Joe Lardy

Jun 26, 2020

Grains

New cases of Covid-19 in the US totaled 36,000 yesterday.  This is was highest single day total.  The states of New York, New Jersey & Connecticut announced yesterday they are putting travel restrictions in place for people traveling there from states where the virus is surging. Forecasters are calling for a round of rain to move across the corn belt tomorrow through Sunday.  They are expecting rainfall amounts to be in the ½ to 1-inch range with generally 85% coverage of the region. First notice date for July futures is Tuesday, June 30th. Any open July futures position on the close of business Monday night is subject to the delivery process. The June Quarterly Stocks and acreage reports will be released Tuesday, June 30th. Comments from White House adviser Peter Navarro early in the week caused a lot of market turmoil when he indicated the trade deal with China was over.  President Trump then tweeted “the China deal is fully intact.  Hopefully they will continue to live up to the terms of the Agreement.”  Mr. Navarro also walked back his comments, saying they were “taken wildly out of context.” 

Corn

The good/excellent rating for corn was at 72% which is up 1% this week. Ethanol Production increased by 52,000 bpd this week to 893,000 bpd. This is the 8th increase in production after 8 weeks of production declines. Ethanol inventories decreased by .3 million to 21.0 million barrels. Over the past 9 weeks stocks are off a combined 6.7 million barrels. Ethanol stock levels are back to pre-covid levels. The weekly export sales report showed 461,700 TMT of old crop and 77 TMT of new crop corn sold last week.  Traders were expecting sales to be between 450 and 1,100 TMT. Combined sales are off sharply, barely half of what they were just 6 weeks ago. Sorghum sales were negative for the 2nd straight week due a large cancellation to unknown.

 

Wheat

The European Commission on Thursday made another big reduction to its forecast for this year's common wheat harvest in the European Union, lowering expected output to 117.2 million tonnes from 121.5 million estimated a month ago.

 The good/excellent rating for US winter wheat improved by 2% to 52%. Winter wheat heading was at 96%. Harvest was at 29% compared to the 5 year average of 26%. Spring wheat good/excellent ratings declined by 6% to 75%.  Export sales of wheat totaled 518.7 TMT.  Traders were looking for 250-600 TMT.

Soybeans

China imported 8.86 MMT of soybeans from Brazil during May according to Chinese data. This is the highest monthly total in two years. Global consumption of palm oil will fall this season for the first time on record as a coronavirus-led recession slashes demand for edible oils and fats, leading industry analyst Thomas Mielke said on Monday.

Soybean planting is at 96% complete compared to the 5-year average of 93%. Soybean emergence is at 89% com-pared to the 5 year average of 85%. The good/excellent rating was down 2% to 70%. The export sales report showed 601.9 TMT of old crop and 560.7 TMT of new crops sales last week.  Traders were expecting the total sales for both crop years to be between 800 and 1.7 MMT.  Meals sales totaled 82.4 TMT, vs. expectations for 100-250 TMT.  Bean oil sales were 20.5 TMT, vs. a trade guess of 5-26 TMT.

Livestock

The quarterly Hog and Pig Report was very bearish. The hog numbers were much higher than expected, higher breeding and marketing numbers also. All hogs 105.2 vs. 103.7 est., Kept for Breeding 98.7 vs. 98.2 est., Kept for Marketing 105.8 vs. 104.2 est.  Cash cattle was down sharply this week with Kansas and Texas trade both at $95 vs $102 last week. Packer margins were pretty steady with last week at $275/head.

Energies

The energy complex is continuing to weigh the demand outlook as coronavirus cases are continuing to climb in parts of the country. Texas Governor Greg Abbot said today that the state will roll back some of its reopening measures as cases of the virus and hospitalizations are continuing to rise. The potential “second wave” of the virus is raising some concerns that the recent rebound in energy prices may be short lived, as voluntary or even potentially city and state government mandated lock-downs are re-instituted. The average price of retail gasoline is currently $2.176 per gallon, according to AAA data. Prices a month ago averaged $1.962. Retail gasoline is still significantly cheaper than the year prior, as prices averaged $2.684 last year at this time.