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Mark's Market Talk

July 6, 2020

Last Tuesday we finally saw a bullish report from the USDA. They released the June stocks and acreage reports and it showed less acres of corn and beans had been planted. For corn it was a drop of 5 million acres from the March intentions report. They reported farmers had planted 92 million acres of corn which was 3 million below the average trade guess. If we use the trend line yield number this may reduce our expected carryout by almost a billion bushels putting us around a 2.3 billion number. That news by itself should have shot futures up the limit. However, the stocks report was on the negative side as they showed 250 million more bushels on hand then the trade had expected. We still ended the holiday shortened week 25 cents higher on September corn and December corn was up 29. We have not seen an up week like this for a long time. Of course, now we ask where we are going from here. The funds are still short the corn market by a long way. However, we still need a weather story to push us higher. The next 2 weeks will determine if we get the dry and hot weather that could affect pollination. Locally we have been blessed with some good rains and we are going into pollination in good shape. Other areas of the mid- west are not that fortunate and need rain. If these areas grow in size and the hot temps come as predicted and we reduce the yield by 3 or 4 bushels we would see a sub 2 billion bushel carryout and then the funds get real interested in owning corn futures. The bean side of these reports show farmers planted about a million acres less of beans than they planned to in March. This tells us that the unplanted corn acres went to prevent plant this year. The bean stock number was in line with the trade estimate, so the bean side was bullish also. For the week August beans were up 31 cents while November was 36 higher. The unknown is how much the Chinese will buy in the near future. This is a daily moving target as the story changes frequently. It seems we continue to be their source of last choice. We are seeing the benefits of working harder with new grain markets in the world as sales to other nations are expanding. This will be more important as we move forward. So, all in all we had a good week. However, we cannot get complacent and think these markets have no where to go but up. A good strategy is to sell into this market on the way up both corn and beans. If you are concerned that this is not the right advise and are afraid you might miss the high, you better let someone else take the wheel. Nothing is a given in agriculture anymore. The successful marketers work toward an average price in the top third of the market. They recognize that trying to be in the top 5 percent will probably land them in the lower 50 percent. Now is probably not a good time to get greedy.

Posted: 7/6/2020 12:52:10 PM by Rob Matherly | with 0 comments

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