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Afternoon Market Recap for June 1, 2020

Soybeans bounce back amid fresh Chinese sales.

Soybeans recovered after the Reuters report  announced Chinese state grain processing behemoths Cofco and Sinograin were barred from purchasing U.S. soybeans and pork. Private companies are still allowed to purchase U.S. soy and pork products – for now. The sanctions came in response to President Trump’s admonishment of Beijing officials for enforcing national security laws in Hong Kong. Check out Farm Futures' ongoing coverage of the diplomatic upheaval for more details.

Corn: Early estimates for a faster than expected corn planting pace in today’s Crop Progress report sent July futures down $0.0175/bushel to $3.24. September futures traded $0.0225/bushel lower to $3.2775.

Happy first day of June! That means that WASDE reports are just days away. Advance Trading’s Larry Shonkwiler takes a deeper dive into old crop corn projections in today’s Ag Marketing IQ column. Ethanol and export forecasts are expected to decline in this month’s report and leave higher old crop stocks in bins heading into harvest. Lower Grain Consuming Animal Units estimates could result in lower livestock feed demand despite record cattle number. But there could be hope if meat processors can contain COVID-19 outbreaks at packing plants and restart the meat supply chain. Check out Shonkwiler’s column for more details.

USDA will release their weekly Crop Progress report this afternoon. As of last week, 88% of the nation’s corn crop had been planted, which was slightly below trade estimates. A week of wet weather across the Midwest will likely see most states, especially in the Eastern Corn Belt, struggle to stay above the five-year average mark in today’s report. Preliminary estimates place today’s progress at 94% planted with 71% of the crop in good to excellent condition.

Corn weighed for export increased 1.2 million bushels or 2.8% on the week to 44.4 million bushels in today’s grains inspection for export report. Corn cargoes destined for Japan led all international corn buyers for the week. Over 17.4 million bushels of corn were weighed for export inspection at facilities in the U.S. Gulf and Pacific ports en route to Japan.

Corn exports remain 30% lower from the 2018/19 marketing year. The global coronavirus pandemic has weighed heavily on U.S. grain exports and corn has not been exempt. But this week’s corn export inspections total offers a glimmer of hope: With 1.775 billion bushels of corn expected to be exported by the end of the 2019/20 marketing year, weekly export totals will have to average 45.5 million bushels for the rest of the marketing year to be realized. Today’s 44.4 million-bushel total hints that goal is achievable in the weeks to come.

Soybeans: China is rumored to have purchased 11.0 million bushels of U.S. soybeans out of the Pacific Northwest for fall shipment this morning despite escalating tensions between the world’s largest economies. The news sent prices in the soy complex higher this afternoon despite trading lower this morning. July soybean futures were up $0.0025/bushel to $8.41 on the news. July soyoil futures rose $0.27/lb to $27.65 and July soybean meal added $0.2/ton to $283.4.

Similar to corn, soybean planting progress will likely show signs of deviating towards the five-year average in today’s Crop Progress report after starting at a rapid pace this year following a week of soggy weather across the Midwest. As of May 24, 65% of the crop had been planted compared to the five-year average of 55% for the same time period. Analyst estimates peg planting progress at 79% planted with 68% of the crop in good to excellent condition.

Weekly soybean export inspections rose nearly 2.0 million bushels from last week to 14.6 million bushels for the week of May 22-28. The 15.7% weekly increase was led by 5.0 million bushels en route to Egypt sourced from the U.S. Gulf last week. Soybean exports to China were noticeably small, totaling a mere 567,706 bushels at interior loading facilities.

While today’s numbers were a positive sign for domestic soybean demand, the reduced amount of cargoes loaded out to China is concerning amid the heightened tensions between the United States and China in recent days. Marketing year to date Chinese soybean demand from the U.S. is 48.6% lower than the five-year average. For more coverage of this morning’s report, check out Farm Futures’ analysis here.

USDA released soybean crush data today. April 2020 crush figures came in at 183.0 bushels, rising above analyst estimates of 182.5 million bushels. NOPA crush estimates released in mid-May totaled 171.8 million bushels for 95% of U.S. processors for April 2020, which was the highest estimate for the month on record. Once refined soybean oil topped 1.22 billion pounds in April, down 21% from March on reduced restaurant demand for soyoil amid pandemic lockdown conditions.

Wheat:

Wheat contracts price changes

The wheat complex tumbled lower this morning on strong early harvest reports out of Texas and Oklahoma, as well as potentially increasing spring wheat acreage in the Northern Plains. Potential damage due to drought in Europe and Russia as well as a weaker U.S. dollar capped losses.

All eyes will be on spring wheat planting progress in today’s Crop Progress report. Trade estimates place the crop at 66% planted as of yesterday. North Dakota was 18% behind the five-year average at 70% complete in last week’s report. With the Roughrider State surpassing prevented plant dates as of yesterday and most yield potential decreasing after the middle of May, much of their remaining spring wheat acreage may be converted into soybean acreage in the coming weeks.

Winter wheat conditions increased by 2% in last week’s report to 54% good to excellent. The trend could continue in today’s report after a week of favorable growing conditions across the Southern Plains. A heat wave moving through the area early this week could inflict further damage on the crop as harvest progresses through Texas and Oklahoma this week. Analyst estimates are projecting the crop will remain at 54% good to excellent condition, with 4% of harvest in the Southern Plains complete as of May 31.

Wheat cargoes weighed for export increased nearly 1.3 million bushels or 7.4% from the previous week to 18.3 million bushels for the week ending May 28, 2020. China was the top destination for U.S. wheat last week, with 6.9 million bushels of wheat weighed at customs to be sent to the world’s second largest economy. The burst in Chinese demand was an optimistic sign as China reopens their economy following the economic fallout of the global pandemic.

USDA set lofty export goals for U.S. wheat shipments amidst a global pandemic that has dramatically reduced the competitiveness of U.S. wheat on the global market. The 2019/20 export projection was 970 million bushels, or 50% of old crop production. But with barely a week left in the marketing year, U.S. wheat shipments are on better pace to reach 900 million bushels of wheat exports than 970 million bushels for the current marketing year.

Weather: Forecasts for the start of the week in the Midwest are exponentially more dry compared to the same time a week ago, according to NOAA's short-range forecast. The Eastern Corn Belt should have a chance to dry out early this week and catch up on planting progress as temperatures heat up across the Corn Belt.

Financials: Coronavirus cases in the U.S. as of this afternoon totaled 1,798,298 cases, according to the Johns Hopkins Coronavirus Resource Center. The death toll rose to 104,658 deaths as of press time.

Today is the first day to sign up for Coronavirus Food Assistance Program (CFAP) relief for farmers. Farm Futures’ policy guru, Jacqui Fatka, takes a deeper dive into the intricacies of the direct payment program implemented by USDA, including what it means for grain bushels still in storage. More details are provided in Fatka’s latest DC Dialogue column.

If you’ve already finished planting for the season, congratulations! But don’t take too much time to rest on your laurels, Darren Frye writes. Now is the opportune time to be evaluating farm goals and performing a mid-year review to make sure cost management and marketing plans are on track. Check out Frye’s latest Finance First column for more helpful pointers about how to guide your farm to financial success this year.

Global stocks continued to inch up slightly this afternoon despite the civic chaos across the U.S. and heightened tension between the U.S. and China. Dow futures were on pace to close 62 points or 0.25% higher to 25,445 points at last glance. Data from purchasing manufacturers came in low as expected but showed strong signs of rebounded as lockdown measures were lifted.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 327.75 319.25 324 -1.75
20-Sep 331.75 323.75 327.75 -2.25
Soybeans        
20-Jul 849 834 841 0.25
20-Sep 851.75 837 843.75 0.25
Soymeal                $/ton        
20-Jul 286.5 282.3 283.4 0.2
Soyoil                    cents/lb        
20-Jul 27.8 27.12 27.65 0.27
Wheat                    $/bushel        
20-Jul 520.75 511.5 515.5 -5.25
20-Sep 523.25 514.5 518.5 -5
KC Wheat        
20-Jul 470 457.75 462 -8.5
20-Sep 474.75 464.75 469 -8
MPLS Wheat        
20-Jul 525 514.25 522 -3.75
20-Sep 536 525.5 532.75 -4
Live Cattle             cents/lb        
20-Jun 99.475 97.1 98.45 -1.275
Feeder Cattle         cents/lb        
20-Aug 136.725 132.525 136.15 0.8
Lean Hogs             cents/lb        
20-Jun 55.85 54.45 54.725 -2.125
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jul 35.9 34.27 35.66 0.17
Diesel        
20-Jul 1.0494 1.0084 1.0363 -0.0003
Unleaded Gasoline   $/gallon        
20-Jul 1.0898 1.041 1.073 -0.0055
Natural Gas        
20-Jul 1.848 1.742 1.78 -0.069
Ethanol Futures        
20-Jul 1.132 #N/A 1.148 0
U.S. Dollar Index        
  98.335 97.77 97.805 -0.536
Gold                      $/ounce        
20-May 1747 1727.1 1737.4 0.5
Copper        
20-May 2.4785 2.4315 2.4785 0.052
Fertilizer Swaps     (as of 6/1)  
DAP Tampa-index     289 -1
DAP-New Orleans     286.6 4
Urea-New Orleans     200.62 -1
Urea-Middle East     215 -3
Urea-Black Sea     200 -5
UAN (32%) New Orleans     143.3 1.65
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