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Afternoon Market Recap for June 5, 2020

Soybeans end the week at a three-month high.

Corn rises with energy prices, wheat falls with a stronger dollar

Corn: Corn prices continued higher to follow the energy complex higher today. Both July and September futures prices were up $0.035/bushel to $3.325 and $3.3675, respectively.

Cash corn prices inched up on the Mississippi River at Savanna, Illinois today and at a Burns Harbor, Indiana elevator. Processing demand dropped a penny per bushel lower to $0.08 below July futures prices at a Blair, Nebraska facility. Demand also eased at a Council Bluffs, Iowa ethanol plant. Despite a steady increase in corn futures prices this week, farmer sales remained slow.

The Argentine corn harvest, which is expected to yield 2.8 billion bushels, is over halfway finished with 55.6% of acres completed for harvest. Argentina neared the end of its soybean harvest season on Thursday, with 98.6% of its 2019/20 crop harvested. Harvest estimates peg the crop at 2.97 billion bushels. Farmers immediately transitioned to wheat planting ahead of a rainy weekend forecast in the Pampas grain belt region. Wheat sowing progress advanced 16.6% over the week to 30% complete as of yesterday, according to the Buenos Aires Grains Exchange. Argentine farmers are expected to plant 16.8 million acres of wheat in the 2020/21 marketing year.

Ukraine is nearly finished with their spring planting season. As of this morning, 98% of the crops had been planted. The Ukrainian economy ministry estimates that 13.1 million acres of corn and 3.2 million acres of soybeans, among other crops, will be planted this spring. 2020 grain production in Ukraine is projected at 65-68 million tonnes, down from a record-high 75 million tonnes last year.

Soybeans: Soybeans extended their rally, with the July futures contract rising $0.005/bushel to $8.6825 on another round of export sales announced by USDA this morning. The July contract will record its highest weekly price gain since last October. July soyoil futures prices followed $0.44/lb higher to $28.26. But rising futures prices chilled demand for soymeal purchases, sending the July futures contract for soymeal $0.5/ton lower to $289.3.

Cash soybean prices were mixed at processors across the Eastern Corn Belt as crush facilities with varying inventories made basis adjustments to level supplies. Basis fell $0.02/bushel lower to $0.01 over July futures prices on the Mississippi River at Savanna, Illinois. Farmer sales slowed as the rally in July futures prices began to taper off.

USDA announced  two more soybean export sales this morning to unknown destinations. It was the third day in a row new soybean export sales have been announced, underpinning strength in U.S. soybean futures prices. The sales totaled 21.7 million bushels, with 9.4 million bushels scheduled for delivery in the 2019/20 marketing year and the remaining 12.2 million bushels to be shipped after the 2020/21 marketing year begins after September 1, 2020.

Many market analysts believe China is the buyer behind the last three consecutive days of private export sales to unknown destinations. If true, China will have purchased U.S. soybeans for five of the past six trading sessions. U.S. soybean exports to China dropped to 16-year lows in May as cumulative exports for the current marketing year to China total a mere 128.6 million bushels, according to trade data released by the U.S. Census Department yesterday.

It remains unlikely China will be able to meet its Phase 1 trade agreement purchase levels in 2020 despite this week’s purchases. Former USDA chief economist Joe Glauber  is a vocal critic of the agreement, stating, “there’s absolutely zero chance” of meeting Phase 1 trade agreements at China’s current purchasing pace. “They’re just so far behind.”

But a falling U.S. dollar has contributed to a recent uptick in soybean purchases. Weekly export data released yesterday show that U.S. corn and wheat growers have also benefited from a falling dollar over the past two weeks.

Wheat:

Wheat contracts price changes

The ICE Dollar Index bounced up 0.28% today, sending futures prices in the wheat complex tumbling despite hot and dry forecasts in the Southern Plains this weekend.

Spot basis bids for soft red winter wheat in Decatur, Indiana rose $0.05/bushel to $0.15 below Chicago SRW futures prices for the July contract today.

Cash offerings for hard red winter wheat in Kansas rose $0.04/bushel to $0.52 below Kansas City HRW futures prices for July at an elevator in Goodland. Basis was mostly unchanged elsewhere in the Southern Plains. New crop sales slowed as the dollar strengthened slightly.

One of Russia’s largest grain producing states, Stavropol, cut yield forecasts by 40% from last year’s crop on a cold winter and drought conditions to 139.6 million bushels. The recent drought in the fertile southern Russian regions is expected to drop the total Russian grain harvest to 4.4 billion bushels this year, according to Russia’s agricultural ministry. USDA has the 2019/20 Russian wheat crop pegged at 2.7 billion bushels. Russia is the world’s largest exporter of wheat.

Following an abnormally soggy fall planting season, the drought plaguing the European Union this spring will likely result in further cuts to production forecasts as wheat harvest season approaches in the northern hemisphere. Regardless of recent rainfall limiting losses, continental Europe will likely see its smallest wheat crop over the past decade by summer’s end. New projections place the total grain crop at 4.46 billion bushels.

France received a nice round of showers this week, stabilizing wheat crop conditions that are currently at their poorest ratings since 2011. As of Monday, only 56% of the soft wheat crop was in good to excellent condition, unchanged from the prior week and 24% lower than ratings a year ago. France is expected to harvest 1.18 billion – 1.21 billion bushels of wheat this year, down from 1.45 billion bushels a year ago.

French exports hit a five-month low at 46.0 million bushels in May as global export demand stalled due to the coronavirus pandemic. But a steady year of exports, which totaled 448 million bushels by the end of May, have placed France on track to let a marketing year record surpassing 489 million bushels by the end of June. Sales to China, amounting to 4.9 million bushels in May, supported France’s record wheat export pace for the 2019/20 marketing year.

Weather: Scattered showers will move through the Northern Plains and Eastern Corn Belt through the weekend, according to NOAA's short-range forecast. But warm temperatures will help to dry out any soils that become overly saturated this weekend, with temperatures ranging between the 80’s – high 90’s across most of the Midwest and Plains over the next couple days.

Financials: Coronavirus cases in the U.S. totaled 1,886,555 cases this afternoon, according to the Johns Hopkins Coronavirus Resource Center. The death toll rose to 108,768 deaths as of press time.

The Department of Justice issued subpoenas to Tyson Foods, JBS, Cargill, and National Beef last night as part of an antitrust probe which indicted poultry processor Pilgrim’s CEO Jayson Penn, along with three other poultry industry executives, on price-fixing charges on Wednesday. The DOJ is requesting pricing and cost information from the nation’s four largest meat processors to determine if pandemic-related supply disruptions were used as profiteering opportunities by the industry to exploit U.S. livestock producers and meat consumers.

Secretary of Agriculture Sonny Perdue released a statement on the recent court ruling blocking dicambia sales and usage in the U.S. last night, encouraging the EPA to reconsider the ruling during planting season, when many farmers need the herbicide to complete planting. “I encourage the EPA to use any available flexibilities to allow the continued use of already purchased dicamba products, which are a critical tool for American farmers to combat weeds resistant to many other herbicides, in fields that are already planted,” the Secretary said.

It’s been a crazy week in the world, particularly for farmers who are still planting. Here’s a roundup of seven agribusiness stories that made headlines this week if you want to catch up on the ag world this weekend.

May unemployment rate data surprised the markets today. The May unemployment rate was expected to jump up 4.8% from April 2020 to 19.5% in this morning’s monthly unemployment report, but stunned the markets by falling to 13.3%, adding 2.5 million jobs as workers returned to their posts following the earliest days of the pandemic. S&P 500 futures added nearly 81 points or 2.59% to $3,193 by day’s end.

Energy stocks followed higher on improving global demand, with Brent crude oil futures up $2.16/barrel to $42.15. U.S. sweet crude oil prices rose $1.93/barrel to $39.34.

It’s National Donut Day! While most of us will not be excused from our daily duties to observe this unofficial holiday, it’s never too late to make a donut run! Full disclosure – National Donut Day is a seriously observed event on the Holland Family Dairy Farm, where it is celebrated in conjunction with June is Dairy Month by way of consuming copious amounts of donuts and chocolate milk. Have a great weekend, everyone!

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu      
20-Jul 332.5 328.25 332.5 +3.5
20-Sep 336 3/4 332 1/2 336 3/4 +3 4/8
Soybeans        
20-Jul 873 1/2 865 1/4 868 1/4 +0 4/8
20-Sep 874 1/2 866 3/4 870 1/4 +1 4/8
Soymeal                $/ton        
20-Jul 291.5 287.3 289.3 -0.5
Soyoil                    cents/lb        
20-Jul 28.4 27.67 28.26 +0.44
Wheat                    $/bushel        
20-Jul 527 3/4 513 1/4 515 1/4 -8 4/8
20-Sep 531 1/4 518    520 1/2 -7 0/8
KC Wheat        
20-Jul 476    459 1/2 461 1/2 -10 6/8
20-Sep 483    467 1/2 470    -9 2/8
MPLS Wheat        
20-Jul 528 3/4 515 3/4 522    -7 4/8
20-Sep 540 1/4 527 3/4 533 1/4 -6 6/8
Live Cattle             cents/lb        
20-Jun 95.95 93.35 94.325 -1.4
Feeder Cattle         cents/lb        
20-Aug 135.5 133.35 133.875 -0.85
Lean Hogs             cents/lb        
20-Jun 48.775 47.275 47.575 -0.85
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jul 39.68 37.05 39.42 +2.01
Diesel        
20-Jul 1.1526 1.0711 1.148 +0.0739
Unleaded Gasoline   $/gallon        
20-Jul 1.217 1.1417 1.2115 +0.0625
Natural Gas        
20-Jul 1.864 1.777 1.784 -0.038
Ethanol Futures        
20-Jul 1.06        1.213 +0
U.S. Dollar Index        
  97.05 96.43 96.925 +0.268
Gold                      $/ounce        
20-May 1711.8 1668.6 1677.6 -41.3
Copper        
20-May 2.555 2.551 2.555 +0.062
Fertilizer Swaps     (as of 6/5)  
DAP Tampa-index     294.5 +6
DAP-New Orleans     294.87 +8
Urea-New Orleans     201.17 +1
Urea-Middle East     216.5 +2
Urea-Black Sea     202.5 +3
UAN (32%) New Orleans     148.81 +5.51
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