Weekly Market Recap


Grains

July options expired at the close of business on Friday June 21st. First Notice Day for July futures is next Friday, with all long positions being reported after the close on Thursday, June 27th. The USDA is scheduled to release their update acreage and June 1 grains stocks reports next Friday at 11 AM CDT. The U.S. Department of Agriculture (USDA) on Thursday announced a new measure to help farmers who were unable to plant corn and soybeans due to widespread flooding across the U.S. Midwest. In most years, farmers who make a crop insurance claim on these so-called "prevented plant" acres are not allowed until November to chop the fields for silage used to feed livestock. The USDA's change, which is only for 2019, means growers can hay, graze or cut cover crops for silage on prevented plant acres on or after Sept. 1 and maintain eligibility for their full-year 2019 prevented planting indemnity. The CME Group Inc CME.O on Tuesday said that force majeure is no longer in effect at Chicago Board of Trade corn and soybean shipping stations on the Illinois River and Mississippi rivers.

Corn

Ukraine’s corn crop suffers from extensive hot/dry weather conditions. The latest USDA production estimates was at 33.0 mmt for 2019/20. This compares to 35.81 mmt for 2018/19. US corn export inspections were just terrible. This week’s total of 654,000 tons is the lowest total of the year. Inspections have slumped over the past 6 weeks.  Planted acres were reported at 92% complete when the average is 100% complete. Right now the best guesses for how many unplanted acres remain is around 7-8 million. We will probably not have the true number on how many acres did not get planted until October.  A study from an Iowa State University economist indicated the yield could be as low as 135 BPA based on late planted years.  A University of Illinois economist put out a 153.3 BPA yield figure. The market is shrugging off those low numbers for now.  Crop conditions were unchanged at 59% G/E, while many in the trade were expecting a 1-2% improvement. Ethanol production continue at a pretty high level.  Ethanol margins are still negative at 3 cents. China's Ministry of Commerce said on Wednesday it will maintain anti-dumping and anti-subsidy tariffs on imports of U.S. distiller’s grains (DDGs), a by-product of ethanol production used in animal feed, after closing a review launched in April.  This has the potential to be a big deal for the corn market.  China used to import huge amounts of DDG’s from the US. Corn prices saw a setback on profit taking through the week.  December corn traded as high as $4.73 (new contract high) on Monday to a low of $4.49 on Thursday.

Wheat

Egypt tendered for wheat this week and bought a bunch of Russian and Romanian wheat.  No other countries offered beyond the winning pair. Export inspections were very poor this week at just 375,000 tons. This is the lowest inspection total since March.  HRW continues to make up the majority of the inspection totals week after week.  Export sales are starting off the new marketing year on a soft note. The wheat harvest is underway at 8% complete but lagging the 5 year average of 20%.  Some heavy rains are predicted for the SW plains right into the teeth of harvest. Crop conditions remain historically high at 64% good/excellent.

Soybeans

The traded was expecting 79% of the crop to be planted while the USDA reported that only 77% of the crop had been planted as of Sunday. The first conditions report is expected to be in next week’s report. Condition ratings usually begin once the crop is around 90% planted. The May NOPA Crush report was below expectations at 154.8 million bushels compared to 162.5 million bushels expected. This was less than the lowest guess and down 5.4% from last year.  Soyoil stocks at 1.58 billion pounds were below the 1.78 billion pound estimate and near a 14-year low. 

Livestock

China's southwestern province of Guizhou has reported new outbreaks of African swine fever in two villages, the agriculture ministry said on Friday. China said on Friday it has banned direct and indirect imports of pigs, wild boars and related products from Laos due to the first African swine fever outbreaks reported by the Southeast Asian nation on June 20.  Cash cattle trade was softer this week as southern trade was in the $109-112 range.  Margins are still ridiculously good at $200/head.

Energies

It was a strong week for crude and products. RBOB got a large boost after a fire at an East Coast refinery on Friday morning knocks some gasoline production out in the Northeast just as travelers gear up for summer travel.  The bulls may hold control into next week with Middle East tensions are likely to remain high and as negotiators discuss trade in front of a President Trump and President Xi meeting at the G-20 next week.