July 10th, 2020

CORN

Corn futures closed 11-12 cents lower today, but CU finished the week just 4 cents lower. Funds were active sellers of 14,000 contracts by mid-session to add to an estimated short position of 158,000 contracts. A comment by President Trump that a Phase 2 trade deal is doubtful, and a GFS weather model forecast mid-day that trends towards less heat and better precipitation chances over the next 10 days weighed on futures. The announcement China had purchased 30.1 mln. bu. of old crop U.S. corn and 23.6 mln. bu. of new crop did not have much if any impact on trade. The S&D reports were close to estimates. 19/20 ending stocks increased 150 mln. bu. to 2.248 bln. bu. as Feed/Residual was cut 100 mln. bu. and Ethanol usage was cut another 50 mln. bu. (Ethanol usage estimate is down 575 mln. bu. since March and trade estimates are for another 50-150 mln. bu. cut this marketing year.) 20/21 production fell 995 mln. bu. to 15.0 bln. bu. due to the cut in harvested acres of 5.6 mln. as yield is unchanged at 178.5 bpa. Total usage dropped 175 mln. bu. as Feed/Residual fell 200 mln. bu. (smaller crop – smaller residual) and ending stocks fell 675 mln. bu. to 2.648 bln. bu. New stocks to use ratio is 18.1%. On the world stage, Brazil corn exports fell 1 MMT and Argentina corn exports increased 2 MMT for 19/20 (Ukraine steady). USDA basically left 20/21 alone for now. All in all, it seems USDA gave the market about what it expected.

SOYBEANS

Soybean futures closed 7-11 cents lower today, but SQ lost just 8 cents this week. Funds were sellers of 8,000 contracts at mid-day to cut into their estimated long position of 80,000 contracts. Improving weather prospects, the lack of regular Chinese purchase announcements, and no bullish S&D surprises seemed enough to weigh on futures through today’s session. The S&D report saw 19/20 ending stocks increase to 620 mln. bu. in spite of an increase in crush as USDA adjusted Seed/Residual lower. For 20/21, production was up slightly to 4.135 bln. bu., usage up 15 mln. bu. on crush improving, and ending stocks up 30 mln. bu. to 425 mln. bu. with a stocks to use ratio of 9.8%. On the world stage, 19/20 Brazil production increased 2 MMT and their exports increased 4 MMT’s. Argentine numbers steady. Chinese bean imports increased 2 MMT’s. For 20/21, USDA chose to leave balance sheets alone for the most part. No big surprises in today’s report.

WHEAT

Wheat futures closed 9 cents higher today and WU gained 42 cents this week as the trade rediscovered dry conditions in the EU, Russia, and U.S. central Plains. Also, China bot 190 tmt U.S. HRS and 130 HRW wheat for 20/21 delivery. Funds were buyers of 6,000 contracts mid-day to cut into their estimated short position of 17,000 contracts.