN.
  • The July /Sept corn spread traded between 3 ¼ and 2 ¾ carry overnight.  This is the tightest this spread has been since April 2nd

 

Outlook: flat to 1 higher:  Some of the private yield models that adjust for the forecast are starting to predict national yields that would be slightly below the USDA’s current estimate of 178.5 bpa.  The midday weather models will likely set the tone for the close today.

 

Oilseeds   

  • Open interest in July soybean futures dropped to ~74K contracts during yesterday’s session.  We have two trading days to go before the start of the delivery cycle.
  • There are reports of a large swarm of locusts in South America that are eating vegetation.  It is hard to know the impact this could have at this point in the growing season.
  • This morning’s Dow Jones basis survey shows bean bids were mostly steady yesterday. We continue to see a noticeable divergence between the western processor market and the river system.  For example, Sioux City, IA is reported at -43SN, while St Louis is still posted at +34SN. 
  • The July/August soybean spread has traded between 2 ½ and 3 inverse during the night session.  July/November has traded between ¾ and 1 ½ inverse overnight. 
  • Palm Oil futures were another down 27 ringgits overnight.   

 

Outlook:  flat to 3 lower to start: the US weather continues to be viewed as non-threatening to soybean yield potentials at this point in the growing season. 

 

 

Wheat

  • Basis levels for hard wheat at the ports continue to be strong.  The Dow Jones basis survey shows the Texas gulf is bidding +100KWN, while Portland is reported at +150KWN for hard red wheat.  Bids for hard red spring wheat are similar with Portland reported at +140MWN.  However, the bids for soft red wheat are not as firm with CIF NOLA reported at +45WN.   
  • Open interest in July wheat futures: CBOT SRW ~37K, KC HRW ~21K & MGEX HSW ~7K.
  • WN/WU is at 1 ½ carry, KWN/KWU is at 7 ¾ carry & MWN/MWNU is at 7 ½ carry this morning.

 

Outlook: flat to 3 lower.  Harvest activity in Kansas continues to progress, but the crews are having to dodge rain drops as they try to finish up in some locations.