News Source: SETZ

Morning Comments; Monday, July 13th, 2020

The majority of the numbers released in the July balance sheets came out as expected. One number that was lower than expected would be the new crop ending stocks on corn, which were 80 million bu under expectations. That said, corn ending stocks are still forecast to increase 400 mbu from old crop to new crop and remain ample. Soybean reserves are also expected to remain adequate at 425 mbu next year. This is nearly 200 mbu less than the old crop carryout though, which is helping to limit the bearish fallout from the large old crop ending stocks. One bright spot for both corn and soybeans was an increase to average cash values. The average cash corn value is now $3.35, and soybeans are at $8.50. This was a 15-cent increase on corn and a 30-cent bump for soybeans. Now that the monthly supply and demand report is out of the way, trade will once again focus the majority of its attention on two factors; weather and crop reports. Weather will be key as some forecast models expect heat to return to the Corn Belt this week and last through the end of the month. This will cover the majority of the pollination period on corn. The question is how much precipitation will be received with this heat to help alleviate its impact. We will also start to receive more yield estimates with this development. Surprisingly, some crop scouts have actually raised their yield projections on both corn and soybeans in recent weeks, even with adverse weather. These are being based on crop ratings which remain higher than usual despite less than favorable conditions. While crop ratings are not an accurate indicator of yield potential, they do signal how much stress has been applied to the crops. The next big USDA report will be the WASDE report in August which is a month away.

Highlights

* Lack of bullish news in WASDE report

* Weather forecasts turn benign

* Technical resistance limits advances

* Steady to lower ratings expected tonight

* Concerns build over rising Covid cases

* Outside markets again impact commodity investors

* China continues to rotate reserves

* China expected to slow meat imports

* China increases corn, soy import forecasts

* Forecasts increased La Nina odds

Corn

* Production at 15 bbu, -995 mbu from June

* 2019/20 carryout 2.5 bbu

* 2020/21 carryout 2.65 bbu

* 2020/21 world carryout 315 mmt

* Final yield higher than July in past 7 years

Soybeans

* Production up 10 mbu from June at 4.135 bbu

* 2019/20 carryout 620 mbu

* 2020/21 carryout 425 mbu

* 2020/21 world ending stocks 95.1 mmt

* Final yield above July in 5 of past 6 years

Wheat

* All wheat production 1.824 bbu

* Production -54 mbu from June

* 2020/21 carryout 942 mbu

* 2020/21 world carryout 314.8 mmt

* Trade focused on global production reports

Livestock

* 2020 beef production at 29.6 bil pounds

* 2020 pork production 28.5 bil pounds

* Beef production up 260 mil pounds

* Pork production up 770 mil pounds

* Over-production more of a concern than demand

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Friday, July 10th, 2020

The early portion of today’s trade was spent getting final positions in place for the monthly WASDE report. Hopes of sizable changes to balance sheets diminished as the report drew closer, and the reality that even with smaller volumes than seen in June, ending stocks will still be more than enough to satisfy demand set in. Trade was unfazed by the announcement of large flash sales and instead focused on what appeared to be moderating weather outlooks for the Corn Belt next week. Many regions of the Corn Belt will receive from 1 to 2 inches of rain over the weekend, helping to stabilize crop conditions and limit production losses.

The USDA did adjust corn plantings to match the June 30th revisions, but left yield alone in the July supply and demand report. The US corn crop this year is now projected at 15 billion bu, 995 million bu less than the previous estimate. The USDA lowered feed and residual demand but made a slight increase to industrial demand to put 2020/21 ending stocks at 2.65 bbu. While a reduction of 675 million bu from June, this is still an ample amount. The 2019/20 ending stocks estimate increased 145 mbu to stand at 2.25 bbu.

As with corn, soybean acres were adjusted to reflect the June revisions from the March intentions. The average yield per acre was left unchanged at 49.8 bpa to give the US a 4.135 bbu crop, 10 mbu more than predicted last month. Ending stocks were bumped to 620 mbu and when the additional production was added in it was enough to raise 2020/21 carryout to 425 mbu, 35 mu more than the June estimate. The only change to soybean demand was a 45 mbu increase to crush.

Very few changes were made to US wheat balance sheets, with old crop ending stocks declining from the June estimate by 43 mbu to a 1.824 bbu total. The 2020/21 carryout on wheat is now pegged at 942 mbu, up from June’s 925 mbu.

The biggest change to the global balance sheets for the 2020/21 marketing year was a 23 million metric tons decrease to the world corn supply. While down, this still leaves the world with a comfortable 315 mmt corn reserve. The global soybean reserves are expected to decrease 1.2 mmt to a 95.1 mmt total. The global wheat supply is also forecast to shrink a minimal 1.3 mmt to a still adequate 314.8 mmt. One surprising global number was an increase to Brazil’s soybean crop of 2 mmt, giving the country a 126 mmt crop.

Now that this report has been released, trade will again focus on weather and crop reports for daily market decision making. Forecasts still indicate rising temperatures next week, but to what extent is questionable. Crop ratings will be closely monitored as well following last week’s heat and the impact it was expected to have had on fields. We will also continue to monitor demand as we approach the end of the marketing year on corn and soybeans.

The daily flash sales report this morning contained friendly data for the grains. China booked a huge 1.365 million metric tons of corn from the US. This was split with 765,000 mt for the 2019/20 marketing year and 600,000 mt for the 2020/21 marketing year. China also booked 320,000 mt of US wheat in two separate purchases for delivery in the 2020/21 marketing year.

Along with these sales came an announcement from China’s Minister of Ag that the country will likely import more corn and soybeans this marketing year than earlier thought. Chinese corn imports are now estimated at 6 mmt for the 2019/21 marketing year, a 2 mmt increase from the initial estimate. Soybean imports are now at 94 mmt, up 3 mmt from the group’s June projection.

Farm gate movement of stored corn and soybeans has been on a rise over the past week. This was initially the result of the friendly stocks and acreage reports but has been excelled by weather. While this has applied pressure to interior basis values in some regions, the elevated movement is actually beneficial long-term. There were concerns that without farmer selling prior to harvest we would see both old and new crop deliveries at the same time, causing logistic issues in several regions. This will likely limit basis loss this coming harvest season.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Friday, July 10th, 2020

The highlight of today’s session will be the release of the monthly WASDE report. This release will incorporate the June stocks and acreage figures and likely give us some noticeable changes in balance sheets. The most interest will likely fall on corn where the average carryout estimate on the 2020/21 marketing year is 2.68 billion bu. This compares to the 3.32 bbu that was released in June. The loss of acreage is the leading cause of this decline as most analysts are holding their yield estimate steady at 178.5 bushels per acre. Any decrease to yield and we could easily receive a friendly reaction in the market. Fewer changes are expected to the soybean balance sheets today. The average guess on new crop ending stocks is 416 million bu compared to 395 mbu in June. This is mainly from the higher stocks and bump in acreage from the end of June reports. Trade also tends to make fewer changes to soybean production until we get through July as weather has more of an impact on the crop in August and September. While much of the attention on today’s data will come from production, we cannot forget the usage side. For corn we have seen ethanol demand increase in recent weeks and exports remain strong which could further reduce ending stocks estimates. Demand has not been as high on soybeans, mainly exports where Brazil continues to supply the world with much of its needs. Brazil will likely exhaust its soybean exports in another month or so, and it is unlikely the USDA will adjust balance sheets until then. Once this data is released, trade will quickly return to monitoring weather for daily price discovery. This is especially the case ahead of a weekend with some forecasters predicting a return to extreme heat cross the Corn Belt next week.

Highlights

* Drought builds in SAM

* Consumer confidence impacting commodity outlook

* Weather forecasts remain mixed

* Trade expecting rating decline next Monday

* China claims trade tensions are highest since 1979 with US

* Doubts remain over Chinese long-term buying

* China still listed as main buyer of US corn/soybeans last week

* US cattle/hog weights continue to decline

* Country movement slows again

* July WASDE report at 11:00 AM CST

Corn

* Corn yield estimate at 178.6 bpa, crop at 15.04 bbu

* Production -954 mbu from June

* 2019/20 carryout est 2.27 bbu

* 2020/21 carryout est 2.68 bbu

* 2020/21 world carryout est 324.8 mmt

Soybeans

* Yield est 49.9 bpa, crop at 4.15 bbu

* Production up 25 mbu from June

* 2019/20 carryout est 584 mbu

* 2020/21 carryout est 416 mbu

* 2020/21 world ending stocks 96.7 mmt

Wheat

* All wheat production est 1.84 bbu

* Production -29 mbu from June

* 2020/21 carryout est 948 mbu

* 2020/21 world carryout est 315.9 mmt

* Trade focused on global production reports

Livestock

* US beef sales last week at 9,500 mt; an 8 wk low

* Pork sales last week at 31,500 mt

* China to auction 10,000 mt pork today

* Global meat production on decline

* Hog futures 32% off May high

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Thursday, July 9th, 2020

Much of today’s session was spent getting final positions in place ahead of tomorrow’s supply and demand data. While trade is expecting to see several changes in these numbers, the fact that even with possible reductions ending stocks are expected to remain adequate is tempering market activity. At this point we may need to see yield reductions to encourage more short covering and buying from the fund crowd. Weather forecasts were mixed today with most uncertainty surrounding the heat that is impacting the US, and if high temperature will return next week. While weather did provide support today, advances were held in check by overhead technical resistance.

Export sales for the week ending July 2nd were mostly favorable. Corn sales for the week totaled 23.6 million bu on old crop and 1.69 mbu for new crop. Soybean sales were a large 35 mbu on old crop and 14 mbu on new crop. These were above the range of estimates, and especially friendly for soybeans which has already surpassed its sales objective for the marketing year. Wheat sales fell in the middle of trade guesses at 12 mbu.

The majority of tomorrow’s report interest will fall on production. Even with recent weather concerns, it appears as though most analysts are still not willing to adjust yields. Several analysts are using yields of 179 bushels per acre on corn and 49 bushels per acre on soybeans in production forecasts. Even with a corn yield this high, total production is expected to fall nearly 1 billion bu due to reduced acreage. Soybean acres are more in line with what trade is using in balance sheets, keeping crop size relatively flat at 4.12 billion bu between both privates and the USDA.

On the demand side of tomorrow’s report, much interest will likely fall on China. The US attaché in China is predicting soybean imports of 90 million metric tons for the 2019/20 marketing year and 91 mmt for the 2020/21 marketing year. These are increases of 6 mmt on old crop and 5 mmt on new crop from the last attaché projections, but still fall short of what the USDA is using in its projections. The USDA believes China will need 94 mmt of soybeans this year and 95 mmt of soybeans next year. The reason for the difference in demand is the slower return of hog feeding that attaché is using in its expectations.

The attaché is also adjusting its Chinese corn demand estimate. Feed demand is expected to increase 5% in the 2020/21 marketing year as China rebuilds its hog herd following the African Swine Fever outbreak. At the same time, China is going to reduce corn plantings by 4% as it expands plantings of other crop on higher quality land. As a result it is believed China will increase its corn imports to 7 mmt in the 2020/21 marketing year, 500,000 mt more than in 2019/20.

We may see more interest in the wheat numbers in tomorrow’s balance sheets. France has cut their wheat crop by a large 21% from last year due to drought. The same has taken place in Ukraine where wheat production is forecast to decline 8% this year. Other countries reporting drought loss in wheat production are Argentina and Australia, although the Australian crop is still expected to be much larger than in recent years. Thoughts are this will bring more export business to the US and negate worries over lower protein content in newly harvested bushels.

The losses in the Argentine wheat crop are becoming more of a market topic. Officials in Argentina claim drought has reduced the countries crop from an estimated 20 to 21 million metric tons to a more likely 18 or 19 mmt. While some of this is from yield, a loss of acres is also causing the crop projection to decrease. Wheat plantings in the country are now estimated at 16 million acres, down from earlier estimates for 17.3 million.

While most of the attention in Ukraine has been on the smaller wheat crop, the country’s corn crop has not been impacted by drought. In fact, the corn crop is now expected to be larger than previously thought. Ukraine officials are pegging the country’s corn crop at 38.5 million metric tons, up from the previous estimate for 37.6 mmt of production. The concern with this is it means extra competition for the US in the global market, mainly with Asian buyers.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Thursday, July 9th, 2020

Much of today’s session will be spent getting final positions in place ahead of tomorrow’s monthly WASDE report. Estimates on what we will see for numbers are all over the board as the USDA will incorporate the quarterly stocks and acreage data into balance sheets. It would also not come as a surprise to see yields adjusted in the July report following recent weather conditions across the Corn Belt. Crop ratings have remained relatively steady since the last release of data which may prevent any alteration to the current crop estimates. This is especially on soybeans which are more affected by August weather than current conditions. The most interest in tomorrow’s balance sheets will likely fall on corn figures, primarily new crop ending stocks. The 5-million-acre reduction to corn plantings is expected to reduce the available corn supply by nearly 1 billion bu this year. While this is possible, it is not necessarily a given. The increase in corn stocks from expectations and recent sluggish demand may negate a large portion of the acreage reduction. The current ending stocks estimate on corn is 3.32 billion bu on corn and trade is split in what could happen to this. While some believe it will decrease to around 2 bbu, others claim it will hold close to 3 bbu due to current stocks and demand. The sleeper numbers in tomorrow’s report for corn may be feed and ethanol. Trade is also looking at soybean reserves and feels we will see much fewer changes to production, but we may see elevated demand from the recent crush pace. Very few changes are predicted for wheat. Once this data is released expect trade to quickly turn its attention back to weather as pollination is starting to take place on corn.

Highlights

* Covid impact on grain demand a concern

* China booking SAM soybeans for August

* US economy stalls

* US unemployment expected to remain high

* Ethanol production up for 10 straight weeks

* Ethanol stocks up 456,000 barrels last week

* First ethanol stocks increase in 11 weeks

* Record daily Covid cases continues

* Crop stress to continue next week

* EIA predicts higher crude oil demand

* July WASDE report tomorrow at 11:00 AM CST

Corn

* China to increase corn imports

* Elevated overnight low temps a concern

* Analysts hesitant to alter yield estimates

* Reductions continue to Safrinha crop

* Brazil exports on the rise

Soybeans

* Attaché sees elevated Chinese imports

* China soy imports still under USDA

* Canadian canola crop in good shape

* Chinese crop estimated at 18 mmt, USDA using 17.5 mmt

* Brazil soy supply underestimated?

Wheat

* French crop -21% last year

* Ukraine wheat crop -8%

* Egypt buys 230,000 mt Russian wheat

* Russian crop larger than thought

* No limits to Russian exports

Livestock

* “New” Chinese hog flu not easily transmitted

* Yearly beef export -5.8%

* Pork exports nearly equal to last year

* China to auction 20,000 mt pork tomorrow

* Cash cattle drop under futures

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Wednesday, July 8th, 2020

Trade was on both sides of unchanged today with little clear direction being sought by either buyers or sellers on corn and soybeans. Much of what is taking place is positioning ahead of the WASDE report that will be released this Friday. For the most part, trade is expecting to see smaller corn reserves and an increase in soybean carryout. Aside from that activity, weather is the key driver of the market, mainly the heat across the Central US. While this is expected to breakdown this weekend, most forecasts expect a return of elevated temperatures next week. Wheat was the leader of today’s trade, taking its support from global weather issues and loss of production in many countries.

The Brazilian firm CONAB was out today with its updated production data for the country. CONAB is now pegging Brazil’s soybean crop that was just harvested at a record 120.9 million metric tons. This compares to the groups 120.4 mmt estimate in June and is well above last year’s 115 mmt. CONAB’s corn crop estimate is at 100.6 mmt, under their June estimate of 101 mmt, but just above last year’s 100 mmt crop. The decline in corn production was from a smaller Safrinha crop as drought continues to impact the country.

Trade is now looking forward to next year’s Brazilian crops, with production expected to be even higher. Sources in the country are putting the 2020/21 Brazilian soybean crop at 131 mmt as weather is expected to return to more normal conditions. More favorable weather is also expected to benefit Brazil’s corn production with crop size being bumped up to 108 mmt. Additional plantings of both crops will also contribute to elevated production.

It was initially thought the United States would see less competition from Brazil in global soybean trade this month, but that has been altered. Brazil’s soybean exports for July are now projected at 8 mmt, down from recent months, but up from the previous estimate for just 7.25 mmt of exports. Brazil is also expected to increase its corn exports for the month with loadings predicted at 5.16 mmt compared to the earlier estimate for 3.9 mmt.

Ethanol production data for the week ending July 3rd was mixed. Data from Mid-Co Commodities indicates 6.398 million barrels of ethanol were produced in the week, a 1.6% increase from the previous week. While this was the 10th consecutive week of elevated production, it stills leaves total manufacturing down 12.7% from last year. Ethanol stocks increased 456,000 barrels during the week, making it the first expansion to stocks in eleven weeks. While up on the week, ethanol reserves are still down 2.4 million barrels from a year ago.

The United States has seen elevated demand for corn in recent months after a slow start to the grain’s marketing program. According to the Census data for May, corn exports totaled 224 million bu for the month. This was a 20% increase from May of 2019 and the 2nd highest volume on record for the month. This elevated demand for US corn was mainly from a lack of competition in the global market, but also from a decline in corn values to historically low levels.

One buyer who has ramped up its imports of all commodities recently is China. This comes even though the US and China have seen relations strained as political tensions increase, including the thought the US will increase tariffs on Chinese imports. This is actually the reason for the elevated Chinese buying as importers want bookings in place in case the trade war escalates to pre-Phase 1 levels. China is also rotating its domestic reserves and has room for elevated deliveries. This is not just on grains, but on beef and pork as well.

While mostly overshadowed by conditions in the US, weather is still impacting production in South America. Drought continues across parts of Brazil and Argentina and is still reducing yields on later harvested crops, mainly the Brazilian Safrinha crop. Thoughts are this will reduce the volume of corn the country can export, and further benefit US sales. Before long weather will also be a factor for planting in South America as that activity gets underway in another 6 to 8 weeks.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Wednesday, July 8th, 2020

Over the past week we have seen basis values soften across much of the Corn Belt, which really is not that much of a surprise. The primary reason for weaker basis is the rally we have seen in futures following the June 30th USDA reports. This caused farmers to move more of their farm stored inventory and the combination gave end users adequate coverage for now. Some processors already claim to have enough coverage to last until new crop harvest begins. This convergence is a process that takes place every year at this time and causes elevated volatility in the cash market. Buyers are not willing to pay any more for elevated old crop stocks than they have to if they can wait until new crop bushels are available. This is especially the case in years like this on corn where old crop quality it less than average. Another reason for a weaker basis is positioning for fall harvest. Some terminals across the interior market claim to be full of old crop inventory and are worried about getting the bushels moved ahead of the upcoming harvest. One benefit has been the increase in both crushing on soybeans and ethanol manufacturing for corn, but these have yet to totally make up for the losses in production when the Covid-19 outbreak took place last spring. Mediocre exports are also preventing interior terminals from moving as much inventory as hoped. Any weakness we may see in basis may be limited though as buyers will likely show more interest in pushing for new crop inventory to blend with old crop, especially on corn. Much of today’s session will likely again focus on weather forecasts, mainly if heat returns to the US next week. Some models are increasing their precipitation chances, which weighed on overnight trade.

Highlights

* Covid cases continue to rise

* States again closing some businesses

* China economy showing signs of recovering

* SAM still impacted by drought

* US sees cool down this weekend, heat to return

* July may go down as one of hottest in past 125 years

* US ethanol futures at $1.31/gallon

* Ethanol futures highest since February

* EPA places biofuel mandate on hold

* US/China trade tensions building

* Positioning increases for WASDE

Corn

* Gulf basis firming

* Defer pricing contracts coming due

* Country sales rising

* Open interest declining as shorts are covered

* Delayed pollination from early heat

Soybeans

* China accounts for 58% of new crop demand

* Processors bids weaker on elevated movement

* Analysts predicting higher soybean yields than USDA

* Brazil nearly sold out of reserves

* China crush margins rebound

Wheat

* US exports up 6% from year ago

* EU production -10% from weather

* Russian wheat crop lowered to 80.9 mmt

* Harvest pressure builds in US

* Drought starting to cut Argentine crop

Livestock

* US yearly beef exports equal to year ago

* May beef exports down 20% from last year

* May pork exports a record 618 million pounds

* Pork exports a record for 12 consecutive months

* Retail values starting to firm

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Tuesday, July 7th, 2020

Commodity values set back overnight as light profit taking developed following the recent rally we have had, which is not that surprising. Forecasts have tempered their heat for later this week which added to the negative tone. Futures were quick to stabilize once the day session started though as traders are not interested in removing recently added risk premium at this time. We are seeing building doubt over large global production estimates which added market strength today, especially in the wheat complex.

All eyes were on weather outlooks today, mainly the heat that is affecting much of the central US. Temperatures are forecast to reach into the 90’s for the next few days before breaking down to more seasonable levels by the weekend and through early next week. Along with this comes elevated chances of rainfall. Some models are indicating heat will build into the last half of July though, with temperatures hitting higher levels than we are currently seeing. A few indicate temperatures could lead to July going down as one of the hottest in the past 125 years.

The equity markets had more of an impact on commodity values today, and unfortunately, it was a negative one. Global economic indicators are showing countries have not recovered from the Covid-19 outbreak as fast as thought. One getting the most attention today was the EU where officials believe the GDP will fall 8.7% this year. In the US we are seeing cases of Covid spike, causing some retailers to again shutter businesses. This has caused investors to return to the US dollar, which tends to reduce commodity demand.

A story that has slipped through the cracks of the market is the decision by the Environmental Protection Agency to leave biofuel blend rates unchanged for 2021. It was believed that the EPA would increase the US blend rate slightly from the 2020 target of 20.09 billion gallons to a 2021 level of 20.17 billion gallons. Industry hopes were this announcement would come in mid-July, but the EPA has stated any decision to make changes is on hold indefinitely.

Planting plans are being made in South America, and the country getting the most attention as they start is Argentina. When the Argentine government took office last January it immediately raised export taxes to 33% on soybeans and 12% on corn to generate additional income. The total tax rate on Argentine farmers increased a large 20%. There are thoughts we could see Argentine farmers scale back their acreage as a result.

We are also seeing a decrease in Argentine crush output. The current yearly crush volume in Argentina stands at 10.8 million metric tons compared to 13.6 mmt a year ago. This is the slowest start to the Argentine crush rate in the past six years as farmers are unwilling to make sales given the tax rate changes being enforced. Argentina has also harvested a smaller soybean crop as the country still suffers from drought conditions. Increased transit restrictions to stop the spread of Covid are also reducing the country’s crush ability.

While the recent futures recovery has been welcomed by farmers, there are already concerns over what it may do to demand if it continues. This is especially the case for the ethanol industry as plants were finally able to report positive margins. The rally that took place in corn likely erased much of this profit, although building demand is beneficial. Exports are also being questioned following the rally in futures, especially with a firming US dollar.

More concerns are being voiced over the quality of the remaining corn in the United States. Much of the corn currently being delivered is lower in test weight, which is not a surprise. This factor may end up impacting balance sheets as more bushels will need to be consumed to reach the same result as higher quality corn. While this may elevate usage, it will lower efficiencies, especially for feed and ethanol.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Tuesday, July 7th, 2020

As expected, the condition of the US corn and soybean crops held mostly steady on the week. Both crops are now rated 71% Good/Excellent, which remain high ratings for this time of year. This could easily change in the near future though as weather is turning stressful across much of the Corn Belt. The greatest impact is temperatures which are well above normal in many regions. Along with this heat is limited precipitation. This will be more of a factor on corn as that crop is now beginning its pollination stage of development. Supply and demand is always an underlying factor in the market, just some years it has more of an impact than others. In years such as this, we are seeing changes to these two wash each other out as we move through the growing season. We have started to see private analysts walk back their corn yields in recent weeks from less than ideal weather in parts of the Corn Belt. Normally this would receive a larger reaction in the market, but the sheer size of the corn crop that is being forecasted this year is tempering the reaction. We are also seeing some of the same analysts who are lowering corn yields lower corn demand as well. The main uses being scaled back are ethanol and exports. In the June balance sheets the USDA projected increases in ethanol demand of 300 million bu and in exports of 375 mbu. We have not seen much for changes to soybean production this growing season, but same as in corn, we are starting to see more doubt over forecasted demand. For soybeans the doubt is on exports which are expected to increase 400 mbu from this year to next.

Highlights

* China continues to rotate inventory

* IL River closures starting to take place

* 1/3 CFAP payments have been sent

* Rally has not hindered exports

* Heat to remain across US

* No change to biofuel blend rate

* US continues to see trade tensions with China

* Farmer selling remains high

* US processors starting to take downtime

* US food service industry sees reduced demand

* Russia increase grain export forecast

Corn

* US corn 71% Good/Excellent

* Corn is 10% silking, 16% is average

* Privates put corn yield at 174 bpa

* Pollination getting underway

* Old crop demand being questioned

Soybeans

* Crop is rated 71% G/E

* Pod setting at 2%, normal is 4%

* Chinese crush margin at 18-month low

* Privates put yield at 49 bpa

* Export values firming for July/August

Wheat

* Winter wheat 56% harvested, 55% is normal

* Spring wheat 70% G/E

* Spring wheat 63% headed, 68% is normal

* Most production concerns are on North Dakota

* Winter crop in France smaller than thought

Livestock

* China suspends pork from 2 more Brazil packers

* China shows more concern over containing Covid

* US beef exports drop

* Cash cattle trade remains thin

* Slaughter numbers above year ago

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Thursday, July 2nd, 2020

The grains struggled today while soybeans managed to hold closer to unchanged. Much of what took place was position squaring ahead of the long holiday weekend. The shock of the decline to corn plantings wore off today and instead traders started to focus on what we may see for ending stocks, with some models not as bullish as others. Weather remained a primary factor in today’s trade, and even though temperatures are expected to remain above normal for much of the Corn Belt some forecasts are starting to increase rain chances, which limited buying interest. We finally saw flash sales of 202,000 metric tons of corn and 126,000 mt of soybeans to China today, but even those carried little weight in the market.

Export sales for the week ending June 25th were released today with lackluster totals. Corn sales were split with 14.2 million bu on old crop and 1.67 mbu new crop. These totals were below estimates but above the volume needed per week to reach yearly expectations. Soybean bookings were split with 8.88 mbu old crop and 31 mbu new crop, and while below estimates, we have surpassed our yearly sales goal which is friendly. Wheat sales totaled 15.2 mbu which was in the middle of trade guesses but above the needed amount on a weekly basis.

Census export data for the month of May was released today and was mixed as well. Corn exports in the month of May totaled 224.4 mbu, up from the 184.6 mbu in May of 2019. Soybean exports for the month came in at 72.2 mbu, down from last year’s 94 mbu as the United States faced more Brazilian competition. Wheat exports in May reached 86.2 mbu which was also down from the 104.7 mbu from a year ago.

The May fats and oil report was also released and showed 179.5 mbu of soybeans were crushed in the month. This was under the average estimate of 180.7 mbu and a 3.84 mbu decrease from April but was still a record for the month. Oil stocks at the end of May totaled 2.44 billion pounds, a 155-million-pound decrease from April, but a 428-million-pound increase from a year ago.

US meat exports were mixed on the week. US beef sales last week totaled 12,326 metric tons, a 50% reduction from the week before. Pork sales for the week totaled 39,151 mt which was a 9-week high, and 67% more pork than sold the same week a year ago. Of the pork sales, 55% was to China. Even with these high pork sales hog futures were pressured today as long-term hog economics remain negative.

The shock from the decline in corn plantings in Tuesday’s report is wearing off, but that does not mean the impact of the reduction is going away. Until this point trade has been comfortable with corn reserves and showed little concern with the possibility of a yield decline. This is not the case anymore, as some models indicate new crop carryout could fall to just half what is currently being predicted. As a result, funds have started to cover the massive short position they have been holding. We are also seeing buying in the soy complex where some projections indicate a new crop carryout of just 250 million bu and possibly less.

The commodity that was mostly overlooked this week has been wheat. When it comes to the wheat market, more attention is on the global market than the US, primarily on Ukraine. Ukraine wheat exports in the marketing year that just ended for them totaled 20.5 million metric tons, a 31% increase from the year before. These exports are expected to decline this year though as Ukraine production has suffered from drought, opening the door for more US sales.

Livestock traders are keeping a very close eye on consumer demand. We are now in what is termed the “grilling season” which runs from Memorial Day to Labor Day and is normally when we see the highest volume of grilling done in the US and meat demand picks up. There are thoughts we could see even more demand than normal this year given the limited access to restaurants and consumer fears over going out in public. It is possible that elevated grilling demand could actually increase US beef and pork consumption under this scenario.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Thursday, July 2nd, 2020

The initial effects of the USDA stocks and data has worn off now and trade is fully engaged in what we will see in the July supply and demand report. Trade is also starting to place more attention on weather outlooks as we approach the key pollination window on corn. While conditions before and after pollination are also important in final yield, pollination can be key in how ears set and develop. In many years this alone has altered final crop sizes. Much of today’s trade activity will focus on weekend positioning. The markets close at 12:05 PM CST tomorrow and will be closed at day Friday for the July 4th holiday. Trade will resume Sunday night. This could quite possibly be the first real weather weekend of the growing season, and to see some risk premium added to futures ahead of it would not be surprising. The overall tone of the market is that production, even if reduced, will be enough to cover forecasted demand. Until this mindset changes it will be hard to sustain a long-trending rally in the markets. This is especially the case with funds seemingly comfortable with their current positions, especially the record short one in corn. Now that the calendar has shifted to July, trade will be closely monitoring China for an indication of when they will start taking US purchases. China has been an active buyer of US soybeans for new crop delivery in recent weeks, but this has been met with caution by some analysts. Their opinion is China has been making purchases with little interest in actually taking delivery of all bookings, but rather they were made to appease critics who doubted the phase 1 agreement. Any indication China will cancel soybean purchases will likely cause an unfavorable reaction in the market.

Highlights

* Basis starting to soften

* Rating declines likely next Monday

* Trade starting to position for July WASDE

* Forecasts turning dry for corn pollination

* US ethanol stocks lowest since January 2017

* EU bans travel from US

* US/Canada issues develop on aluminum trade

* Trade starting to doubt Chinese imports

* More states enact travel restrictions

* Markets close at 12:05 CST today

* Markets closed tomorrow for July 4th

Corn

* Higher feed demand expected

* Other demand may slip on corn

* Commercial long 3rd largest in history

* Argentine harvest 80% complete

* SAM exports rising

Soybeans

* Peak Brazil exports may have passed

* China accounts for 72% of Brazil demand

* Weakness in canola pressures soybeans

* Crush margins continue to fall

* Exports unlikely to reach projections

Wheat

* Drought building in Argentine crop

* EU harvest to get underway

* EU wheat values at 3-month low

* Ukraine wheat crop -7% this year

* Russia may lift export limits

Livestock

* Packer margins on cattle average $275/head

* Concerns build over new swine flu in China

* China may increase US pork imports

* US retail pork +8.6% in 2020

* Elevated grilling demand on beef

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Wednesday, July 1st, 2020

As expected, yesterday’s stocks and more importantly acreage reports were again drivers of today’s trade. All attention remained on the larger than expected reduction to corn plantings which change the entire landscape of that complex. Soybeans were followers of corn, as even though yesterday’s data was friendly for soybeans, it was not overly bullish. That said, ending stocks of both corn and soybeans could easily shrink in the 2020/21 marketing year which is causing fund buying. Gains are being limited by technical resistance and concerns what a sharp rally in futures will do to our already weak demand base.

The majority of the talk surrounding yesterday’s USDA report focused on the reduction of corn acres from March to June. This totaled 5 million and was the greatest acreage decline in 37 years. The greatest reduction to acres was in North Dakota with 800,000 fewer plantings. Corn acreage declines were also high in Nebraska at 700,000 acres and South Dakota at 600,000 acres. Planting estimates were also reduced in Illinois and Indiana by 400,000 acres each. On a whole, the US saw total planted acreage shrink for all crops by 7.2 million acres.

The question is why so many acres were lost between the March and June reports. The primary factor is weather, especially in the Dakotas where many farmers struggled to get last year’s crop harvested this spring let alone get the new crop seeded. Another reason for the decline in acres on a whole is diminished demand. Much of this was the result of the Covid-19 outbreak that took place right as planting was starting to get underway. For corn the loss of ethanol production was the primary issue. The result of this decline in acres is more attention on yield as the US does not have the cushion to absorb losses as it did before, especially on corn.

Ethanol manufacturing in the United States did increase in the week ending June 26th, albeit a minimal amount from the previous week. A reported 6.2-million barrels of ethanol were produced in the week, a 49,000-barrel increase from the week before. Ethanol stocks managed to decline a large 870,000 barrels during the week, making it the 10th consecutive week of shrinking reserves. US ethanol stocks now stand at 20 million barrels compared to 22.8 million a year ago.

Of the crop condition numbers that were released Monday night, one that is getting more attention is the US pasture rating. US pastures are rated at 42% Good/Excellent and 32% Fair. The concern is that a large 26% of the US pastureland was rated as Poor/Very Poor. This is likely why we had larger cattle placements in the latest cattle on feed report. Reports from the US Plains indicate pasture conditions continue to deteriorate from a lack of precipitation, and this could easily lead to elevated feed grain usage.

More attention is starting to be placed on where the US is on corn and soybean export loadings for the marketing year. Corn loadings at the present time total 1.3 billion bu which is 74% of the yearly forecast. Soybean loadings total 1.35 billion bu which is 82% of the yearly projection. The worry is that with just 10 weeks left in the marketing year, these totals may be hard to reach given recent export volumes.

Even though the revised NAFTA agreement has just gone into effect we are already seeing trade issues develop between the partners. The new trade agreement between the United States, Mexico, and Canada called USMCA was expected to be more favorable for all parties and elevate trade. Today, however, the United States announced it was considering tariffs on Canadian aluminum imports. There are also political tensions building between the US and Mexico. The concern is these developments could already jeopardize the entire pact.

The US livestock industry is finally starting to see daily slaughter numbers get back to pre-Covid-19 levels. While still lower, numbers are much higher than where they were expected to be. One factor that the livestock industry is glad to see, especially on hogs, is slaughter weights are already starting to decline. Hog weights jumped when animals started to back up ahead of packing plants, but last week the average weight declined by 2 pounds per animal. While still above average, this shows the hog situation may be starting to remedy itself.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Wednesday, July 1st, 2020

There is little doubt we will see continued reaction to yesterday’s USDA acreage and stocks reports in today’s session. The most interest remains on acreage and how many planted acres will actually be harvested. The harvested acres in yesterday’s data came out at 84 million on corn, 83 million on soybeans, and 36.7 million for wheat. The most attention was on corn, as this total was 5.6 million fewer than what is being used in current balance sheets. If we use the “new” harvested acres number of 84 million and the current corn yield at 178.5 bushels per acre it puts production at 14.99 billion bu, a full 1 bbu under the current crop forecast. If corn yield is closer to trend at 173.2 bpa, which is what more field scouts are using in their projections, the corn crop drops to just 14.5 bbu, or 1.5 bbu under the USDA projection. If everything remains constant on usage, this will nearly cut new crop ending stocks in half. The other figure from yesterday’s release is the decrease in soybean reserves from a year at 1.386 bbu. While this was in line with trade estimates, it was a 397 mbu decrease from last year. Very few adjustments were made to wheat acreage or stocks from what trade was expecting. Now that this data is out of the way, trade will start to incorporate the data into the USDA balance sheets. This will be closely watched in the July WASDE report. Trade will also be closely watching yield estimates over the next few weeks and trying to better determine actual crop size. More attention will also fall on the heat that is building in the heart of the Corn Belt, with above to much above normal precipitation being forecast for the next two weeks.

Highlights

* US acreage still debated

* Hong Kong special status revoked

* US agrees to food safety export certificates

* World Covid cases top 10 million

* US businesses become hesitant to reopen

* China starting to doubt Phase 1 import goals

* Large variance in US crops

* Drought continues in Argentina

* SAM currency continues to soften

* Lower demand may negate smaller US production

* Trade now focused on July WASDE

Corn

* US corn acres 92 million planted, 84 million harvested

* June 1st stocks 5.22 billion bu

* 2019 stocks were 5.02 bbu

* Privates estimate corn yield at 173.5 bpa

* US carryout could drop in half for 2020/21

Soybeans

* Planted acres at 83.8 million, 83 million harvested

* June 1st stocks at 1.38 bbu

* Stocks -397 mbu from last year

* Private soy yield at 49 bpa, USDA at 49.8 bpa

* Chinese demand again questioned

Wheat

* Planted acres at 44.3 million, harvested at 36.7 million

* June 1st stocks at 1.04 bbu

* 2019 stocks were 1 bbu

* EU officials lower crop by 4.3 mmt

* US mills pull bids ahead of harvest

Livestock

* Cattle slaughter -6% from last year

* Wholesale boxed beef lower

* China bans pork from some Brazil packers

* Another Chinese hog flu discovered

* China bans imports of US poultry

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Tuesday, June 30th, 2020

The early portion of today’s session was spent getting final positions in place ahead of the USDA acreage and stocks reports. While this generated some last-minute short covering, buying was limited by last week’s improvement to crop ratings. While this cannot be associated with a yield prediction, it does indicate that for now at least the crop is stabilizing. The acreage side of the USDA reports shocked trade with lower than expected numbers, some of which was offset by higher stocks on the grains.

According to the USDA, US corn stocks as of June 1st totaled 5.22 billion bu, nearly equal to last year’s inventory, and well above trade estimates for 4.95 bbu of inventory. Soybean stocks on June 1st were close to the average estimate at 2.386 bbu. This is a large 397 million bu less than the US had in inventory a year ago. Wheat inventory to start June was above estimates at 1.04 bbu, which was 40 mbu under the 2019 volume.

The acreage numbers are where trade was caught off-guard. US corn plantings this year are now pegged at 92 million, 3 million under the average trade guess and 5 million fewer than what came out of the intentions report. Soybean plantings were more in line with trade estimates at 83.8 million but were still 1 million under the average guess. Soybean plantings did increase 300,000 from the intentions report. Wheat plantings are projected at 44.3 million, also in line with trade guesses, and 300,000 fewer than the March intentions.

Compared to last year, corn plantings are expected to be 2.3 million higher, soybeans will be 7.7 million higher, and wheat will be down 860,000 acres. The real focus is on harvested acres though, with corn projected at 84 million, soybeans at 83 million, and wheat at 36.7 million. The most attention is on corn, where harvested acres this small will reduce the national corn supply.

Given these harvested acres and projected yields, US crops this year will total 15 bbu on corn, 4.13 bbu on soybeans, and 1.82 bbu on wheat. These would all be under what the USDA is currently predicting for crop sizes.

Wheat harvest is not only getting underway in the United States, but in the Black Sea as well. Most activity so far has been in Ukraine as that country has benefited from near perfect growing conditions all season. Ukraine officials are expecting to see high yields on all grains this year as a result. Trade is keeping a close eye on Ukraine activity as it has become a main supplier of grains into the Asian market. Russian authorities are not as optimistic on yields, and we have already seen export forecasts reduced as a result.

Trade tensions between the US and China are on the rise. China is not pleased with the US stance on China’s handling of Hong Kong as well as other countries. Chinese officials claim the US stance and how it has reacted may jeopardize the guidelines that were set in the Phase 1 agreement. While many US analysts have doubted China would reach its agreed to levels, this is the first time China has indicated it may not import as much as promised.

Another issue that is rising between the two countries is food security. China has started to request countries provide Covid-free certificates when making exports. Hardly any have agreed to this requirement, but the US has said it will provide documents that any crops were grown, harvested, and shipped in the safest manners possible. To guarantee any commodity is Covid-free is nearly impossible, as there is now way to determine where a product may have picked up the virus, including in Chinese ports and testing facilities.

Chinese officials have announced a new strain of Swine Flu that is showing signs of being a potential pandemic. While there is no immediate threat to people, China is very cautious of any virus following the Covid-19 and African Swine Fever outbreaks. This is especially the case if the virus is as easily transmitted to humans as some experts claim it could be. There is now speculation on what China will do with infected hogs, and if it will lead to additional Chinese pork demand.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Tuesday, June 30th, 2020

The condition of both corn and soybeans improved 1-point last week despite less than ideal conditions in parts of the Corn Belt. The US corn crop is now rated 73% Good/Excellent and soybeans are at 71% G/E. The progress of the crops is mixed with a slow corn silking but a faster pod setting. If this continues, we will soon start to hear talk of an early soybean harvest and possibly a larger crop. Of all the conditions released one that is getting more attention is the poor rating on US pastures which are at 24% Poor/Very Poor. This is from the less than ideal growing conditions in the US Plains and could start to lead to higher cattle placements and elevate feed grain usage. The majority of today’s session will be spent getting final positions in place ahead of the June Quarterly Stocks and Revised Plantings reports. These will both be released at 11:00 CST. Average trade estimates for grain stocks on June 1st are 4.96 billion bu of corn, 1.39 bbu of soybeans, and 987 mbu of wheat. These would be decreases on all three, with 244 mbu less corn, 392 mbu fewer soybeans, and 93 mbu less wheat. For acres, average trade estimates are for 95.14 million on corn, 84.83 million on soybeans, and 44.72 million on all-wheat. These would be increases of 1.32 million on soybeans and 70,000 more wheat from the March intentions. The corn acreage would be a 1.85 million decrease from March. Compared to last year, corn acres would be up 5.44 million, soybeans up a large 8.73 million, and wheat plantings down 43,000 acres. Aside from this data, trade will focus on month and quarter end positioning today as well.

Highlights

* Month/Quarter End

* All spot contracts now in delivery

* Stocks/acreage report at 11:00 AM CST

* Covid-19 cases continues to rise

* US inventory main source of commodity demand

* Feed demand under-estimated

* China threatening to shut off US purchases

* US crop reports highly variable

* US dollar starting to rebound

* ECB corn bids 18 cent premium to WCB

* ECB soybean bids 42 cent premium to WCB

Corn

* Corn 73% G/E, +1%

* Corn 4% silking, 7% average

* Average acreage estimate today is 95.1 million

* Average stocks estimate is 4.96 bbu

* Last year’s stocks were 5.2 bbu

Soybeans

* Crop is rated 71% G/E, +1%

* 14% is setting pods, 11% is average

* Average acreage estimate is 84.8 million

* Average quarterly stocks 1.39 bbu

* stocks would be down 392 mbu from year ago

Wheat

* Winter wheat 41% harvested

* Spring crop rated 69% G/E

* Total wheat acres estimated 44.7 million

* June 1st stocks estimated at 987 mbu

* Year ago stocks were 1.08 bbu

Livestock

* Heat stress builds on cattle

* Slaughter weights starting to decline

* Covid cases bring additional grilling demand

* Economic worries weigh on demand

* More US restaurants re-closing

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Monday, June 29th, 2020

Much of today’s session was spent getting final positions in place ahead of tomorrow’s quarterly stocks and revised plantings reports. Trade was also squaring up positions for month and quarter end. Weather was a factor in today’s trade as above normal temperatures are being forecast for much of the Corn Belt, although the length of these conditions is being questioned. Advances were capped by building concerns over the surge in US Covid-19 cases and what it could mean for the economy and commodity demand.

Parts of the Corn Belt are forecast to experience above normal temperatures for the next several days, with some regions expected to see these last for the next two weeks and maybe more. The question with this is how much precipitation will be received, with some regions seeing none. These temperatures are more of a factor on corn as that crop is starting to move into the pollination stage of development. Funds are holding a record sized short position, and the possibility of production losses is giving the complex some much needed support.

These weather conditions are already starting to cause some analyst to back off their corn yields. More and more analysts are starting to put the US corn yield closer to trend which would be 173.2 bushels per acre. This is a large 5.3 bpa under what the USDA is currently using in balance sheets. If correct, this decrease would take nearly 475 million bu off the US production figure using current acreage. It goes without saying this would greatly impact US and global balance sheets.

The United States is not the only country seeing production losses from weather. The European Union has lowered its wheat crop forecast due to drought, putting it at 117.2 million metric tons. This compares to the 121 5 mmt prediction in June and last year’s wheat crop of 130.9 mmt. Argentina is also indicating its wheat crop could be smaller than first thought this year due to drier than normal conditions. These losses are being offset by elevated production in Australia and high yield reports on the US winter wheat crop.

Stats Canada released its acreage estimates for the country for the 2020/21 growing year this morning. Stats believes the country will plant 20.8 million acres of Canola and 25 million acres of wheat this year. Corn acres are forecast to total 3.56 million and soybeans come in at 5.07 million. The most changes would be to wheat with 400,000 more acres in the 2019/20 marketing year, and soybeans would be down 630,000 acres.

US export loadings for the week ending June 25th were mixed. Corn loadings were a solid 48.6 million bu, but still fell short of the volume needed to reach the yearly USDA projection. Soybean inspections also fell short of needs at 11.9 million bu. Wheat inspections topped the needed amount though with 18.3 million bu. The greatest concern with the report was the low loadings to China which were just half of a year ago.

One source of corn demand that is expected to increase in the US is for feed. The United States continues to see elevated numbers of animals on feed, especially given the backlog caused by the Covid-19 outbreak. This is one of the main reasons for the 5% jump in hog numbers in last week’s inventory report. We are also seeing cattle move into feed lots sooner as pasture conditions deteriorate where drought is taking place in the Plains. The USDA is already forecasting a 350 mbu increase to feed demand in new crop balance sheets though, so any additional usage may not have a significant impact on balance sheets.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Monday, June 29th, 2020

The majority of today’s session will focus on final positioning ahead of the long-awaited Quarterly Stocks and Revised Plantings reports from the USDA. Acreage has been doubted ever since the USDA released its prospective report in March, especially the corn figure at 97 million acres. Initially it was thought this number was well above actual plantings, and acres would be closer to 92 or 93 million. Since then trade has adjusted its opinion, and now some feel corn plantings will be closer to 94 or even 95 million acres. If correct, this will alter what may are forecasting for production and ending stocks as well. The same scenario is taking place in soybeans where acres are expected to increase by 2 million. This would put total soybean plantings close to 85.5 million. Given the yields being forecast, this would generate large crops for both commodities. There will also be a considerable amount of interest on stocks as they will give us a clearer indication of what our ending stocks might be. Once all of this data is released, trade will quickly revert to immediate growing conditions and crop reports. Crop conditions have been stressful over the past few weeks and some forecasters have started to lower their yield estimates as a result. This is a somewhat misleading statement though, as we have to look at what was being predicted for yields to begin with. Many of these were above the trend yield from the baseline reports late last year, including the USDA yield of 178.5 bpa that is being used in balance sheets. It is not out of the question on corn that we could see reduction to yields and acres and the end result could still be negative for futures.

Highlights

* Month/Quarter End is tomorrow

* FND positioning today

* Stocks/acreage report tomorrow at 11:00 AM CST

* Stats Canada acreage estimate today

* US drier than normal in many areas

* Heat to build in ECB today

* Ethanol values drop last week

* States again closing some businesses

* Rapid rise seen in Covid after opening

* Short trade this week for July 4th

* Markets close early Thursday, closed all day Friday

Corn

* Steady rating expected tonight

* China continues to hold auctions

* New crop sales slowing

* China corn imports remain minimal

* Slowing demand tempers production worries

Soybeans

* Rating may improve tonight

* Elevated new crop demand continues

* Farmer selling picks up

* Chinese imports +27.4% in May

* Global production forecast rising

Wheat

* Ukraine may limit exports

* Rains delay US harvest

* Northern Plains turning dry

* Dry conditions reported in Australia

* Argentine crop being hampered by drought

Livestock

* Beef values continue to erode

* Packers again facing labor issues

* Chinese May pork imports at 370,000 mt

* Yearly Chinese pork imports 1.72 mmt

* Wholesale values under pressure

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Friday, June 26th, 2020

As it has been all week, positioning ahead of next week’s reports and month and quarter end dominated today’s trade. Unfortunately, this caused traders to shore up positions and move to the sidelines, which pressured commodity trade. A lack of much for fresh news was also limiting to futures, even soybeans, where a flash sale of 132,000 metric tons to China was announced this morning. We also had a flash sale of 203,500 mt of sorghum to an unknown buyer. We did see more interest on weather today as high temperatures are being forecast for parts of the Corn Belt with limited rainfall.

A big story in the market today was the increase we have seen in Covid-19 cases across the United States. In fact, yesterday’s new cases were a record at 39,061. These are coming from states that lifted travel restrictions, and concerns are we may see some again tighten their guidelines on businesses, especially restaurants. The worry with this weighed on the equity market today and caused the US dollar to rally which is negative for commodities. It also generates worries that we may see a decline in commodity demand if consumers again stay home.

Another concern with rising Covid cases is what it may do to energy demand if travel is reduced. This is especially the case for the US ethanol industry where production has been on a steady rebound and now trails last year by just 16%. Ethanol values dropped a large 14 cents/gallon yesterday though as thoughts we will see more travel restrictions weighed on the industry.

The May import data from China has been released with a notable difference in soybean totals. In the month of May China imported 9.38 million metric tons of soybeans, a 27.4% increase on the year. Of this total, 8.86 mmt originated from Brazil. This was a 41% increase from last May and the highest soybean trade between the two countries in two years. At the other end of the spectrum, China only imported 492,000 metric tons of US soybeans in the month. This was a 50% reduction from last May and the lowest monthly amount since January 2019. This divergence was the result of high Brazilian sales due to the country’s cheap currency values.

A story that has been in the market over the past several weeks is if China will achieve its projection on Ag purchases from the US under the Phase 1 trade agreement. Officials from both sides claim this is likely to happen, but current ag trade data does not verify these opinions. So far this calendar year China has booked roughly $10 billion of ag products with a yearly goal of $36.5 billion. With half the year gone, this target seems unlikely. What should be getting more attention is if China and the US are willing to work out further trade deals given the recent strain on relations between the two parties.

When it comes to Chinese trade, there is a development taking place that could impact all business with the country. China has requested that exporters submit Covid-Free certificates with soybeans when deliveries are made. None of the world’s soybean suppliers are willing to do this, including the US and Brazil. The objection to this is that there is no way to prove the soybeans are Covid -free once they leave their origination point. Sellers are also stating there is no evidence that Covid can be spread through food products.

An interesting weather fact has been released from the firm T-Storm Weather. Since the year 2012, US topsoil has decreased between the dates of June 15th and June 25th. The opposite happened this year though, with soil moisture actually building. A large 53% of the US corn producing region remains drier than normal though, which is the highest amount in the past eight years.

Yesterday’s hog inventory report weighed heavily on the complex today. June 1st US hog numbers were reported at 105% of last year’s total, above trade expectations for a 103.7% increase. The total number of hogs in the US now stands at 79.6 million. This compares to just 68.4 million in June of 2016.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Friday, June 26th, 2020

While much of the attention on corn production at the present time is on the United States, we continue to see interest on South America as well. The Brazilian firm Safras surprised trade last week by releasing a new crop corn production estimate for the country of 108.4 million metric tons. This is well above the 100-101 mmt being predicted for this year. Safras is using higher acreage in their estimates as planting conditions are more favorable in Brazil, as is the currency exchange rate that will generate high returns. The question is what this production, if accurate, will do to the global balance sheets. In the June WASDE report the USDA projected world corn ending stocks of 337.9 mmt for the 2020/21 marketing year. If Brazil’s crop is this large, it will obviously increase that number. This reverses a trend of decreasing world corn production and thoughts we may eventually get to a point where rationing might be needed. The other side of this equation is demand, which is being heavily disputed as well. The most doubt is on ethanol where the USDA is predicting a large rebound for the US. Not everyone is on board with this belief, and some analysts believe it will be no greater than this year. This is a difference of 300 million bu, and that is if we do not see any further declines to old crop production which are quite possible. Bottom line is that the global corn supply is growing, making any small decline to production easy to absorb. Until this changes we may not see funds cover their short positions which is needed to turn the market around.

Highlights

* Brazil guarantees Covid Free meat exports

* Other exporters hesitant to make such claims

* Chinese consumers show concern over imports

* Ukraine crops in better shape than year ago

* US ethanol stocks now lowest of calendar year

* US ethanol for export value -16.3% from year ago

* US/Brazil ethanol spread now 6c/gal

* Covid surge again impacting global economy

* Stats Canada acreage estimate next Monday

* Crop ratings expected to hold steady next Monday

Corn

* India lowers import tariff

* India trying to support poultry market

* Global corn crop estimates rising

* IGC raises global corn crop 3 mmt

* Steady ratings Monday night

Soybeans

* Argentina crushing more soybeans

* Global crush margins under pressure

* Trade not impressed by flash sales

* New crop esports remain strong

* China taking half of new crop total bookings

Wheat

* Rains slow harvest

* Global wheat values under pressure

* High variability in Kansas crop

* Some elevators expect ½ normal receipts

* Yields range from 30 to 60 bpa

Livestock

* Beef sales 24,373 mt last week

* Beef sales +21% last week, +61% last year

* Pork sales last week 24,000 mt

* Pork sales -19% last year

* US hog inventory +5% at 79.63 million

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Thursday, June 25th, 2020

Trade was on the defense to start today’s session as even though selling was not that heavy, there was very little interest in buying. The most interest in the market is simply shoring up positions ahead of next week which brings the long-awaited USDA data as well as month and quarter end. Trade will have very little interest in daily happenings until then, and possibly after unless we see a weather threat develop. Additional pressure today came from the outside markets and worries that the build in Covid cases will again pressure commodity demand.

Export sales data for the week ending June 18th gave the market little support. Corn sales were split with 18 million bu old crop and 1.65 million bu new crop. Soybean bookings came in at 22.1 mbu old crop and a large 20.6 mbu new crop. Wheat sales reached 19.06 mbu. These totals were all within trade estimates and above the volume needed per week to reach yearly targets.

Meat exports were mixed on the week. Beef sales totaled 24,373 metric tons, a 21% increase on the week and 61% more than the same week a year ago. Pork sales totaled 24,000 mt, 19% less than the same week last year. China accounted for 4,518 mt of pork sales last week.

The International Grains Council updated their world production forecasts this morning, raising them for the second consecutive month. The IGC is pegging world grain production at 2.237 billion metric tons this year, 7 million metric tons more than their May projection. Elevated world corn production was the primary cause of this increase, as that crop is forecast to be 3 mmt larger at 1.17 bmt. Grain consumption was left mostly unchanged from last month, which will cause ending stocks to increase 8 mmt to a more comfortable 635 mmt.

Estimates have been released for next week’s acreage projections by the USDA. Corn acres are projected at 95.14 million, down 1.85 million from the March intentions, but up 5.44 million from last year’s plantings. Soybean acres are estimated to be 84.83 million, a 1.32 million increase from the intentions report and a large 8.73 million more than US farmers planted last year. Wheat acres are expected to come in at 44.72 million, 70,000 fewer than the March figure and 430,000 less than what was planted a year ago.

Estimates have also been released for the quarterly stocks data. Thoughts are that as of June 1st, the United States held 4.96 billion bu of corn, 244 mbu fewer than a year ago. Soybean inventory is expected to have been 1.39 bbu, 392 mbu less than last year. Wheat stocks are estimated at 987 mbu, down 93 mbu from a year ago.

The wheat market is starting to face more harvest pressure, which has caused weakness in the complex. Pressure is more than normal this year though, as yields are higher than expected, but quality is mixed. Many regions are reporting lower than usual protein content in this year’s wheat, which may impact demand for the grain in the global market. This is especially the case with some of our leading competitors reporting better than expected crops, mainly Russia and Australia.

Ethanol values have been on the rise in the past week which is starting to impact export demand. US ethanol at the gulf is currently being offered at $1.41 per gallon. This is up 2% from a week ago, but still 16.3% under the asking price from last year. The concern in the industry is that the spread between the US and Brazil has narrowed to 6 cents per gallon on ethanol offerings.

The increase in Covid-19 cases across the United States is again becoming a factor in the entire market complex. Investors are again pulling monies out of the equity market and placing them back in the US Dollar, which is negative for commodities. There is also renewed concerns over commodity demand if US businesses again close, even if just temporarily. The most worry is on energy demand if travel is again halted.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Thursday, June 25th, 2020

We are starting to see mixed field reports from across the Corn Belt, which is not uncommon as the growing season gets underway. This is especially the case on corn where yield estimates are starting to vary a considerable amount. In regions where weather conditions have been favorable, we have seen yield estimates rise, with some topping the 180 bushel per acre mark. This is only 1.5 bpa above what the USDA projected in the June WASDE report, but would be enough to add from 125 to 150 million bu of production to current estimates given projected corn plantings. This also seems like a minimal amount but would be enough to push ending stocks on corn closer to the 3.5 billion bu level. There is little doubt we would see additional market pressure if this number starts to be projected. At the same time, other field reports are calling for lower corn yields as they have seen drought develop in recent weeks. This is mostly in the Plains, but other regions are reporting drier than normal soils as well. These regions claim their corn yield will be under trend this year. It is quite likely that both of these possibilities are correct depending upon where you are. Historically, current data does indicate a corn yield that would come in under what the USDA is presently predicting. This is based off similar years with similar crop ratings and soil conditions. Most indications are the final corn yield at this time would be closer to 174 bpa than the 178.5 bpa the USDA is projecting. We have the critical month of July right in front of us, which is where many agronomists claim corn yield is determined. We are seeing the same outlooks in soybeans, but they are not getting much attention given the length of the growing season for the crop.

Highlights

* EU may impose travel restrictions on US

* US may elevate tariffs on EU

* Crop conditions to stabilize this week

* Areas of crop stress to shrink

* Crude oil volatility building

* US ethanol production +6.2% last week

* Highest weekly production since March

* Corn use for ethanol jumps to 91 mbu

* Concerns build over Covid economic recovery

* Positioning increases for June 30th reports, month and quarter end

Corn

* EU lowers import tariff

* So Africa crop up 38%

* Export basis remains steady

* WCB basis 18 cents under ECB

* Trade questions Chinese interest

Soybeans

* China accounts for 30% of US soy exports

* Canadian canola crop is variable

* Summer export basis is weaker

* 75 cent spread between interior and export basis

* Open interest declining

Wheat

* Harvest pressure building

* Yields mostly above expectations

* EU wheat weaker, pressures US

* Lower US dollar a benefit for demand

* Damage reports to Plains wheat increasing

Livestock

* US beef supply is growing

* US pork supply lowest since 2011

* US slaughter numbers growing

* Brazil firms agree to Non-Covid certification

* Hog inventory report after close

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Wednesday, June 24th, 2020

Much of what took place in today’s session was simple consolidation ahead of month and quarter end. We are also starting to see more positioning ahead of next Tuesday’s long-awaited USDA acreage and stocks report. From now until then we will receive many private projections with likely a wide array of numbers. This action limited trade activity today, as did a lack of fresh news and mostly benign weather forecasts. Trade activity was limited by weak outside markets and ongoing worries over the long-term impact of ongoing Covid-19 cases.

Ethanol manufacturing for the week ending June 18th jumped a large 6.2% from the previous week. According to data from Mid-Co Commodities, ethanol manufacturing for the week totaled 6.25 million barrels, a 364,000-barrel increase from the previous week. This was the highest weekly production figure since the 3rd week of March. Ethanol stocks decreased on the week by 312,000 barrels and now stands at 21.03 million. This production indicates a corn usage of 91 million bu which is close to what the USDA is using in balance sheets.

The United States may soon see more pressure from Argentina in the global market on soymeal sales. Argentina is crushing more of its recently harvested soybean crop than normal, with total crush up a reported 1.2% from a year ago. One reason for this is demand, but also from the lack of soybean exports. Argentine farmers and exporters are hesitant to sell as many soybeans as in recent years due to the elevated taxes that are being attached to sales.

Another country the US is starting to see more export pressure from is Russia. The Russian wheat harvest will be getting underway within the next two weeks This is expected to bring Russia back to the export market, likely with values under what the United States is asking for its wheat. Farmers in Russia are comfortable with this year’s crops and are more willing to make sales as well. The most competition for the US may come from quality, as Russia’s wheat crop is expected to be higher in protein than the crop being harvested in the US.

Trade is starting to form a mixed opinion on Chinese soybean business. While relations between the two countries remains strained, China continues to buy US soybeans. For the year, Chinese soybean bookings are up 14% from a year ago and continue to build. Even with this growth, China is unlikely to reach its Phase 1 objective on total purchases. The question to many traders now is how far China may fall short of their initial target.

While old crop US sales of corn and soybeans have struggled recently, we are seeing elevated demand on new crop. New crop US corn sales currently total 140 million bu, a 14% increase from last year’s sales at this time. New crop soybean sales stand at 203.4 million bu, a large 77% increase from last year. Of these soybean sales, 55% are to China.

We are at a stage of the growing season when analysts start looking at past years and try to determine what may happen this year on crop development. While this is far from scientific and does not mean outcomes will be repeated, there are some interesting correlations being made. Over the past 40 years there are nine being found with soil conditions similar to what we have now. In four of these years the United States had record yields, while in just three yields were below trend. This is limiting the amount of risk premium traders are adding to futures at the present time.

We are starting to see a wide spread in corn values between the West and East corn Belt. The average cash value on corn in the Western Belt is currently $2.95 per bushel. In the eastern Belt the average cash bid is $3.13 per bushel. One reason for this is the volume of old crop corn that is still available in the west versus the east, but also from the prospects for another record crop in the west that will further elevate these stocks.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Wednesday, June 24th, 2020

A lack of addition selling provided overnight support, while gains were limited as buying was sparse as well. While much of the interest in the current market environment is on production, we are still seeing attention on demand. This is starting to shift more towards new crop and for good reason. Export bookings on corn for the 2020/21 marketing year currently total 104 million bu. While this may not seem like much, it is actually a 14% increase from last year at this time. Buyers are showing doubt over the ability of Brazil to supply as much corn as it did last year given production issues and a building domestic need for the supplier. Trade is still concerned with old crop exports though, as demand is not up to initial expectations. We are also seeing larger new crop soybean demand this year than last year. The US currently has 203.4 mbu of new crop soybean sales on the books. This is a large 77% increase from a year ago. It is not surprising that the majority of these sales are to China, who has bought 55% of the total. China’s current soybean bookings from the US on the 2020/21 marketing year are also 31% larger than the record import year of 2017/18. The obvious question in the market is how long this sales pace may last. Given their recent trend, China is likely only booking enough soybeans to last until the next harvest gets underway in South America. This will come sometime after the first of the year. What is unknown is how many soybeans buyers have to take delivery of from Brazil and Argentina from this year’s harvest. It is quite possible buyers already have a significant amount of their immediate needs covered and just need to take delivery of them.

Highlights

* China will struggle to reach Phase 1 totals

* Trade tensions further strained between US and China

* Feed demand may increase

* Crop reports highly variable

* Reports indicate 52 pending bio-fuel waiver requests

* Mexico to resume sending workers to Canada

* China asks for Covid-free import certification

* China approves 2 more GMO import licenses

* CME to launch Brazil soybean contract

* Market technicals not supportive

Corn

* Safras claims 108 mmt Brazil crop estimate was for next year

* Corn basis narrowest since March

* Mexico remains main source of corn demand

* China sold 150 mbu from reserves last week

* Global ending stocks to rise

Soybeans

* Argentine harvest complete

* Argentina soy yield 44 bpa

* Argentine offerings under US

* Brazil out of soy by September

* Decline in Palm Oil demand weighs on soy oil

Wheat

* Frost damage in Kansas hurting yields

* Now seeing damage from wind, hail

* High variability in winter wheat yields

* Russian wheat offers under US

* Russian wheat higher in protein than US

Livestock

* US hog numbers continue to rise

* Thursday hog report est +4% from year ago

* Heavy slaughter weights continue

* Weekly hog slaughter +5.4%

* Wholesale values stabilize

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Tuesday, June 23rd, 2020

Trade started out on the negative side today as the market continued to react to confusing information from the White House surrounding trade with China. Corn was also pressured today from a 1-point increase in the crop rating in the weekly conditions report. Soybeans were mixed today as even with conflicting trade data China was listed in the flash sales as a buyer of 132,000 metric tons from the US. Benign weather conditions weighed on all commodities while a weaker dollar was beneficial, especially to the wheat complex.

A considerable amount of confusion took place overnight and early today surrounding the US/China trade deal. Late yesterday the White House gave the indication the Phase 1 trade deal was no longer in effect. This was being credited to China not living up to trade promises. This was then clarified, and it was stated the Phase 1 deal is in place, but the US could no longer trust China. This was all the result of White House frustrations over China not informing the US of the Coronavirus outbreak in a timely manner.

Trade is closely monitoring its soybean demand, especially from China. China has primarily been sourcing its soybeans from Brazil, but that supplier is expected to be out of exportable reserves by the end of August. This will leave Brazil without soybeans to export until its next harvest in January or February and should be a great benefit for US sales. The question is how much coverage importers already have sourced and how much more they will need.

Trade is also aware of China’s corn demand. For the past several days it has been rumored China is shopping for US corn, but so far, no flash sales have been announced. China has started to auction corn out of its state-owned reserves by selling 150 million bu last week. This is not uncommon and done many years to help rotate inventory. The question is if China will need to make imports to refill these reserves or if they feel domestic production will by adequate to do so.

A bigger question for Chinese corn demand is where imports may be sourced from. Brazilian firms have upped their corn production forecasts, and yesterday Safras claimed the crop would total 108.4 million metric tons. The initial reaction is this would allow for Brazil to elevate its exports from last year. This may not be the case though, as Brazil over-extended its sales last year and needs corn to refill its own reserves. Brazil is also using more corn domestically, mainly for ethanol and feed. Under this scenario it is possible Brazil could produce a larger corn crop and actually be less of a competitor in the global market.

Trade is also starting to consider how many more imports China may need, specifically on soybeans. China already has 4 million metric tons of new crop US soybean purchases on the books. This is the highest level of purchases at this time of the marketing year since 2014. Given this pace, we would expect China’s yearly bookings to reach 28 mmt, or roughly 1 billion bu. This is nearly the same as the pace of the 2017/18 marketing year which was the last full year prior to the Trade War. This may be enough to get China through to the next South American harvest that normally starts in January.

One factor that could end up impacting all trade with China, as well as other buyers, is Covid-19. Many buyers have been asking for certification that exports will be free of Covid-19, both on meats and grains. This will likely raise concerns with an exporter, as it may be hard to maintain food safety between ports.

The cold storage report for June was released, giving us mixed numbers. Beef in storage on June 1st totaled 415.2 million pounds compared to 405.1 million in 2019. Pork in cold storage totaled came in at 467 million pounds, down considerably from the 629 million pounds from 2019. This was a result of the decline in processing following Covid-19 and increase to Chinese purchases. Pork bellies in cold storage totaled 59.18 million pounds, down from the 64.12 million pounds from a year ago.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Tuesday, June 23rd, 2020

Trade received mixed news overnight when it was initially announced the US/Chinese trade deal was not working, but was later clarified to state the Phase 1 agreement is still in place. This created confusion that weighed on overnight trade. There is little doubt we will hear more about this development today. The condition of the US corn crop rebounded 1 point last week to come in at 71% Good/Excellent. The crop is maturing at a normal rate with 2% in the silk stage. Soybean planting is in the final stages at 96% complete. The crop is now blooming on 5% which is in line with the normal pace. The crop decreased 2% from its Good to Excellent category, and now stands at 70% G/E. The winter wheat harvest is gaining momentum with a 29% completion rate, just ahead of average. The spring crop rating remains high at 75% G/E. These numbers were all pretty much as expected by trade. While much of the interest in the market right now is on production, demand is still a factor, and has prevented futures from rallying as much as hoped. This is especially the case on corn where demand is not up to expectations, mainly ethanol. Even with the recent reduction to projected ethanol demand usage has trailed the needed usage amount by 10 million bu per week. If this trend continues for the remainder of the marketing year it would add roughly 100 million bu of corn to ending stocks. Wheat demand is also being questioned as global production is on the rise meaning more competition for US sales. Quality may also become a factor on wheat demand as the US is seeing low protein content in the newly harvested wither wheat crop.

Highlights

* US/Chinese trade deal uncertainty

* Record new cases of Covid being reported

* US diesel supply down for 1st time in 11 weeks

* USMCA to take effect July 1st

* US trade talks with EU limited

* Argentine Peso at record lows vs US Dollar

* Brazilian Real again declining in value

* Poor pasture leads to higher cattle placements

* Frost damage showing up in US wheat

* Positioning rises for June 30th reports

Corn

* US corn 2% silking, equal to average

* US corn 72% G/E, +1%

* Safras raises Brazil corn estimate to 108 mmt

* New crop corn sales at 140 mbu

* New crop corn sales +14% from year ago

Soybeans

* Soybeans 70% G/E, -2% on the week

* Soybeans 5% blooming, equal to average

* New crop export sales at 203.4 mbu

* New crop sales up 77% from last year

* China accounts for 55% of US soybean sales

Wheat

* Winter wheat 96% headed

* Winter wheat 29% harvested

* Spring wheat 75% G/E

* Global wheat trade under US values

* Russian officials predict smaller crop than USDA

Livestock

* 415.2 mil pounds beef in cold storage

* Year ago beef storage was 405.1 million pounds

* Pork in cold storage at 467 million pounds

* 2019 pork in cold storage was 629 mil pounds

* 59.18 mil pounds pork bellies in storage, 64.12 last year

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Monday, June 22nd, 2020

Corn, soybeans, and wheat all struggled to start the week as a lack of bullish news combined with more favorable weather outlooks to weigh on futures. The current trend of heat followed by cooling temperatures and rains is expected to continue creating favorable conditions for much of the United States. This does not mean we do not have pockets of crop stress, but not a widespread crop loss. We did see some concern over the rising Covid-19 cases in the US, but the market shrugged these off as being a result of elevated testing. A lack of fund participation limited all futures today while support came from an absence of selling pressure.

One of the surprises we did have in trade today was an increase to the Brazilian corn crop. The firm Safras raised its corn crop projection to 108.4 million metric tons, well above most other estimates that range from 99 to 101 mmt, including the USDA. Safras is basing its estimate on a larger Safrinha crop which they peg at 75 mmt. Their previous estimate was 69.5 mmt. Safras claims the larger estimate is from the likelihood of elevated corn acres given the higher returns that can be generated with the current currency exchange rate.

One thing that is being noted by analysts is the average corn yield being predicted in Brazil. Scouts in the country have corn yield ranging from 84 to 86 bushels per acre. This compares to the 90 bpa the country averaged a year ago. This low yield also shows how much potential the Brazilian farmer has for yield and crop size as they continue to improve their farming practices. This will only increase the pressure the US sees in the global corn market.

In Argentina we are seeing the soybean harvest draw to a close for the year. As it does, lower production is being noted. It appears as though the Argentine soybean crop will total 49.8 mmt this year, roughly 10% under last year’s crop, and just under the USDA estimate. Soybean production in Argentina is also down 1.4% from the five-year average, mainly from the less than ideal weather the country was affected by, but also from a reduction in plantings due to increased export taxes.

What may be an even greater factor for the US when it comes to South America at the present time is the currency exchange rate. The US dollar had started to fall in comparison to the Brazilian Real and Argentine Peso, but this trend has reversed. We are now seeing both of the South America currencies falter as economic and political issues arise in those countries. The Argentine Peso is now at record lows versus the US Dollar. This has increased commodity sales from the countries as farmers can generate higher income to help negate unfavorable tax rates.

Export loadings for the week ending June 18th were mixed for trade but offered little in the way of a market influence. Corn inspections for the week were right at the needed amount per week at 51 million bu. Soybeans inspections fell well short of the needed amount with just 9.37 mbu. Wheat inspections came in at 22.5 mbu, well above the 18.3 mbu needed per week.

According to data from the US Grains Council, US ethanol is becoming more affordable for global importers. US ethanol for export ended last week at $1.37 per gallon. This was up 1 cent from the previous week, but down a large 14% from a year ago. US ethanol is now 13 cents per gallon cheaper than ethanol sourced from Brazil which is also favorable for exporters.

The June cattle on feed report surprised trade with higher cattle numbers. As of June 1st the United States had 11.67 million head of cattle on feed, 99.5% of the amount of a year ago, and above trade expectations. Placements in May were also higher than expected at 2.04 million head which was 98.7% of a year ago. Thoughts are this was a result of poor pasture conditions in regions of the US Plains. Marketings were less than expected in May at 72.5% as packing plants continued to recover from Covid-19 closures.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Monday, June 22nd, 2020

This week’s trade will bring us elevated positioning for the long-awaited June acreage revisions and quarterly stocks data. Several firms have already published their estimates with an emphasis on plantings. The consensus seems to be traders are expecting to see a reduction to corn acres and an increase in soybean plantings. This is really not that surprising and is in-line with what trade has been expecting ever since the March data came out. Most estimate are calling for a 2-million-acre bump in soybean acres and a 3 million acre decrease to corn. This corn decline is actually less than what was initially predicted. It is not out of the question we could see corn acres decline and the number would still be bearish for futures. We will also likely see debate over the acreage numbers that are released this month as well. Reports are coming from across the Corn Belt that replants are being made in areas where stands were on the poor side. This does not necessarily mean we will see fewer acres, or that yields will be lower on those acres, but the possibility of them taking longer to mature is a reality. Slow maturity is a factor in last year’s crop that generated many of the quality issues we are seeing today. We will continue to see a large amount of attention on weather this week as we approach the pollination window on corn. This will start in southern areas this week and next and work its way north. At the present time weather appears to be favorable for the to take place. Other factors in price discovery this week will be daily demand reports and if we continue to see Covid-19 cases rise and what their expected impact on the global economy might be.

Highlights

* Dry pockets reported across Corn Belt

* More concern over drought on Spring Wheat

* IL River starting to close

* Chinese demand doubted

* Brazil to shift exports from soy to corn

* Low fertilizer values indicates lower demand

* China continues to sell corn at auctions

* US ethanol cheapest in global market

* China traces Covid cases to food markets

* Positioning rises for June 30th reports

Corn

* Further rating decline likely

* Planted acres to decline 3 million

* Export loadings decrease

* Cumulative exports 68% of total

* Analysts starting to question yields

Soybeans

* Planted acres to increase 2 million

* China remains buyer of new crop soybeans

* Crush helping offset slow old crop sales

* Soy exports at 80% of total

* Crude rebound helps soy oil

Wheat

* Mills are pulling bids

* Winter wheat harvest advancing

* Low protein a concern

* Exports remain ahead of last year

* Spring crop estimates rising

Livestock

* COF at 99.5% of last June

* Total on feed count was 11.67 million head

* May placements higher at 98.7%

* Placements totaled 2.04 million head

* May marketings low at 72.5%

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.