Morning Comments, June 26, 2020

Grain Cornfield Wlandus Cooperative 2016

Opening Calls:

Corn: unchanged to 1/2 lower

Beans: down 3 to 4

Yesterday, December corn futures made new contract lows due to funds aggressively selling, renewed COVID fears, worsening global economic conditions, and cheap South American corn. Corn is unchanged this morning with limited upside potential. Lack of Chinese corn demand, good weather forecast and lack of competitiveness at the gulf are all keeping corn stagnant. Once the crop is pollinated, farmer selling is expected to pick up—which should put some pressure on basis and help at the Gulf, but not help new crop cash prices.

Soybeans also traded lower yesterday on fears of a second wave of COVID. This morning, beans are also lower and the market is expected to trade sideways ahead of next week's USDA stocks & acreage report. Chinese customs data shows a 41% increase in Brazilian bean imports during May and U.S. imports were down 50%.

Next Tuesday is the USDA’s quarterly update on stocks, as well as an update on acreage in the U.S. Expectations are for fewer corn acres and more soybean acres. We’d like to think that this is somewhat built into the current prices, especially after yesterday, but it’s always hard to outguess what the USDA might do until we see the actual data. As we’ve been saying, it’s time to finalize old crop marketings and start making some new crop sales. Also, the “carry” from December of this year to December of 2021, is currently more than 30 cents. While something around $3.60 futures isn’t usually a great number, the concern here is the looming large ending stocks number for this time next year. If we are anywhere close to 3.3 billion bushels by then, we may all wish we had priced something at $3.60 or above for harvest of 2021. So, if you want to put in some offer prior to the reports next week, please let us know by the end of the day Monday.