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AgriFinance Market Update 6-27-19

Farmer selling and fund liquidation ahead of potential fireworks were the features in the marketplace today.  FC Stone reported fund selling at 70 million bushels of corn, 40 million bushels of beans and 15 million bushels of wheat on the day.  Of course, the 4th of July is a week away, but tomorrow’s USDA reports and this weekend’s US/China trade talks should provide for a very interesting couple of days of trade activity!

July wheat was up more than a dime at the high today.  A brutal heat wave sweeping across Europe (including Russia) right now is impacting their crops.  Temperatures in the 90s and 100s are prevalent across the area.  Much of their wheat is in the heading stages and vulnerable.  The EU is expected to produce 5.65 billion bushels of wheat this year (about 3 times what we grow).  Throw in the Russian crop estimated at 2.9 billion and it’s a big deal if drought conditions continue.  Their corn crop is also at risk with some of it at or near pollination.  The EU is expected to grow 2.5 billion bushels of corn this year.  Trim it just 10% and it’s a big deal!

Weekly export sales reported by USDA this morning were pitiful for corn and soybeans.  The meal number was shockingly small, too.  The bright spot for this week was wheat.  You can see the 22.5 million bushels exceeded all estimates.  We also got a huge new crop sales volume reported at 28.7 million bushels.  The combined total is more wheat than we’ve sold the past five weeks combined!

USDA report day is upon us.  We’ll get Planted Acreage and Quarterly Stocks numbers tomorrow at 11 am CT.  The range of trade guesses across all categories is huge.  There’s bound to be some “shock and awe” somewhere in the avalanche of figures.  For your reference, the average trade guess is for corn acres to drop 6.1 million from March Intentions, soybean acres to drop 262,000 and wheat to drop 100,000 acres.

And if you missed this from earlier in the week……..this report has a history of generating significant price moves. We’ve seen 20-30 cent corn rallies the day of the report in 2010, 2012, and 2015.  Prices have also gone sharply lower, like the 69 cent loss in 2011 (no price limits on the July contract in delivery), a 29 cent loss in 2009, and 30 cent move lower in 2008.

For soybeans, the bullish reports in 2015, 2016, and 2017 saw rallies of 26 to 53 cents. For bearish reports, we had 28 cents lower in 2011, and 31 cents lower in 2014.

Regarding the much-anticipated RE-START of the US/China trade talks at the G20 Summit in Japan this weekend……President Trump and President Xi are scheduled to sit down for dinner on Saturday evening.  Osaka is 10 hours ahead of us.  So, 7 pm Saturday evening is 9 am in Chicago.  News about the meeting should be out before noon.



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