Need a quick catch up on the market news of the week? Here's what you missed.
Ag Marketing IQ
It is easy to observe the bearish news today and become very pessimistic about upcoming marketing opportunities. It is critical to recognize the current issues and the reality of the resulting low prices, but it is equally important to appreciate that it is very early in the crop year and much can and likely will change.
Memorial Day marks the real beginning of the race to bring in another crop, as growers navigate the risks and rewards of the growing season. What happens at the start of the race to harvest doesn’t assure how the market will finish come fall. But the next few days may offer clues about chances for a rally.
Grower A thinks he could market his corn for up to $5 per bushel this season using various risk management tools. This is not the ag depression of the 1980s, mostly because of the safety nets and marketing tools set up for corn growers in response to the decade's financial devastation. Check out the numbers for the growers projected corn revenue for 2020.
It has been a quiet few weeks for grain futures as prices hold firm awaiting fresh fundamental news in order to provide new price direction. Cattle futures have slowly recovered higher after the coronavirus sell off, and now are waiting for cash and demand news before committing to the next price objective. Corn futures are in a timid uptrend. Soybean futures continue to consolidate in a firm, sideways trade pattern. Wheat futures have tested recent price lows, and look patient to wait for events that could dictate the next price movement.
It goes without saying 2020 makes 2019 look like a walk in the park. When states issued stay-at-home orders due to the COVID-19 pandemic, demand for gas plummeted. With a massive build-up for oil, gas and ethanol stocks, energy prices took a nosedive, with the pinnacle seeing May crude trade sharply into negative territory just before going off the board. Just over a month ago, corn grind for ethanol hit its low of 53 million bushels. It seemed as though the demand destruction could continue for some time. Fast-forward a month, and it seems like so much has changed.
USDA’s latest grain export inspection report was released a day late, due to the Memorial Day holiday on Monday. But the latest round of data didn’t feel worth the wait, with corn, soybean and wheat volumes all taking a step back from the prior week’s tally.
Export sales were reported three days this week. China bought soybeans. Unknown bought corn and the Philippines bought soybean cake and meal.
USDA didn’t offer a lot of bullish data in its latest export sales report, out Friday morning. The report, which showed sales for the week ending May 21, saw volume for corn, soybeans and wheat all slide lower compared to their prior four-week averages.
Corn planting progress was again hampered by ample Midwestern rains this week, but farmers were still able to make some forward momentum for the week ending May 24, per the latest USDA crop progress report. Both corn and soybean planting progress are much faster than 2019’s historically sluggish start and maintain moderate leads over the prior five-year average.
As the world adjusts to a new reality, there are few economic impacts from which farmers have been spared. Consider these financial and input factors as you look towards the summer months. Gasoline demand fell as much as 45% since the onset of the coronavirus pandemic, pressuring the limits of 6.8 billion barrels of global oil storage capacity. As the coronavirus pandemic infected international markets, investors searching for “safe-haven” assets flocked to stable currencies, particularly the U.S. dollar and Japanese yen.
Corn prices inched higher this morning as wet weather across the Corn Belt stalled the final round of planting in many states. Rising tensions between the U.S. and China spurred losses in the soy complex this morning. Prices in the wheat complex were mixed this morning after U.S. and European forecasts raised concerns about meeting production potential.
Worries over an eroding relationship with China kept soybean prices sliding lower again on Friday. Technical selling trimmed prices by another 0.7%. Corn prices also saw moderate losses, as planting pressure and the expectation for a huge harvest this year has created headwinds for both crops. Wheat prices jumped another 1.25% or more higher Friday, in contrast, as dry weather in the U.S. and abroad may negatively impact yields in some key production countries.