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Weekly market review

By Staff | Jun 22, 2020

Planting progress and crop ratings for the week ending June 7th were as expected. Corn planting is near completion at 97% complete. The only state lagging the 5-year average now is North Dakota at 87% versus 96% for the average. Soybeans are now 86% planted, up 11% from the prior week and 7% ahead of the 5-year average. Corn condition ratings improved 1% for the week to 75% good/excellent. All of the major Corn Belt states have corn rating at 60% or more good/excellent. Soybean condition ratings improved 2% this week to 72% good/excellent. The same can be said for soybeans with a large percentage rated at good/excellent.

While Chinese soybean exports have enjoyed a nice increase in activity, corn exports have not. While U.S. corn is competitive in the world market, China has been selling grain out of government reserves rather than purchasing more. U.S. soybeans are very attractive in the world market and continues to be the preferred choice for new crop purchases. Brazil’s currency continues to rally against the U.S. dollar adding to the U.S. price advantage.

CONAB released its Brazilian soybean estimate for the 19/20 growing season to 120.4 million metric tons from the previous estimate of 120.3 million. However, bad weather has affected the Safrinha corn crop and cut there estimate from 75.9 million metric tons to 74.2. The South American forecast this week keeps the rain in south and drier in the north.

Weather models continue to be closely watched, as heat and dryness remain in the forecast for much of the 8-15 day models. The moisture that developed of the tropical storm Cristobal was again light in areas showing up as abnormally dry in the weekly drought monitor. Stressful weather could lead to short covering if concerns continue to build. This would be fuel for the corn market as funds are 270,000 contracts short.

Ethanol production for the week ending June 5th increased 72,000 barrels a day to 837,000 barrels per day, with the Midwest region showing a majority of the increase. This is still down 23.6% from the prior year. Ethanol stocks decreased 674,000 barrels to 21.8 million barrels, with the Midwest region being the only region showing an increase.

As expected, the USDA elected to leave new crop corn production estimates unchanged in Thursday’s June supply and demand report. A slight reduction to the old crop yield estimate and acres brought the production figure down 45 million bushels, which carried into the new crop beginning stocks. Demand changes were as expected; old crop corn demand for ethanol was reduced 50 million bushels. Leaving a net increase in carryout of 5 million bushels, for both old and new crop. U.S.corn carryout totals are now estimated at 2.103 billion bushels for old crop and 3.323 billion bushels for new crop.

As for soybeans, there were no major surprises in Thursday’s USDA numbers either. Slightly smaller old crop production coupled with increased soybean crush and a smaller export prediction brought a net increase in old crop carryout of 5 million bushels to 585 million. Increased crush estimates coupled with a slightly larger carry-in resulted in a 10 million bushel reduction to new crop carryout at 395 million bushels.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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