Morning Comments May 22, 2020

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Opening Calls:

Corn: 1 to 2 lower

Beans: 1 to 2 lower

Increased tension between the U.S. and China, a downturn in ethanol prices, favorable weather, a harvest pace in Argentina that is 10% higher than this time last year (44%), and 96 million acres going in the ground with corn expected to be finished planted Memorial Day weekend and a 3 billion-plus carryout are giving the bears the fuel they need to keep pressure on the market. Bulls are looking at total export commitments being around 17% less than a year ago signaling that we are slowly making up ground to hit the USDA number. They are also watching the calendar for May 26 and June 5, which are the Prevent Planting dates for the Northern Plains and Eastern Corn Belt respectively. With the cool end to April and wet May, a case could be made that the 3 billion-plus carryout could be too high along with yield expectations. 

Beans closed sharply lower yesterday over concerns that U.S./China tensions over Corona Virus and China clamping down again on Hong Kong will result in China buying less U.S. ag products, Meal falling to contract lows, and the possibility of the trade deal falling apart have the bears running the show. Bulls can point to soybean sales at a 22-week high with new sales reported to China. However, for now with a long weekend in front of us and PP dates still a couple of weeks away, the bulls don’t seem anxious to fight the bearish momentum at the moment.

Right now it seems the bears are in control going into the long weekend with supply looking large and demand low. A large disruption in supply or weather issues will be needed to turn the market higher at this point.

Calling your local GMA to discuss old and new crop marketing solutions can help you take some of your risk off the table as the markets chop around looking for direction. We remain concerned about the extreme amount of grain in farm bins that will most likely need to move to town before Harvest. How soon will that happen? If it waits until post pollination, we could have more logistical issues to manage than possible in a short period of time. Why not move some of that in June? If you’re thinking that way, contact your GMA to better understand how we can help.