Morning Comments, July 21, 2020

Bradford plot harvest

Opening calls:

Corn: 2 to 3 lower

Beans: 5 to 7 Lower

Markets are trading lower today based on:

  • Crop conditions report yesterday which left corn unchanged and saw an improvement in beans
  • Weather
  • Ethanol margins

Yesterday, the USDA left corn unchanged, and beans improved by 1%. The improvement in beans is weighing on the market this morning as the trade was looking for a 1% decrease. While an argument can be made that we have hot and dry areas, for now, the trade is viewing weather as a non-issue. This could change in the next couple of weeks, especially for beans. Ethanol margins are back in the red and we will have to wait and see what this does to corn demand in that industry. With COVID increasing, it has traders worried about states shutting back down and the impact on the general economy if this happens again. Bean exports are lagging for the year and the question is being raised if we will meet the USDA estimate. While corn exports look to be on pace, South America still has the advantage on price and with above-average yields - it looks like they will be a supplier into early 2021.

While all of the above is bearish for corn and beans, there is talk that China is battling food inflation and southern China is seeing the worst flooding in 30 years. This could lead to China being a continued buyer from the U.S. but until it happens it is just an argument for the bulls.

With the volatility in the markets contact your local GMA to discuss marketing strategies for the crop that is still in the bin as well as the crop that is in the field.