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WEEKLY COMMODITY REPORT

06/28/2019

Prices are Volatile Following China Negotiations, Release of June USDA-WASDE Projections and Acreage Report

The following quotations for July and September 2019, were posted by the CME at

15H00 on Friday June 28th compared with values for Friday June 21st (in parentheses) shortly after release of the acreage report.

The market responded with a downward turn following release of the USDA Acreage report on June 28th. Corn planted in 2019 is up 3 percent over 2018 to 91.7 million acres, albeit late due to saturated fields that will reduce yield. Soybean acreage planted is down 10 percent compared to 2018 to 80.0 million acres, the lowest since 2013.

The commodities market recorded a sharp increase in the futures prices of corn, soybeans and soybean meal after the release of the June WASDE on Tuesday 11th. The mid-May run-up in prices was due to slow progress in planting and consequential projections of reduced yields. The possibility of lower yields compared to 2018 is now more certain. Based on the revised acreage for corn futures for July retreated by 4.5 percent. The market anticipated a decline in acreage planted to soybeans. Accordingly a relatively mild decline in the soybean quotation of 0.3 percent was posted this past week. A second factor supporting the soybean price is continued but subdued optimism that some accommodation on trade will emerge from the bilateral discussions between the Presidents of China and the U.S. on June 29th during the G-20 Meeting

The absence of any definitive news regarding resolution of the trade dispute with China and previous conflicting statements by White House spokespersons over the months since the dispute began is disconcerting to the commodities market and

has contributed to price fluctuation.

COMMODITY

 

Corn (cents per bushel)

July 423 (443)

Sept. 426 (449)

Soybeans (cents per bushel)

July 900 (903)

Sept. 911 (916)

Soybean meal ($ per ton)

July 313 (316)

Sept. 317 (319)

Changes in the price of corn, soybeans and soybean meal this past week were:-

COMMODITY CHANGE FROM PAST WEEK

Corn: July quotation down 20 cents per Bu        (-4.5 percent)

Soybeans: July quotation down 3 cents per Bu (-0.3 percent)

Soybean Meal: July quotation down $3 per ton. (-1.0 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

  • For each $10 per ton change in the price of soybean meal:-

COMMENTS

Subscribers are directed to the review of the weekly USDA Crop Progress Report posted in this edition for the rate of planting, crop emergence and condition.

Some concessions have been promised by China on reducing coercive trade practices and clarifying dispute resolution although U.S. negotiators claim that China has backtracked on structural issues hence the threat of more stringent tariffs and embargos on trade with tech companies in China. From an agricultural perspective the question of delays by China in approving new GM cultivars has yet to be settled.

Prices will be influenced by the trend in stock levels, area planted in 2019 and early crop progress in the face of flooding.

According to the June 11th 2018 WASDE Report #589, it was projected that 89.7 million acres of corn would be planted in 2019 to produce 13.68 Billion bushels. The June 28th Acreage report increased the area to 91.7 million acres. By proportion this will increase the 2019 crop to 13.83 million bushels. The WASDE projected 84.6 million acres to be planted to soybeans. The USDA Acreage report reduced this to 80.0 million acres. The 2019 soybean crop projected to attain 4.15 Billion bushels in the June WASDE must by proportion be reduced to 3.92 Billion bushels. The levels of production and ending stocks for the two commodities are based on current planting data, projections of harvest area and yield. The WASDE to be published in mid-July will confirm the projected yields and ending stocks of corn and soybeans respectively.

See the WASDE posting summarizing the June 11th USDA-WASDE Report #589 under the STATISTICS tab documenting price projections and quantities of commodities to be harvested, processed and exported from the 2019 harvest.

Unless shipments of corn and especially soybeans to China resume in volume, the financial future for row-crop farmers appears bleak despite the release of two tranches in 2018 amounting to $8 billion as "short-term" compensation for producers of commodities. A further allocation of $14.5 billion to producers under the Market Facilitation Program was announced on May 23rd for the 2019 crop.