Weekly Market Recap



The first crop rating of the year for corn was released this week.  The good + excellent category was at a remarkably good 79%.  This is one of the best ratings ever, and the best opening week since 1991. The ratings are expected to hold steady or even increase next week.  Planting progress on corn is pretty much wrapped up.  The crop is 92% planted already so the focus will now turn towards the weather for next few months.  Corn export sales continue to remain strong, with the best sales in 6 weeks.


The Egyptians have rejected a Russian wheat shipment due to too much ergot fungus.  This resumes the saga of a country that imports a lot of wheat but their changing policies make it difficult for exporters.  The US hasn’t been caught up in any of this mess, but that it’s because US wheat hasn’t been competitive.  In the US, spring wheat planting has gone from well behind average to ahead of pace.  Planting is now at 91% and almost wrapped up.


The trucker’s strike in Brazil was way more disruptive than anyone could have imagined.  Lack of food, no gasoline, and no water were reported in much of the country.  The strike was so crippling that the government agreed to all of the striker’s demands.  The main soybean ports were pretty much out of beans to export.  Now that the strike has mostly ended, export operations are resuming, but it will take time to get back to normal. It seemed that the China/US trade war was put on the back burner last week.  But President Trump said he was planning to go ahead with previously scheduled tariffs despite a verbal agreement to put things on hold just 10 days ago. Despite that possible resumption, it is rumored that Cofco was a big buyer up to 10 million tons of soybeans in orders to calm trade tensions. This caused the soybean market to sell off sharply as China has indicated that soybeans would be a target if the trade war resumed. Export sales continue to be disappointing but this week new crop sales were the 2nd best of the marketing year. 


Packer margins for cattle are at historically high levels.  Normally the range for margins is -$100 to +$100 per head.  Current levels just went over $300/head!  The futures market is following a soft cash market lower, however the packer has been able to sell beef at good levels due to strong demand as we hit the grilling season.


Profit taking was the theme this week as OPEC hints at increasing output.  Fundamentals remain supportive as crude oil stocks are not building at their normal seasonal pace, as crude exports remain robust, and as diesel inventories are at a 5-year low.  In this current heavy geopolitical risk environment coupled with an upcoming OPEC meeting, the only certainty seems to be volatility.