Have We Seen The Lows For Corn And Soybeans In 2018?
Jun 20, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for June 20, 2018.
Grain markets are catching their breath after the extreme volatility during the last 2 trading sessions. It has been 3 weeks since we saw the highs in December corn and nearly a $2.10 trading range in July soybeans. The questions that we must ask now are: Can the potential for US corn and soybean crops get bigger? Is the shuffle of US soybean exports worth $2.10 per bushel? Will funds continue to sell? Will US weather conditions stay ideal? Are the disease issues in soybeans going to affect yields? Can we see a resolution to the trade war in the next few months? These are just a few. Time will provide the answers and provide continued volatility for Agricultural markets.
Rich Nelson, Allendale’s Chief Strategist, has run a regression comparing week #24 and final yields vs. trend yield using 73% Good/Excellent crop condition would imply a 4.7% increase over the 20-year trend of 48.8. This would imply a yield of 51.1 bushels per acre. However, it must be noted it is a bit early to suggest high confidence in the study.
Basis bids throughout the Midwest and at the Gulf improved as farmer selling stopped due to the sharp decline in futures.
Funds were aggressive net sellers on Tuesday. They were estimated selling 32,000 corn, 23,000 soybeans, 8,000 wheat, 6,000 soymeal and 9,000 soyoil contracts.
Brazilian Agriculture Minister Blairo Maggi said the U.S.-China trade dispute was "very detrimental" to the business interests of the country, a large exporter of commodities like meat and soybeans. (Reuters)
EPA Scott Pruitt will appear before the Senate to testify in August. Senators will be itching to put the Environmental Protection Agency (EPA) chief in the hot seat over his scandals.
June Cattle on Feed estimates are: On Feed June 1, 103.4%, Placed during May 95.6% and Marketings during May 105.1%. USDA will release the report on Friday, June 22 at 2:00pm CDT.
Fed Cattle Exchange Auction today is offering 2125 head. Cash trade is quiet as packers will be trying to resist paying up for cattle this week. Beef product values are on a slide as retailers are finished with most pre-holiday purchases. Post July 4th historically meat demand slows as we get into the “dog days of summer.”
August live cattle futures closed higher on Tuesday testing long-term sideways resistance level. A close above the 106.87 (100 day moving average) could cause further short covering and fund buying. Support comes in at 103.30.
CME lean hog index has risen sharply and is now above the July lean hog futures. Cash markets are strong as packers try to fill their production needs. Seasonally weights and market ready numbers are declining. Export demand with uncertain trade agreements has traders limiting their seasonal enthusiasm.
August lean hog futures are now the lead futures contract as it has more volume than the July. Technical trading range is between 77.00 and 80.00.
Dressed beef values were lower with choice down 1.01 and select down 1.90. The CME Feeder Index is 141.48. Pork cutout value is up .30.