Missed some market news this week? Here's the market news from the week to catch you up.
Ag Marketing IQ
The Soybean Supply Demand Balance Sheet does have a bit of a story, at least one that is potentially better than corn. Much depends upon China’s continued purchases of U.S. product vs. Brazil. U.S. beans have recently become competitive once again with more sales to China. However, there are many who believe that China as a whole will not be able to fulfill their agreed to obligations mentioned in Phase 1 of the trade agreement, and this will need to be watched closely.
Signs of reawakening economies, especially in China, are emerging after the world’s pandemic slumber. The result could mean higher input prices for growers, so it’s time to take a serious look at buying plans. Fertilizer in particular needs attention.
There has been much speculation regarding how much of an impact COVID-19 could have on Brazil’s export capabilities. Much like the U.S., its ag economy has become increasingly reliant on exports. Brazil’s infrastructure has always been the Achilles heel of its overall supply chain. Lack of asphalt roads, with limited railway, make its grain more expensive. Most everything is still trucked thousands of miles and will continue to do so for the foreseeable future.
After trading in a very quiet trading range for much of May, soybean futures finally broke out of that range with a twenty-five cent price rally. The market was supported by news of steady export sales to China, as well as a lower U.S. dollar. Soybean futures prices continue to be in an uptrend for the moment, waiting for fresh data from today’s USDA report for next potential price direction.
Grain export inspections for the week ending June 4 didn’t hold a lot of bullish news, per USDA’s latest report, out Monday morning. Corn, soybeans and wheat all saw week-over-week declines, with soybeans landing at nearly half of the prior week’s tally. Sorghum continues to churn out positive numbers but is a secondary player in the grain export market.
USDA’s latest batch of grain export sales data were somewhat disappointing data for corn and wheat but yielded some interesting numbers for soybeans, which saw week-over-week sales jump higher, while shipments languished at a marketing-year low for the week ending June 4.
Two export sales were reported this week. China took 26.5 million bushels of soybeans and unknown took 4.4 million bushels of soybeans.
USDA’s latest crop progress report shows corn plantings nearly finished, with soybeans taking another moderate step forward for the week ending June 7. Corn plantings reached 97% completion last week, according to USDA. USDA moved ratings a point higher this past week, to reach 75% in good-to-excellent condition. Soybean planting progress moved from 75% complete a week ago up to 86% this week, versus analyst expectations of 87%. This year’s spring wheat planting season has also nearly concluded, reaching 97% this past week. Winter wheat crop quality wobbled slightly, but 51% of the crop is still rated in good-to-excellent condition. Another 30% is rated fair, with the remaining 19% rated poor or very poor.
Advanced Marketing Class
For some farmers, storage is a tool for carrying last year’s marketing problem into the next year, and sometimes the year after that. The odds for success are stacked against farmers who hold grain too long. If they had a better understanding of cash price patterns, producers would stop making the mistake of holding grain in storage too long. Do you have unpriced grain in storage?
North Dakota continues to make waves in the corn market. The state’s 2019 corn harvest was not completed until the end of May, which will drag down test weights on 2019/20 production. With such delayed spring fieldwork progress, many North Dakota corn acres were shifted into prevented plant acreage. Wall Street Journal trade estimates place the 2020 corn crop at 15.92 billion bushels, down 71 million bushels from the May WASDE report. Winter wheat harvest has kicked off in fast fashion in the Southern Plains. Texas was 17% ahead of the five-year harvesting progress average on Sunday and the nationwide harvest is in line with historical averages of 5%. But a dry growing season across the Southern Plains will likely lead USDA to slash 2019/20 production estimates by 70 million bushels.
The June World Agricultural Supply and Demand Estimates report from USDA indicated lower-than-expected new and old crop ending stocks for corn, even though USDA added 5 million bushels of ending stocks for each year. But the futures market rewarded the news, with July futures rising 2.25 cents in the minutes following the report. Soybeans also inched higher after the report was released as new crop ending stocks fell 10 million bushels to 395 million bushels, offering hopes for tight supply conditions and favorable price prospects for the newly planted soybean crop. But wheat prices tumbled after global wheat stocks rose 219.3 million bushels to 11.6 billion bushels for the 2020/21 year, resulting in the highest global ending stocks figure on record.
Corn futures prices were mixed this morning following yesterday’s WASDE reports. July futures edged up $0.0075/bushel to $3.305 while September futures were unchanged at $3.35/bushel. The soy complex was mixed this morning as increased demand from China sought to offset a weak export report issued yesterday. July futures prices rose $0.0175/bushel to $8.6725 as July soyoil futures followed $0.11/lb higher to $27.61. July soymeal prices added $0.6/ton to $290.3. Chicago wheat tumbled to a three-week low on yesterday’s WASDE report, which continued to forecast record-high global wheat stocks as harvest progresses in the U.S. and weather conditions improve in the EU and Russia.
Grain markets fought through a choppy session Friday to emerge with modest gains for the most part, although MGEX spring wheat futures closed slightly lower. Other wheat contracts tracked moderately higher, as did soybeans, while corn came through with fractional gains. Traders remained concerned about the mas-sive crops expected this season, although forecasts for hotter, drier weather this coming week lent some support, as did a large soybean sale to unknown destinations announced this morning.