Ami Heesch

Jun 30, 2020

Ami L Heesch 

Highlights

The grain markets started out higher on short covering and Chinese buying optimism while waiting for the release of the USDA data. Prices traded much higher midday on less than expected acreage numbers around the horn.   June 1 stocks figures were mostly overshadowed by the smaller acreage numbers. Weather forecasts call for more heat this week with chances of showers across the US Midwest. 

  • The energy markets are mixed with crude oil down 36 cents at 39.35/barrel.
  • The US$ is down 130 at 97.40, the gold market is up 17-18 bucks at $1798/ounce (after tickling 1804/ounce), the CD$ is up 0.0058 at 0.7365.
  • DJIA is up 217 at 25812, S&P up 35 at 3090 and the NASDAQ up 184 at 10058. 

Corn

The corn market opened higher on leftover fuel from yesterday despite a second week of improving crop conditions. Hopes of possible Chines buying provided underlying support. Corn got a boost midday, from a smaller than expected planted acreage number.   

  • Closes: September at $3.40 ¾, up 12  cents, December at $3.50, up 15 ¼ cents, March at $3.60 ¾, up 15 ¼ cents, July at $3.72, up 13 ½ cents.
  • Gulf premiums were 3 cents weaker for July and August. Illinois river closures during the month of July could raise some logistical pickles.
  • USDA lowered their corn acreage number from 97.0 million in March to 92.0 million in June. This is 3.2 million acres below the average trade estimate of 95.2 million.
  • June 1 stocks were reported at 5.224 billion bushels, above the average trade estimate of 4.951 and last year at this time (5.202).
  • Spreads: U/Z 9 ¼ carry, Z/H 10 ¾ carry, Z/N 22 carry.

Oilseeds

The soybean market opened higher on technical buying after the November found support at its 50-Day MA of $8.59 ½. There was chatter in the market that China may be looking for another round of US soybeans although there was no confirmation to that affect. Prices rallied on USDA’s acreage forecast below what the trade was expecting and the rally in the corn market. 

  • Closes: August at $8.78 ½, up 17 cents, November at $8.82, up 20 ½ cents, January at $8.84 ½, up 19 ½ cents, July at $8.82 ¾, up 9 ½ cents. The products were stronger with meal up 5-6 bucks and oil up 27 points.
  • Gulf premiums were 1 cent weaker for July and August. July logistics along the IL river could get a bit tricky with the river closed for lock and dam repairs.
  • USDA raised their soybean acreage number from 83.510 million acres in March to 83.825 million acres in June. This is 891k acres below the average trade estimate of 84.7 million acres.
  • June 1 stocks were reported at 1.386 billion bushels, slightly below the average trade estimate of 1.392 bb and below last year at 1.783 bb.
  • The canola market traded higher on borrowed strength in the US soy complex and fewer acres planted in Canada this year. Acres were reduced from concerns of the ongoing trade spat with China.
  • Spreads: Q/U 2 inverse, Q/X 3 ½ carry, X/F 2 ¾ carry, X/H 4 inverse, X/N 1 ¼ carry.

Wheat

The wheat market traded higher in sympathy with the row crops. Prices drew additional support from a lower wheat acreage number. Prices drew additional support from the cash market with all 487 deliveries that were put out against the July contract were stopped by a commercial. Mpls drew strength from a lower than expected acreage number. There were zero deliveries in KC against the July. There were 151 deliveries in Chicago with no stopper. 

  • September closes: Mpls Sep at $5.20 ¼, up 10 ½ cents, KC at $4.40 ½, up 4 cents, and Chicago at $4.92 ¼, up 5 ¾ cents.
  • USDA lowered their Other Spring Wheat acres to 12.200 million, 351k below the average trade estimated and 390k below their March estimate at 12.590 million acres.
  • USDA reported larger than expected June 1 stocks, but the market seemed to be focused more on the acreage numbers for wheat and the row crops.
  • North Dakota spring wheat acres were at 6.0 million versus 6.7 million acres planted last year. This week saw a 10 point drop in conditions for ND spring wheat.
  • Nice rains were said to have fallen across a fairly broad areas of North Dakota this week. Hopes are that the spring wheat crop will see an improvement in next week’s conditions report.
  • Algeria bought 240k tonnes of optional origin wheat at $217-$218/tonne for Aug/Sep.
  • Spreads: Mpls U/Z 13 ½ carry, U/U 54 ½ carry (4 ½ cents a month), Z/H 13 ½ carry........Kansas City U/Z 12 carry and Chicago U/Z 7 ½ carry.