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Soybeans creep higher to finish the week

Corn prices wobble up and down, wheat narrowly mixed and keep an eye on cotton.

Missed some market news? Check out the market news from this week.

Ag Marketing IQ

The market has moved to a different level with the happenings of the past few months. If you developed your marketing plan at the end of 2019 for 2020, you likely need to re-visit your plan to ensure your market targets are still attainable and realistic.

Halfway through a tumultuous year for agriculture and the world, the turbulence buffeting farmers likely isn’t over. But thanks to another massive injection of government aid, the bottom line for 2020 may be better than many feared. To be sure, individual farms and entire sectors of the ag economy are hurting. Overall, however, net farm income could actually show a modest improvement when all is said and done.

Trade with China has been growing steadily for the last several decades.  As U.S. manufacturers sought ways to compete by reducing costs, China quickly became the lowest cost producer for anything and everything the world buys. Unfortunately this is a double-edged sword. While consumers may lament that American jobs were lost to China, they benefited greatly from cheaper consumer goods. American agriculture actually benefited from this relationship, in that it created a huge export market that has provided consistent growth and helped to keep grain inventories from accumulating.

It feels like traders are monitoring cotton export demand in the short term. U.S. cotton exports continue to be strong overall. The U.S. is actually the world’s leading cotton exporter at an astounding 16 million bales! And while China is the world’s second largest cotton producer, it actually imports close to 9 million bales. So, if U.S. exports can continue strong in the coming weeks that might keep price in an uptrend for the short term. The weather ahead will be something to monitor. If no weather threat is perceived, then this recent price rally might run out of steam sooner than later.

Exports

USDA’s latest batch of grain export inspection data was pedestrian for the week ending June 11, with corn and wheat volumes both taking a modest step back from the prior week. Soybean volume firmed by 37%, meantime, but were still on the lower half of trade guesses.

For the past two weeks, soybeans have jumped to the top in total volume in USDA's weekly export sales report, thanks to an abundance of new crop sales, even as old crop sales were relatively disappointing for the week ending June 11.

Crops

The 2020 U.S. corn crop has started the year with a faster-than-average planting pace and relatively good quality. But that quality eroded four points last week, according to the latest USDA crop progress report out Monday afternoon, which covers the week ending June 14.

Recaps

Corn futures rose slightly this morning on gains from the energy complex as global economic recovery from the coronavirus pandemic continues. July futures rose $0.0175/bushel to $3.3275 while September futures rose $0.015/bushel to $3.37. Futures prices in the soy complex rose this morning on news that China would increase purchases of U.S. agricultural products following ongoing diplomatic discussions between Secretary of State Mike Pompeo and Chinese officials in Hawaii. July soybean futures rose $0.055/bushel to $8.785 on the news while July soybean oil futures soared $0.57/lb higher to $28.63. July soybean meal futures rallied $1.3/ton to $290.1 on the sentiment. Kansas City wheat rose on news of hopeful trade demand prospects out of China this morning. Chicago and Minneapolis futures slipped on large global stocks.

Corn prices have wobbled up and down this week, with July futures hovering within a few cents of $3.30 for the past several sessions. Today was no exception, after a round of short-covering led to modest gains of around 0.5%. Soybeans also crept modestly higher, closing with gains of around 0.3%, on general trade optimism (although many questions remain regarding the future of U.S.-China relations). Wheat prices were narrowly mixed but mostly lower in an uneven round of technical maneuvering.

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