Free Commentary

Hands down, the story of the week, and a dour one at that, is the performance we have witnessed in the corn market.  Obviously convinced that the balance of the growing season will be a non-event, bears came out of the woods yesterday and feasted on any remaining bulls.  While yesterday’s activity will not be reflected in the Commitment of Traders report to be released this afternoon, one has to imagine that large specs have re-entered the shorts they lightened up on during the previous week and then some. Individual contracts have stabbed into new lows, but as you can see on the spot weekly chart, we have surrendered just a bit over half of the May/June advance.  Regardless, this will be the largest weekly setback since early April, which at the current level would be 16-cents. Rounding out the big three, we find spot wheat currently 4-cents higher for the week and beans down 8-cents.

It feels like rubbing salt in the wounds at this point, but Chinese beans imports for the month have been tallied and reflect another banner month for Brazil.  Coming in with the highest figures since May of 2018, China unloaded 8.86 MMT of Brazilian beans.  This was an increase of 41% over last year.  The total from the U.S.?  491,697 MT, which was down 50% from last year.  While minor consolation at this point, we should see the reverse scenario as we move into the fall.

Stats Canada released updated acreage numbers this morning with no significant changes.  All wheat was reduced 800,000 acres from the April estimate; corn was reduced 100,000, and beans were increased 500,000.

That is an excellent segue to the industry estimates for the USDA figures to be released next week.  The average estimate for planted acres has corn at 95.2 million (-1.8 mil.) beans at 84.7 (+1.2 mil.) and all wheat at 44.7 (+100k).  June 1st corn stocks are estimated to be 4.95 billion bushels, beans at 1.39, and wheat at 980 million.

The quarterly Hogs and Pigs report turned out to be one of those good news/bad news types of releases.  For the hog industry, the good news was that the June through November farrowing estimate is projected to be down 5% from last year.  Of course, that is not good news for feed demand.  The bad news for the hog industry is that all hogs and pigs as of June 1st totaled a record 79.6 million head, which was up 5% from last year, which is good news for the feed industry and could result in a smaller grain inventory number next week.

There have been a few adjustments in world production estimates in the past 24 hours.  The European Union sliced their wheat production estimate again, taking it from 121.5 MMT to 117.2.  Last year they produced 130.9 MMT.  Ukraine now estimates that their total grain crop will be 72.4 MMT, which would be down nearly 3 MMT from last year.  Keep in mind that last year was a record crop, and earlier, there were estimates as low as 68 MMT.  Countering any encouragement those may have provided, the International Grains Council increased their global wheat estimate 2 MMT, primarily on an increased outlook for Australia.  They bumped their corn estimate fractionally higher but raised the total grain output by 7 MMT.

So, where is Nostradamus when you need him?  Already this year, we have experienced a global pandemic created by a novel virus, swarms of locusts, sweeping across the Horn of Africa with another predicted for later this summer and a huge dust cloud pushing westward across the Atlantic as we speak.  With all that has happened thus far, it was certainly not shocking to read that there is now also a massive swam of locust moving across Northeast Argentina and Southeastern Brazil.  Fortunately, they are moving towards cooler temperatures, which should limit the insects’ movement, but there is some concern for crops that are still unharvested.  Technically, we already have a river that is running red after the major oil spill in Russia’s Arctic region, so all we need are a few major volcanos and the Nile teeming with frogs, and we will have most of the elements to call this an apocalyptic year.   Oh, and let’s not forget. To top it all off, this is an election year.  YIKES!