Sunday calls are mixed with a higher tone in wheat due to the freeze, and slightly lower call to corn and beans ahead of USDA report…BUT there seems to be good support under the market due to recent China buying.
Freezing temps hit the farm belt. Everyone has an opinion and most in Chicago dispel a freeze as no big deal. But if you have ever grown wheat that was hit by frost, you know better. Expect significant damage to wheat that was in boot or later stage. We believe corn and beans has no real affect. Trader attitude is it is early enough to replant and not have an impact on yield potential.
This week:
China was a large buyer of US corn, beans and pork . We expect that will continue and will eventually convince a significant short fund corn position to question how much longer should they remain short in light of the Chinese buying and the seasonality of the market in the next 60 days.
USDA Supply Demand report on Tuesday – this is what we have been waiting for and hope to see either a spike low in corn, or a recovery reversal to the upside. If we see that, then we should be confident in expecting a seasonal move.
Covid-19. Keys to watch: Rate of infection and hospital capacity as people go back to work. We never maxed the health care system while distancing. As long as we do not return to a stay at home status, we suspect there will be an growing optimistic attitude. The key to commodities will be consumer spending and confidence….AKA inflation. Watch DC as they start to debate more bail out money. EIA report of gasoline demand. The soughern states that are opening are seeing a lot of traffic – more gas demadn – more ethanol demand. But as nation and a world, it might be a slow ride.
Average trade guess for US 2019/20 corn carryout is near 2,224 mil bu vs 2,092 previous, soybean 488 vs 480
and wheat 968 vs 970. Average trade guess for US 2020/21 corn carryout is near 3.389 mil bu, soybean 430
and wheat 814. Average trade guess for US 2020 winter wheat crop is 1.245 mil bu vs 1,304 last year, HRW
739 vs 833 and SRW 280 vs 239.
CFTC estimated Managed funds were net long 4,000 contracts of SRW Wheat (-12,000); net short 190,000
Corn (+29,000); net long 9,000 in Soybeans (+5,000); net short 12,000 lots of Soymeal (+5,000), and; net short
7,000 Soyoil (-5,000).
Be sure to read Matt Bennett’s Weekly Comments as he discusses strategy in the next few weeks.
Bill Biedermann
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