AgriVisor Morning MarketWatch

Monday, June 01, 2020
Now that the calendar has turned to June, we will start to see a shift on trade focus. For one we will see more interest in the June supply and demand report that will be released on the 11th. This will be closely watched to see if any additional demand changes are made as the May data did not include the full impact of the Covid-19 outbreak. We have seen some demand return since then though, mainly on ethanol, which is creating a difference in opinion on how the market may react to any change in usage. We will also see more attention on the USDA data that will be released at the end of the month, this being the quarterly stocks and revised plantings reports. For stocks, this will also reflect the changes to demand from the Covid 19 outbreak. The most watched will be ethanol usage on corn. The June stocks data tends to give us a clearer indication of potential ending stocks. The most attention will likely fall on the acreage revisions. Of these, corn will likely be the focal point. The USDA released a corn planting figure of 97 million acres in March, and since then planting conditions have not been ideal. Even at the time this number was highly suspect. The question is not really if corn plantings estimates decline, but rather how much. For the most part trade has dialed in a corn planting figure of 93 to 94 million acres given the current market dynamics. This means we will likely need to see corn plantings fall below 93 million to be bullish. At the same time, we could see a higher soybean planting projection given the loss of corn acres. It is not out of the question acreage could end up being bearish for both commodities, even with a decline to corn. 

* New month positioning
* Several days of drier weather needed for parts of Corn Belt
* Weather appears mostly favorable
* No new sanctions on China
* Interior basis starting to firm
* US crude oil imports +40% week ending May 22nd
* US ethanol stocks lowest since January
* Low water continues to impact Argentine exports
* Brazil to benefit from Argentine issues
* Russia sees higher exports in 2020/21
* April soy crush estimated at 182.5 mbu

* Brazil Safrinha crop est 3.3 mmt under USDA
* IGC predicts world corn crop 18 mmt under USDA
* Ethanol usage over-estimated
* Corn basis firmest in 8 weeks
* Farmers selling is rising

* Crush margins decline in China
* Weekly crush rate still record high
* Slower crush in Brazil allows for more exports
* Low water restricting Argentine exports
* Global soy production questioned

* Winter wheat 2x normal pace in Texas
* Trade expects to see losses in Plains
* EU crop projections declining
* Global weather a concern
* IGC production 2 mmt under USDA

* Chinese hog expansion continues   
* Lower feed costs benefit margins
* China ramping up beef imports
* 2 million hogs waiting for processing
* US food sales recovering