AgriVisor Morning MarketWatch

Wednesday, June 03, 2020
Now that planting is starting to wind down across the United Sates, more interest will be placed on movement of farm stored inventory. Typically, the better new crop development looks, the more willing a farmer is to sell his old crop inventory. Buyers have been holding off on pushing for sales in anticipation of high post-planting sales. One factor that may limit the number of sales that will be made in the next few weeks is the additional government subsidy payments that are being made. These are coming to farmers from the Covid Relief Stimulus package. While not large amounts, these are enough to provide at least some cash flow. Farmers may use this income for immediate needs and wait to see if futures rebound as the growing season progresses. Given recent weather conditions and the lack of risk premium ion the market this is fully possible. Commodity buyers are limiting their basis bids to see what farmers do with these bushels. To see localized pushes take place would not be surprising though, especially where movement is limited. Buyers know a large amount of stocks need to be moved prior to harvest though which is limiting basis strength, as is low profit margins. Any movement at this time will also start to impact fall basis values. The greatest concern remains that farmers will not move their remaining bushels until we get closer to harvest, leaving terminals full as harvest gets underway. This could easily limit fall basis values as well as old crop. A big factor on basis will also be what we see for demand, both domestically and for export. It is not out of the question basis values will hold steady for the next few weeks until we get to the June inventory report and old crop ending stocks can be better predicted. 

* Country movement up and down
* Concerns that protests may cause Covid resurgence
* US dollar at 2 ½ month low
* Political tensions rising, causing market volatility
* Dr. Cordonnier raises US yield estimates
* Barchart lowers yield estimates
* Indications of a La Nina forming
* Weather remains mostly favorable
* Tropical Storm to hit US gulf this weekend
* Remnants to bring rains to Corn Belt
* Gasoline demand to rise, benefit ethanol

* US corn loadings -28% from year ago
* US exports just 63% of yearly estimate
* Analysts predict 93-94 million planted acres
* Funds remain record short
* Ethanol demand may reach WASDE estimates

* US loadings up 3% from year ago
* Loadings total 78% of yearly estimate
* China demand remains uncertain
* Soy crush +2.6% from last year
* Brazil May exports at 15.5 mmt; 10 mmt in 2019

* Harvest pressure building
* Russian yields stabilize
* EU crop estimate dropping
* Spring planting advancing
* Ukraine exports slowing

* Hog weights up 6 pounds   
* Hog slaughter -8% from pre-Covid
* Cattle slaughter down 11%
* Overall slaughter pace to remain slow
* Wholesale values continue to drop