Market Commentary > Weekly Crop Commentary - 7/17/20

Weekly Crop Commentary - 7/17/20

Jul 17, 2020

Weekly-Crop-Commentary-(008).jpg

Grain markets this week started out with price potential based on Monday’s crop condition update with corn losing 2% in the good-to-excellent rating and soybeans dropping 3%. The weather forecast in the 6-10 day showed excessive heat, but with the potential for rains across much of the U.S. growing region. However, when you add daily announcements of China buying corn and beans; both old crop and the 1.762M tons of corn for new crop, many thought futures would have to trade higher. The single largest corn purchase on record from the Chinese only caused a blip on the radar. Unfortunately, we continue to deal with geo-political retaliations with China on issues surrounding Hong Kong as we work through Phase 1 of the trade agreement. The market seems to be skeptical of the intent of all the purchases that have been taking place. Corn basis remains strong as we move through the summer bolstered by renewed ethanol demand as blenders are finally seeing decent profit margins. Soybean basis continues to fade as crush margins are depressed and the export program is doing all the heavy lifting. As we move through the balance of the summer it will be a hand to mouth market as we move towards new crop. Have a great week and please be safe as we continue to navigate through the pandemic.

Weekly-Crop-Commentary-(009).jpg

Good afternoon. I had my comments written before the report from the USDA last week. We did see them incorporate the June 30th planted acreage numbers for both corn and beans. With the yield predictions the same we did see production losses of almost 1 billion bushels, but with the adjustments to usage the net loss of stocks is 675 million bushels. We did see the USDA report some massive corn sales late last week and the beginning of this week. They resulted in 3.1 MMT of corn sales to China. Most of this appeared to be in the 20/21 crop year. We also had flashes from the USDA on soybean sales to China that totaled 1.3 MMT. This was a mix of 19/20 crop and 20/21 crop. Here we are with a reduced corn plantings, lower production, lower carry out stocks, great export sales reports, and corn is 20 cents off the previous highs. This is not a good sign, that we have all this positive news in a week and still remain below all moving averages. We are expecting big exports with the implementation of the Phase 1 agreement with China. We are still expecting a big corn yield, and don’t get me wrong I know there are some dry area’s around. The funds are still short the market, but in last week’s report they were not near as short as trades estimates. The only thing that really was a surprise was the lower planted acreage number. That just wasn’t enough to continue to push the market higher at this time. Corn basis continues to be bouncing back from the COVID meltdown. The western and north western parts of the state continue to be the strongest. Bean basis is another story as it has been on the defensive this week. Crush margins continue to be weak, but NOPA crush from June was still strong at 167 million bushels. Not quite sure what we are missing here, but current board crush margins do not indicate record crush numbers. Anyway the crops in the Marysville area are like most others, some look really good, some are ok, and some are in need of a nice drink. The forecasts increased chances of precipitation for us, but we have heard this for a couple weeks now. Please continue to stay safe as we are still in some turbulent times.

Weekly-Crop-Commentary-(010).jpg

Sales to China have been good this week. China has become more aggressive in buying U.S. commodities, this week they did the largest one-day purchase of corn on record. It seems the gains are limited though because of lack of confidence that China will buy enough to offset the large surplus. Hopefully, China will continue and live up to commitments made in the phase one deal, but the unknowns surrounding China remain the primary market mover other than the Midwest crop weather that has yet to become a threat.

There has been producers start to contract new crop grain but don’t want to do too much because of the dry weather that we are currently dealing with locally.

Weekly-Crop-Commentary-(011).jpg

Good afternoon. It’s been two weeks since I’ve last written commentary. In that time, wheat harvest has come and gone, a successful Logan County Fair has nearly come and gone, corn is tasseling, and rain has still been scarce. This week, parts of Ohio (including our area) have been added to the Moderate Drought category according to the U.S. Drought Monitor ( https://droughtmonitor.unl.edu ). Most of western Ohio is Abnormally Dry, but a good portion of Hardin, Logan, and Champaign counties are in the D1 category now. The last time this area was at the D1 stage in July was 2016. There’s a chance of scattered storms nearly every day next week, so keep your fingers crossed!

As for the cash market over the last two weeks, corn has lost about a dime and soybeans a few cents, whereas wheat has gained about thirty cents. Corn basis has been steady, while beans and wheat have felt some pressure, both weakening some. Chinese demand is helping to close out the week with corn and beans in the green this afternoon. Outside markets are also doing well over the last couple weeks and today the VIX (“fear index”) is toying with a possible close below the 200-day moving average (26.6), which it hasn’t done since February, as investors are feeling more confident in the marketplace. Please continue to be safe and have a great weekend!

Weekly-Crop-Commentary-(012).jpg

Good afternoon, wheat futures have been the big winner in this weeks markets. Wheat is up around .13 cents today from a week ago. Not a lot of good reasons but we will take it. Beans have worked up as well on news of China back in buying both old & new crop. The weather has changed this week and it looks like we will keep seeing some timely rains in the 6-10 day forecast and the funds continue to be a seller and have added to their short position. This morning the corn fund position was about 185,000 contracts short. We are pretty well finished with wheat here in Heritage East territory. Quality has been very good this year. As far as how the crop looks I would tell you that most areas are looking very good. Most have had some very timely rains and with the warm temps things look pretty darn good. You can find some pockets that don’t look the greatest but they are few and fair between. Have great weekend!!!


Read More News

Aug 14, 2020
The grain markets experienced the heaviest volume for the year on Thursday, post the latest numbers from the USDA. Corn prices rose from life of contract lows posting an 11-cent gain on the day...
Aug 07, 2020
Good afternoon and welcome to August.  I don’t know about you, but the few days of fall-like weather sure was refreshing...
Jul 31, 2020
Happy Friday and then end of July 2020. The weekly crop ratings have improved over the past two weeks for much of the country. US corn and soybeans are rated at 72% in the good to excellent...