Weather adds price support but uncertainty remains June 24, 2020
Good Morning from Allendale, Inc. with the early morning commentary for June 24, 2020.
Grain Markets overnight were mixed. Soybean futures were higher on the latest 6-10 day from NOAA suggesting much above normal temperatures for the Upper Midwest. Traders will wait for that forecast to hold for a couple days before they get too excited. On Tuesday, December corn futures closed directly on the closely-followed trendline support drawn from the April lows.
NASDAQ 100 stock index posted another record high price and record high close at 10,209.817 on Tuesday. Separately, the broader S&P 500 has recovered 78% of its virus-related break.
White House Economic Advisor, Larry Kudlow suggests tax rebates and directly mailed checks will be included in the next coronavirus aid package.
European Union could restrict travel to US citizens as part of its re-opening planned for July. Since the EU has seen a larger decline in new cases than the US, we may not fit their three stage criteria.
China’s soybean buyers are asking US, Canadian and Brazilian exporters to certify their soybean cargoes are free from coronovirus. We expect grain exporters to question this likely-impossible request. Of note, some meat packers in Brazil and the US have complied with a similar request.
Brazil’s grain export association, Anec, trimmed their June soybean export forecast from 13.0 million tonnes to now 12.6. Last year’s June export totaled 9.1. Brazil exports are coming down from the very large levels of 11.6 in March, 16.3 in April and 15.5 in May.
Weekly ethanol production report will be released at 9:30 am CDT today. The recovery so far has been under current USDA hopes. 5/30 – 6/5 production was -23.6% year/year. 6/6 – 6/12 production minimally improved to -22.2%. Tomorrow’s report will be compared against last year’s 1.072 million barrel production for the same specific week.
July grain options expire on Friday.
Acreage report is set for Tuesday at 11 am CDT. Allendale sees corn acres -1.672 million to 95.318, soybean acres +1.244 million to 84.754 and wheat acres +364,000 to 45.019 million. Further reductions in corn acreage may be shown in USDA reports later this fall.
Grain Stocks report is scheduled for Tuesday at 11 am CDT. This is simply a count of old crop stocks as of June 1. No supply/demand balance sheets are issued on this report. For this report we see corn stocks at 4.849 billion vs. last year’s 5.202 at the same time. Soybean stocks are estimated at 1.403 billion vs. last year’s 1.783. The old crop wheat marketing year ended on May 31. This June 1 count will be the official 2019/20 marketing year ending stocks. We estimate 984 million for final stocks vs. 978 from USDA on 5/12.
Quarterly Hogs and Pigs report is set for Thursday at 2 p.m. CDT. We are focused on three numbers. Backlogged market hog numbers will be shown in the +180 lb. category for marketings at +17.9%. Piglet euthanasia will be shown in the under 50 lb. category at -2.7%. Lower breeding levels should be seen in Jun/Aug and Sep/Nov farrowing intentions at -4.7% and -4.4% respectively.
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