|Thursday, May 28, 2020 |
Morning Markets: Corn +1 Old & New. Beans +4 Old & New. Wheat +2.
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We are seeing a well-defined division in the market between fundamental based trade and fund attitude. For the past several weeks funds have held a short position in corn and a long position in soybeans. This short position in corn coincides with the latest supply and demand numbers that show record production for the United States this year, which has been forecast for the past several months. A new crop carryout estimates on corn of 3.3 billion bu. is also keeping fund attitude on the short side as there is little reason to own futures given this outlook. So far, the opposite has been true on soybeans. While old crop soybean stocks are high, the USDA is more optimistic on new crop balance sheets. A large 175 million bu. decrease in ending stocks is projected from old to new crop, and that is with a lofty production estimate. It really is not that hard to come up with a scenario in soybeans where stocks tighten even more and could drop to a level that would warrant at least some type of rationing on the domestic side. Therefore, funds have held on to their long position in soybeans for the past several weeks. The entire market seems to be disregarding the fundamental issues that have arisen in recent weeks, mainly the planting issues in several parts of the Corn Belt. We are now at the final plant date in regions where the greatest delays are taking place, and to see farmers take the insurance option rather than force a crop in is highly likely. The question now is how many acres may go unseeded, and if they will significantly impact balance sheets. Given projected carryout on corn, we may have to see a sizable decrease to receive a market reaction.
Crude Oil is down $0.38 at $32.43.
US Dollar is down $0.061 at $99.001.
Global Equities: Japan +1.8%, China -0.7%, and Europe +1.1%.
Dow futures is up 116 points at 25,650.
EU MATIF Exchange: Corn +0.2% and Wheat +0.1%.
Malaysian Palm Oil: -0.3%.
Dalian: Corn +1.2%, Soybeans +0.1%, and Meal -1.0%.
- A ridge of high pressure is expected to move into the Central Plains and Midwest this weekend, producing warmer temps and net drying for much of the Corn Belt and winter wheat region. The ridge is expected to persist through the first week of June before shifting and weakening.
- China’s legislature overnight approved a resolution to impose national-security laws on Hong Kong, overriding the territory’s partial autonomy in a bid to crush anti-Beijing protests that have challenged Chinese leader Xi Jinping. That sets the stage for the U.S. to withdraw the preferential trade and financial status Hong Kong has held since it reverted to Chinese rule 23 years ago. On Wednesday, U.S. Secretary of State Mike Pompeo told Congress that Hong Kong was no longer highly independent from China.
- China's biggest hog producer Wens Foodstuffs Group Co Ltd built nine new pig farms in the first quarter and has dozens more under construction. The company aims to triple output over the next four years.
- Forecasters expect the weekly Labor Department report on unemployment claims to show another 2.1 million filings last week, pushing the total past 40 million since the coronavirus pandemic began.
- Today’s weekly EIA ethanol report is expected to show another modest improvement from last week’s 194.9 million gallons of production. Although ethanol grind continues to slowly increase, several analysts believe corn usage for ethanol will fall short of the USDA’s target of 4.950 billion bushels. We estimate central Iowa ethanol margins at a small loss to breakeven.
- Loading of grains and other products at the port of Paranaguá resumed normally on Wednesday after a case of COVID-19 paralyzed work in berth 214 for about 24 hours.
Have a great day!!!!
Emery Manager & Originator:: Topflight Grain Cooperative, Inc.
593 Emery Rd :: Maroa, IL 61756
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