Weekly Market Recap


The USDA hit the market with a bombshell announcement on a new market facilitation payment (MFP). The USDA says MFP will be $16 billion, 14.5 billion of which will be paid directly to the farmer in 3 installments, with the second and third payments listed as “if conditions warrant.” The payments will be a single rate per county for all commodities, not per commodity as previously leaked, and based on trade damage per county. That county rate will be multiplied by the producer’s aggregate 2019 acreage. Prevent plant acres will not receive a payment. Dairy producers will receive a per hundredweight payment based on historical production. AMS will purchase $1.4 billion in surplus commodities, including beef, pork, and milk. There was no detailed information on how the payment would be calculated so producers are going to have to make assumptions on what course they take going forward. Global equity markets are falling, as the White House’s move against Chinese telecom company Huawei could start a “tech cold war.” Google announced that it will block Huawei from using most of its Android operating system, and many companies will stop selling them processing chips. The Federal Reserve says it will use a “patient” approach to interest rates, seeing an improving economy and lower inflation. However, 71% of analyst in a Bloomberg poll expect rates to be cut by the end of 2019. Markets are closed Sunday night and Monday in observance of Memorial Day. Trading will resume Monday night at 7pm CT.


The Buenos Aires Grain Exchange says Argentine’s corn harvest is 36.1% complete vs 37% 5 year average. They left their production estimate unchanged at 48 million tons. New estimate of the Brazilian corn crop are at 97.5 million tons which is ever so close to the record of 97.8 million tons.

US crop progress showed corn 49% planted as of May 19 vs the estimate of 50% and an average pace of 80% complete. IL is 24% planted vs 89% average, IN 14% vs 73%, and OH 9% vs 62%. US weather forecasts are still extremely wet, with much of the Corn Belt expecting another 2-7 inches of rain over the next 2 weeks. Ethanol production increased by 20,000 bpd this week to 1,071,000 bpd. This is the highest level of the marketing year! Ethanol inventories were up sharply by 1.1 million barrels to 23.4 million barrels. Net ethanol margins were 5 cents lower this week and are at 12 cents negative. This is the fourth week in a row that margins have been negative.


Forecasts still show as much as 8 inches of rain possible for parts of Kansas over the next few days. Spring wheat is 70% planted vs estimates of 63% and 80% average. Winter wheat condition ratings rose from 64% to 66% good-to-excellent, and the crop is 54% headed vs 66% average pace.




BAGE reports Argentina’s soybean harvest is 85% complete vs 80.3% last year. Their production estimate was unchanged at 56 MMT. Cold temps could have done some damage to Canada’s canola crop.  Temps got down to between 21 and 27 degrees last weekend and some replant is likely.  Brazil’s soybean lineup increased from 5.7 MMT last week to 7.5 MMT, with most headed to China. May shipments will still be well below last year’s 11 MMT total.

Late last week, an executive from the U.S. Soybean Export Council said the U.S. will permanently lose some soybean export market share in China, going against USDA Secretary Perdue’s comments that there will be no long-term impact. Crop Progress showed soybeans 19% planted vs 47% average pace. Beans are 5% emerged vs 24% last year and 17% average.


A USDA official said it may take as long as 8 years before an effective African Swine Fever vaccine is found. However, China is reportedly starting clinical trials on 2 possible vaccines. Hogs are not liking the big rally in the grain markets and locked limit down on Friday. Expanded limits will be in place next Tuesday. The latest cattle on feed report was friendly. The biggest miss was in the placements category where the actual number of 108.7% was well below the trade estimate of 113%.


Energies are working to recover from the late week rout that drove prices to multi-month lows.  Large crude stocks, a surprise build in gasoline inventories and global economic certainty were the key drivers.  Middle East headlines over the long-weekend or the start to the summer driving season may allow for a recovery early next week. Nearly 43 million Americans intend to travel for Memorial Day weekend, the second-highest travel volume on record, according to AAA. The majority will travel on the road, a record 37.6 million, up 3.5% y/y.  The national average for a gallon of gasoline is $2.845 compared to $2.849 last month and $2.959 last year.