This Week in Commodities 5-15-20

Corn unchanged this week.

July corn was unchanged this week, closing at 319-1/4. December futures lost 3-3/4 cents this week to close at 332. Old crop corn ending stocks were reported at 2.1 billion bushels on Tuesday’s WASDE report. This compared with a 2.22 billion figure the trade was expecting going into the report. This slightly lower stocks number and the reopening of ethanol plants around the country helped support the cash market this week. The tighter old crop number struggled to find a reason to push the prices higher as the market looked down the barrel of a projected 3.3-billion-bushel new crop carryout. This is by far the largest carryout number the USDA has printed in the last 30 years.

IEG Vantage, formerly Informa, updated their 2020 planted acreage projections this week that reflect its recent survey as well as current planting conditions and economic developments. Their survey estimates 2020 corn plantings at 94.2 million acres down 2.8 million from the USDA’s March planting intentions number. Using this acreage estimate with USDA demand projection figures printed on Tuesday’s WASDE brings 2020/21 corn carryout just below the 3-billion-bushel mark. With the US corn crop over 2/3’s planted the planting season is off to a much better start than last year when only 28% was planted in this same week. Throughout the summer traders will be keeping a watchful eye on precipitation forecasts. Pockets of dryness began to show up on this week’s drought monitor in Iowa but forecasted rains this weekend should alleviate some concerns.


Soybeans lower this week.

July soybeans were 12 cents lower this week to close at 838-1/2. November soybeans were 10 cents lower this week to close at 845-1/2. On Tuesday’s WASDE report old crop ending stocks came in higher than expected. The printed 580-million-bushel number was 100 million bushels heavier than what was estimated back in April. Weaker than expected export numbers seem to shoulder much of the blame. Soybean planting progress was reported as 38% complete as of Sunday May 10th. This compares with 8% complete last year and 23% for the 5-year average for this same week.

April NOPA crush numbers released Friday were rather supportive to the soybean market. 171.75 million bushels of soybeans crushed in April 2020 was the best April for soybean crush every reported. Soy oil stocks came in at 2.1 billion pounds, their highest level since June 2013. Little by little China has continued to buy US soybeans this week. Four separate smaller sales were all announced this week. Each sale totaled no more than 10 million bushels. Overall total soybean commitments for export to all destinations is running behind last years pace. A weak real and huge Brazilian crop have much to blame for this year’s slower pace. Most expect if China come to the table to buy US soybeans those sales will come later in the marketing year when Brazilian supply begins to dry up in the Chinese soybean pipeline.


Wheat slides lower this week.

July Chicago wheat was 21-3/4 cents lower this week to close at 500-1/4. July KC wheat was 27-3/4 cents lower this week to close at 452-1/4. MPLS spring wheat was 9-3/4 cents lower this week to close at 506-1/4. Germany farm cooperatives see the 2020 crop near 22.38 million tons, that’s down 2.9% from last year. Continued strength in the US dollar continues to be a major obstacle to exports from the US. Dry growing conditions in the southern Plains, Russia and Ukraine should prop this wheat market form falling lower here in the short term. Cumulative US export sales reached 99.9% of the USDA forecast this week with just four weeks remaining in the wheat marketing year. Price action this week was negative across all three wheat classes. But Chicago wheat did close higher than its March lows showing some form of resilience from tumbling lower. First support looks to come in right at those March lows of 495 on front month Chicago charts while first resistance looks to fall near the 525 mark.

June Up Limit – Later 2020 Limit Down

This Week in Commodities 5-15-20This was a very volatile week in the dairy futures markets, driven by incredible gains in the cheese, butter, and non-fat powder prices. The block/barrel average had one of the largest price moves in a week in history, gaining 46.25 cents and is now trading at $1.75/lb. This is at or above price levels before the dramatic price drops from the virus. The June contract was up the limit multiple times this week in Class III futures in response to this move. Butter prices also screamed higher, gaining 35 cents on the week. The strong rally in the fat complex is likely related to the reopening of restaurants across the U.S. Non-fat powder prices were up 10 cents to settle at $0.9350 but still have a lot of distance to go before returning to pre-covid levels near $1.10/lb. Whey was the only product to finish lower on the week as it struggles to get over resistance of $0.40/lb.

The Class III 2020 average traded from $15.16 to $16.04 to finish out the week. Last week we changed our short term trend up, and we are seeing follow through on that this week. That is a positive sign for the market. But, the pace at which the market is moving does bring into question how sustainable a move like this will be. There is skepticism in the market today as June is limit up but multiple contracts further into 2020 are also limit down.


Lisa Heder

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