Morning Comments May 20, 2020

Grain Corn Pile Closeup

Opening calls: 

Corn: steady 1 lower

Beans: 3 to 4 higher

Yesterday the USDA announced the details of the Coronavirus Food Assistance Program, which will provide support for losses related to COVID-19. Beginning May 26, the USDA, through the Farm Service Agency (FSA) will begin accepting applications from agricultural producers who have suffered losses.

CFAP announced yesterday:

Non-specialty crops eligible for CFAP payments include malting barley, canola, corn, upland cotton, millet, oats, soybeans, sorghum, sunflowers, durum wheat, and hard red spring wheat. Wool is also eligible. Producers will be paid based on inventory subject to price risk held as of January 15, 2020. A payment will be made based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by the commodity’s applicable payment rates.

https://www.farmers.gov/sites/default/files/documents/CFAP%20CBA%205%2015%202020.pdf

Commodity

Unit of Measure

CARES Act Payment Rate

CCC Payment Rate

Corn

bushel

$0.32

$0.35

Soybeans

bushel

$0.45

$0.50

Beginning May 26, the U.S. Department of Agriculture (USDA), through the Farm Service Agency (FSA), will be accepting applications from agricultural producers who have suffered losses. 

On corn, the question everyone is trying to figure out is whether we are seeing all the negative news priced into the market, and are we finally forming a bottom. Bulls will argue that the 97.5 million acres and 178.5 yield is priced in and acres and yield will normally work lower from here, that ethanol is improving with gas demand and exports and feed should start to improve as the economy continues to open, especially if we see any buying from China. Bears will point at the early planting and weather to argue we will see 95+ million acres of corn, a 3 billion bushels ending stock forecast, the continued problems with negotiations with China, and uncertainty over corona as factors that will limit any run.

On soybeans, you need to feed a bull and we will need to see increased Chinese demand, a weaker U.S. dollar, and widespread weather uncertainty in order for beans to move higher. While it would appear bears are not eager to add much length to their short positions, bulls seem equally cautious as the last few attempts to run have stalled out and eventually moved lower. Bears are looking at record exports out of South America and a favorable Brazilian Real/U.S. dollar exchange as making it difficult for beans in the U.S. Overall we seem to be in a waiting game now until some new news is made available.

With all the uncertainty in the markets talk to your local GMA to discuss marketing strategies on both old and new crop grain.