Tag: soybean

08 Oct 2020

AG MARKET UPDATE: OCTOBER 3 – 9

Corn followed beans higher this week as exports continued and Brazil’s weather is still questionable as their season starts. Corn harvest in the US is 26% complete as favorable weather looks to allow for harvest to continue across the country. As Chinese buying continued following holiday, markets are keeping an eye on their purchases as the Chinese government changed laws in what can be fed to hog herds as they continue to recover from ASF. By not allowing for swill (food waste and garbage) to be fed to hogs anymore the demand for corn and meal for feed looks to increase, but it is hard to tell how much swill feed will need to be replaced. Ethanol demand has remained lower than normal as the pandemic continues, but with lower demand has also lowered production. The lower production has lead to tightening in stocks to their lowest level in 8 years. If/when ethanol demand rebounds, look for a boost in corn purchases for ethanol use to replenish stocks and meet demand. Keep an eye on the USDA yield estimates on Friday.


Via Barchart

 


Soybeans kept the rally going this week on weather concerns in South America and exports continued in large amounts. South America remains in a dry pattern that could turn into a drought if they do not get the much needed and forecasted rain in the next couple of weeks to get the beans in the field in some major growing areas. Harvest continued across the US this week as harvest is seen 36% complete as favorable weather across much of the US has allowed farmers to get off to a great start. As China came back from holiday the buying continued as feed demand in China has started to pick up despite herd sizes only being about 65% of what they were before ASF. Fund buying has also continued this week as funds now are long 1.4 billion bushels (about 10% of the expected world production in 20/21) of beans. Prices will once again be paying attention to the USDA report on Friday but do not expect anything like the last report. As you go through harvest we suggest not storing any beans as the market is currently inverted (Nov prices being better than anything in ’21) showing the market wants your beans now. Not seeing a carry in the market makes it hard to hold the beans when selling the physical and getting long futures if you believe the markets are going higher is an option.

 

Via Barchart

 


Funds continued to get long wheat this week, with some profit taking on Thursday, helping fuel the rally that other grains have seen. Weather problems in other areas of the world are helping markets move as parts of Russia remain dry and the Black Sea area has been dry but is forecasted to get much needed rain this week. Argentina like Brazil has been dry but looks to continue their dry pattern unlike Brazil. Stocks are expected to be lower in the report on Friday from the September report.


Via Barchart

 


Cotton prices rallied this week as Hurricane Delta heads toward the Mississippi Delta. The fact that there is still plenty of time for another storm before harvest after Delta worries farmers that one storm may be fine but another would present major issues. Cotton has seen a steady rise in prices since the lows back in April. Exports were good this week as there were little cancellations and strong sales to Vietnam.


Via Barchart

 

Crude Oil
Crude saw a boost this week as Hurricane Delta has shut down production in many parts of the Gulf of Mexico. This is typical of prices whenever a hurricane is in the gulf as reactions to what may happen is usually worse than the outcome.

Dow Jones
The Dow continues its bounce back despite back and forth tweets from Trump and Pelosi regarding a new relief bill and what it should look like. Big tech stays in the news as Amazon and Facebook are continuously being looked at for anti-trust violations by a bipartisan group, not much is expected to come from this but worth noting.

World Weather
Brazil has been dry causing some delays in planting but some rain this week and cooler temperatures are in the forecast so markets will keep an eye on any changes there. Hurricane Delta barrels toward the US as farmers in the south look to try and get their crops out ahead of any rain that could cause damage, especially to cotton in the Delta.

 

Via Barchart.com

31 Jul 2020

Ag Markets Update: July 25 – 31

As weather across the country continues to be supportive for the crops corn prices have dropped. The past few weeks of timely rain and cooler temperatures has put a trend line or record national yield very much in view. From talking to farmers across the country many think this has potential to be one of their best crops and as great as that is everyone knows the larger the yields the lower the prices tend to be. With China well behind on their phase 1 trade agreement purchases, corn will need to get support elsewhere unless China decides to ramp up their purchases in the second half of 2020. Keep an eye on the flooding in China as they have lost over a million acres of farmland and will tighten their supplies. The higher crop conditions this week did not help prices either as they came as a surprise.

Soybeans and corn are in a similar situation where large yields are very much in play due to the weather of the past month and what looks to be coming. Soybean exports continue along at a good pace but nowhere near the Phase 1 agreement numbers that were expected. If China can ramp up their purchases in the coming months beans can get a boost that is unlikely to come without a weather problem. The good export news of late has been offset by good weather and higher expected yields which is frustrating seeing bullish news be uneventful for prices.

After a short term pull back from the near term highs markets bounced off a technical low and appear poised to give the highs another run.  Weather watchers will be tracking hurricane Isaias and it’s potential impact to the delta over the weekend.  In many cases the fear of hurricanes has been bigger than the actual punch.  In reality, following the storm days in advance does little good and is often a story of buy the rumor and sell the fact.  Look for prices to test the 65 cent level and be prepared to increase hedge protection above 63.50.

 

DOW Jones

The Dow continues its slight downtrend this week as Covid-19 cases remain high in many parts of the country. Despite good vaccine news coming out this week as several promising candidates move onto the next phase of trials, the Dow fell again. All eyes were on Capital Hill this week as Google, Facebook, Amazon and Apple’s CEOs were questioned by politicians looking at anti-trust issues. These were not huge market movers but something to keep an eye on as these companies have helped lead the charge up from the lows back in March along with other big tech companies.

Via Barchart.com

24 Jul 2020

Ag Markets Update: July 18 – 24

Corn held relatively steady this week after falling the past few weeks due to the June crop report. Exports have stayed consistent, but the lack of any weather problems is keeping corn in the range it is in. The cooler forecast with enough rain to support the crop is going to prevent upward price movement with the possibility of a 178 (trend line) yield still in play. China is the main buyer of U.S. Corn right now as major rains that are threatening the Three Gorges Dam area and throughout the Hubei Province have wiped out much of the non-U.S. crop.

The U.S. Department of Agriculture announced China’s largest ever corn purchase from the U.S. on July 14, totaling 1.762 million metric tons for delivery in 2020-21, and U.S. Grains Council President and CEO Ryan LeGrand tells Agri-Pulse that it’s more proof that demand is on the rise.

“We’ve always believed the demand is there,” LeGrand said. “They have been suffering from African swine fever, but they’re ringing the bell on these corn purchases.” (Ag Week)

Continued Chinese buying would be some good bullish news to balance out the bearish good weather news.

Soybeans gained on the week to reach the $9.00 mark again. China made several large purchases of U.S. soybeans this week despite the continued rising political tensions. The same destructive rains in the Hubei province that are wiping out corn will continue to have China buying U.S. ag products to make up for their potentially huge loses. The crop condition report this week was uneventful and as we approach the important stage for soybeans they look to be in good shape with the forecast being friendly as well. Beans have seemed to have had support at the 20 and 50 DMAs recently, so that should help moving forward even with the positive forecast.

A West Texas drought has been supportive for prices, but the lack of demand is the ultimate issue as prices can only move so high. If a healthy amount of rain moves into West Texas, look for prices to fall as a good yield and no buyers would present another problem. A weakening U.S. dollar may also provide some help as a lower U.S. Dollar means U.S. cotton is more affordable to other countries. In Other News see more info about the weakening U.S. Dollar.

 


U.S. Dollar
The Dollar has fallen 9.1% and made new 9 ½ month lows in today’s trade. With record U.S. debt and another stimulus package on the way, the Dollar has devalued endlessly by continuously running printing presses in DC. This is generally good for commodities as it indicates raw material inflation is on the horizon and that U.S. prices become more competitive as other currencies rally against the Dollar. Even though mildly helpful for the Ag industry, it’s not enough to fix the current oversupply problem.


(Bloomberg)

15 May 2020

AG MARKETS UPDATE: MAY 8-15

Corn planting in 2020 continued its strong pace last week as the crop is estimated to be at little less than 70% planted. This is well ahead of last year’s pace and with favorable weather outlooks for the rest of May, the crop should be 100% planted by June.

USDA Report
The May USDA Report came out on Tuesday and it’s safe to say it came of little surprise to most – the ‘19/20 US Corn Stocks were a little lower, while ‘19/20 World Corn Stocks were a bit higher.

The main adjustment was made in the Ethanol Corn numbers in ‘19/20 where they cut 100 million bushels. With Ethanol production averaging 17% lower than last year’s number through August, another 100 million bushels would need to be cut to meet lower demand. Even with the country opening back up, there are still uncertainties on demands as more people are interested in a car ride over jumping into a plane. Ultimately, this report just confirmed what everyone already knew: the world is drowning in corn. With a great start to planting and estimates of a trend line yield of 176+, this problem looks to continue for corn as the year goes on.

U.S. Soybean planting, like corn, continued its streak. As mentioned last week, China is well behind pace to meet the amount of ag goods purchased from the U.S. from Phase 1 of the trade agreement meaning U.S. bean prices are at the mercy of Chinese consumption. As political tensions continue to hover over the markets, prices will be dependent on U.S. and China political and/or export news. With the May USDA report being neutral to bearish, it has turned into a waiting game in the bean market as they continue to wait for buyers.

In the meats sector there is currently a disconnect between futures and cash prices; futures price is roughly $15-20 under the current cash price showing an immediate need for beef. The market is showing the packer margins are phenomenal and because of that, the packers are trying to throw the ranchers a bone by offering over the futures price, but not anywhere near the margin difference they are making. In essence, the packers are buying for relatively cheap and selling for a lot more than they usually would as supplies are tight. This is part of the reason the Trump administration is looking into the meat industry, as several large players are foreign-owned. China will not be buying any cattle from Australia due to their criticism over their handling of COVID-19, so some of that demand may be filled from the U.S. but seeing as we are struggling on our end with production, that would put another strain on the market.

Cotton looks to be experiencing a short squeeze this week on July futures. The Midsouth is behind on planting due to cool weather over the past couple of weeks; soil temps need to be above 65 degrees for planting and the mid-south has had several nights in the low 40s in May.

Cool temperatures are a little surprising this time of year, but I think we’ll get through that fairly unscathed. It’s warming up pretty fast, so it shouldn’t hurt us too badly. Dan Fromme (AgFax)

Cotton needs manufacturing around the world to ramp up as countries begin to drive demand. The USDA report this week was neutral-to-bearish and cotton has managed to hold on to most of its gains making short speculators nervous. They’ll be keeping a close eye on Thursday exports as there’s only one month remaining in the July futures contract. Buying from China, like with any other commodity right now, would be a welcome sight.

Relief Package
The House is expected to vote on another round of financial stimulus equaling out to $3 trillion. In this bill, $16.5 billion may be earmarked for direct farm payments and help for the ethanol and biofuel industry. It may also direct the USDA to reimburse any livestock producer that had to euthanize animals due to closed processing facilities (more on that here).