Good Morning!
While we didn’t get any rain to speak of, the weather has moderated a bit the last couple of days. With highs in the mid-80s, it’s been a little nicer outside than what we’d seen for several straight days. Our forecast has chances for rain again at the end of the week, and most of our highs for the next two weeks are mid-80s into the 90s. I hope we catch that rain, but it’s not a do-or-die thing by any means just yet. We’ve gotten most of the hay baled finally, which is as late as we’ve baled our grass hay in my career. Regardless, every year is different, and that’s what makes farming so interesting. I’ve heard from a ton of you in the last few days on excessive rainfall. Keep me posted if you have excellent conditions as well. I’m interested to hear how it’s going. For more on AgMarket, click here. https://hubs.li/Q03qt2Qd0
The markets are in rally mode this week so far. While a hot July forecast is partially to thank, talk of Chinese soybean purchases and some potential corn business has been floating around. The July WASDE report comes out on Friday, which will give us updated supply and demand reports for both old and new-crop. Outside markets likely had a muted impact:
- The US Dollar settled up .245 at 100.860.
- August crude oil settled up 1.89 at 70.44.
- The DOW settled down 175 points at 53,197.
Corn – The corn market started the week with 15-16 cent gains on Monday and followed that up with nice gains on Tuesday. September corn closed up 5 ½ at $4.43 ¾. This was ¾ off the high and 8 off the low. Corn export inspections were above expectations at 1.642 mmt. This shipments number was 100k lower than a week ago but still a strong number. The crop ratings stayed at 67% good/excellent, which compares to 74% a year ago. This crop in areas is really good, but compared to a year ago, the overall state of the crop isn’t near as good. As my team and I were putting together our estimates for the July WASDE, we noticed that losing 3.5 million-acres from a year ago at the 183 yield the USDA is forecasting drops corn production by 1.2 bbu year-over-year. That’s an incredible drop, especially at a time when we see such strong demand. Can this crop come in above 183? Of course it can-but given the early-season stress, it could come in below that number as well. Consider we’re 30 cents off the recent lows we also need to be thinking about the levels we may add to sales. Personally, I’d like to see us back to a $4.75+ price or $4.50 fall-delivery corn. Dec corn settled up 6 ½ at $4.64 ¼.
Soybeans – Soybeans also rallied sharply on Friday with 40-50 cent gains-then followed it up on Tuesday with the rally continuing. August beans settled 9 ¾ higher at $11.93 ¾. This was ¾ off the high and 15 ¾ off the low. August soybean meal was up 3.3 at 316.2, while soy oil was up .83 at 68.59. Weekly inspections showed bean shipments at 528k mt, which was above expectations and above a week ago by over 100k. The bean crop was rated 64% good/excellent, so it dropped 1%. The bean crop a year ago was rated 66% g/e, so this year’s crop is also not quite as good at this point. While weather could certainly be the reason why corn rallied, it’s tough to think it had much to do with the bean rally-especially in July. The talk of China buying 5 cargoes of beans was more likely to be the culprit, and with corn rallying, the buyers were out in full-force. It was nice to see follow-through buying on Tuesday, which should give producers a chance to catch up on their sales a half-dollar higher than just two sessions ago. As with corn, I want to get caught up if need be on sales, so having offers in above the market makes great sense. Nov beans settled at $11.97 ¾, up 5 ½.
Matt Bennett
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