AgriVisor Morning MarketWatch

Wednesday, June 10, 2020
While much of the attention is on the growing season for corn and soybeans, the harvest of the winter wheat crop is gaining momentum. Active harvest is taking place in Texas and now moving north into Oklahoma and Kansas. Reports from the field are mixed, with average test weights and bushels per acre being reported. Trade is keeping a close eye on protein content though, which so far has been less than hoped for. This could easily start to impact wheat demand, especially with a more favorable outlook on the global side. Australia is expected to produce a much larger wheat crop this year as drought ends in that country. Thoughts are we could see an increase to wheat output of nearly 25% as more favorable growing conditions return. An increase in wheat plantings will also lead to higher output for the country. The unknown on wheat remains the EU and Black Sea where weather remains less than ideal. If the quality of the US wheat crop is low, it can easily impact corn demand. While feeders in the US will not switch to wheat feeding given the low value of corn, we may see global demand increase, especially if wheat values decrease. This decrease would have to be substantial though as the current spread between corn and wheat is nearly $1.80 per bushel. A spread such as this brings into question if wheat is over-valued or if corn is undervalued. All things considered, corn is likely a little under-valued at the present time, but not by a significant amount. Global stocks are adequate and growing which is limiting any desire to run corn values higher. Funds agree with this and continue to hold a record sized short position in corn. Regardless of what we see for a fundamental shift, until this attitude changes, corn gains will be limited. 

* Lack of weather risk in today’s market
* Forecasts mostly favorable
* CONAB increases soybean crop estimate 
* 7 of past 10 Brazil soy crops have been record-sized
* US crop ratings indicate above trend yields
* Fed meeting results this afternoon
* US crude oil over-priced in global market
* OPEC to cut production through July
* World Bank sees -5.2% in global economy
* Market running out of supportive news
* WASDE report this Thursday

* Brazil Safrinha estimates range from 96 to 100 mmt
* US corn exports -26% from last year
* US loadings starting to pick up
* Farmers selling increasing
* So Korea back to buying US corn

* US sales remain slow
* Export loadings decrease
* China soy meal supply at 8-month high
* Brazilian sales are slowing
* Soy rating not as high as expected

* French wheat rating -24% from year ago
* French crop lowest rated in 9 years
* Heavy production losses in Russia
* China remains top buyer of US wheat
* Brazil has started to increase US wheat purchases

* Consumer costs starting to decline   
* Hog cut-out values remain mixed
* Grilling interest on the rise
* US packer margins being questioned
* China imports record volume of US pork in April

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