E-Visor Reports: Market Watch

Friday, June 19, 2020
The US grain inventory is starting to become more of a market topic as we start to prepare for the upcoming harvest. The most interest right now is on corn as not only are large old crop stocks being noted, but new crop inventory is expected to grow substantially. At the present time US farmers are still holding roughly 25% of their old crop corn stocks. Typically this number would be lower as farmers would be making sales to generate cash flow, but this has not happened as much as normal this year. Farmers have received multiple government subsidy payments in the past year and are using these for cash flow instead. Farmers have also made very few new crop sales as they want to see more favorable prices. While this is possible, the USDA actually believes new crop corn values will be lower than the ones we are seeing now. In last week’s WASDE data the USDA projected an average cash value on corn of $3.60. This is expected to decrease to $3.20 next year as the stocks to use on corn rises to 22.5%. Until this ratio tightens it may be difficult to see much higher cash values. Many farmers are already expecting to see support payments if futures remain this low, but these payments are being met with opposition as the government starts to see funding issues. One positive note is revenue insurance which is higher than the projected cash value. We are seeing less concern on soybeans as stocks of that commodity are expected to decrease from this year to next, although the USDA is still expecting cash values to remain low due to competition from South America in the global market. 

* Positioning starting for June 30th reports
* Large production forecasts pressure market
* Long-range forecasts gaining interest
* Hail damage reported in Canadian crops
* China now testing all imports for Covid
* US ethanol margins turning positive
* Concerns return of plants will negate this
* Ukraine to suspend export announcements
* Technical pressure is limiting advances
* Drought continues to impact Brazil

* Technical resistance building
* Another rating decline possible Monday
* Buyers starting to source corn from Brazil
* Weekly ethanol demand 10 mbu under estimates
* Summer export basis is firming 

* Chinese crush margins near 2-year low
* US crush margins also weaker
* Double cropped acres at 3.65 million this year
* Double cropped acres last year were 3.34 million
* Argentine harvest ends, crop reported at 49.8 mmt

* Futures at 4-week low
* Harvest pressure builds
* Export demand worrisome
* EU exports +66% on the year
* EU predicts wheat yield of 83 bpa

* Weekly beef sale at 20,097 mt   
* Weekly pork sales at 38,500 mt
* China was a buyer of 10,000 mt
* COF after close; June 1st est 99%
* May placements 97.5%, marketings 73.8%
RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by  AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation.