July 19 Afternoon Comments

By Steve Freed

Soybeans, soymeal, soyoil, corn and wheat traded higher. Market has been down this week on talk of better US Midwest weather next week. Rumors of China buying soybeans and may be a break in US and China trade talks triggered short covering into the weekend. US Dollar was higher. Hogs were higher.

SOYBEANS

Soybean traded higher. Concern that US weather will turn normal for the remainder of July and most of August has pushed prices lower this week. November soybean fell from 9.36 to near 8.93. Today SX charged back to near 9.24. There were rumors that China may have bought 2.5-3.0 mmt of soybean this week. Most if not all was South America but the rumor was they did buy a few US new crop cargoes. Reports the Brazil soybean crop protein was lower than average raise speculation that China may turn to US for soybeans. There were even talk that China may lower its VAT tax to help US imports. China hog herd continues to decline due to the spread of African Swine fever. This has rallied domestic China hog prices and improved margins. China GDP dropped to 27 year lows. There was talk that next week detail of the second Market Facilitation Program payment to farmers may be announced. Some hear the payment could be $60-$70 per acre vs almost $50 expected. Most are using USDA June guess of 80.0 soybean acres for the 2019 crop. USDA is resurveying key states and will update acres on August 12.

Soybean Futures Chart

CORN

Corn futures tried to rally on hopes of a break in US and China trade talks. December corn had dropped from the recent high near 4.64 to yesterday and todays low near 4.28. It appeared that on Sunday funds began to sell corn and liquidate out of net longs due to forecast that next week US Midwest will see some rains and temps will turn closer to normal. Next few day temps will be near 100. These temps were why the fund pushed

December corn up to near 4.64 initially. Most look for 30 pct of the US corn crop to be pollinating. This a good 2 weeks later than normal. This suggest weather the next few weeks will be critical for yield determination. Forecast also includes 50-60 pct of the Midwest seeing 1.00-2.00 inches of rains favoring the south central. 15-20 pct of the rest of the central and east Midwest could see .50-1.00 inches. Most are using 90 million US 2019 corn acres. USDA is resurveying 14 states and will update acres on August 12. This week USDA Risk Management Agency suggested that current corn prevent plant corn acres could be 7-8 million and could go higher. US cash corn basis continues at historical high levels due to lack of farmer selling.

Corn Futures Chart

WHEAT

Wheat futures closed higher. Wheat continues to follow corn. US winter wheat harvest is coming to an end with yields better that expected and Protein below average. Still HRW protein was not quite as bad as feared. US spring wheat crop continues to be rated above average. World wheat supplies continue to be above demand. Recently, UN provided new information on global food outlook. 2008 world wheat prices reached a record high price. Since then US share of export have been dropping.  In 2009, UN warned that climate change, increase population and increase demand for industrial use threatened increase hunger unless World could produce 70 pct more food by 2050. Despite the fact the since 2009 World wheat acres have been mostly steady, yields have increase 16 pct. US wheat acres dropped 30 pct while Russia took over as the number one wheat exporter. US corn and soybean replaced wheat acres. Global wheat supplies are forecast this year to be up 70 pct since 2008/09. This due to the spread of modern farming technology. This week Russia said they were investing billions to increase crop production 30 pct over the next 15 years.

Wheat Futures Chart

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2019-07-19T19:17:53+00:00 July 19th, 2019|