Market News- POET: Portland 06/01/20 8:33:21 AM
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|Weekly POET Grain Report|
June 1, 2020
- The grain market is deep in the red this morning on reports from Bloomberg news that China has decided to halt some US farm imports - which obviously could threaten Phase 1 US/China trade deal. Bloomberg reported that Beijing has instructed state traders COFCO and Sinograin to suspend purchases of US soybeans and other ag products. Private importers were not told to halt purchases, however they are unlikely to make purchases as they are still subject to prior import tariffs (while COFCO and Sinograin had been given tariff exemptions at least for certain quantities).
- The COT report released on Friday afternoon showed managed money again adding to their short position, which now stands at -276k contracts short. The managed money position has only been this short for 5 total weeks (last April/May) - so we're in pretty rare territory here. Looking at the political landscape/forecast however, there still lacks a catalyst to force funds to cover.
- The US weather forecast remains non-threatening overall (if the 10 day forecast verifies). While it is expected to remain hot/dry for the next week - the 10-15 day forecast does call for a return to near to above normal rain for much of the Midwest with heat confined to the western US.
- After being rejected at the 50 day moving average, corn is now right back at the bottom end of the pennant formation - with support at $3.16-3.18. A close below $3.16 (last week's low) is not going to be a good look for the bulls.
May 29, 2020
- Export sales released this morning came in at just 17MM bushels, which was well below expectations but still within reach of the weekly average needed to achieve the USDA's 1.775B bu estimate. For soybeans, sales were also near the low end of expectations at 23.6MM bushels (7MM bu of which was to China).
- In addition, the USDA reported a flash sale of 132k MT of beans to China (half old/half new crop). There was also a flash sale of 101k MT of corn to unknown.
- AGTT reporting this morning that Indonesia has removed a ban on US ethanol imports. This would create a market for more than 200MM gallons of US ethanol.
- Buenos Aires exchange indicating this morning that 97.2% of the soybean crop has been harvested while corn harvest is still slightly below the 50% mark (47.2% harvested). Argentina corn FOB offers for export have become incredibly competitive at nearly 30 cents/bu cheaper than US gulf offers through December - and now that bean harvest is complete the corn harvest should pick up steam which will continue to add pressure to Argie values. The forward curve shows that US corn exports will be off to a very slow start for the 20/21 crop year.
- Corn futures saw a nice bounce yesterday on much stronger volume - in fact it was 3.5x the prior days volume. The massive fund short is certainly fuel for a nice rally should a catalyst arrive as there just isn't much for resting selling until we get to the $3.30-$3.40 range on July corn. Price stalled at the downward slowing 50 day MA yesterday which stands at $3.28 1/2. A close above this level gets price into a nice volume pocket that could see a quick move to $3.37. Support rests at $3.19.
May 20, 2020
- US Farmers will be getting another round of aid from the government - The payment will be based on the lesser of 50% of the farmer's 2019 production or inventory as of Jan 15th, 2020. The math works out to a total of 32 and 45 cpb for corn and soybeans, respectively.
- Traders will be closely watching the weekly EIA data to be released this morning at 9:30 am CST. Analysts are expecting another bump in production but will be also interested in seeing if stocks continue on their recent decline.
- China will begin auctioning off corn from their state reserves at the end of the month. 4 MMT will be offered (2.3MMT of which is 2015 corn). Maybe they're trying to empty reserves in an effort to refill on high quality new crop US corn? Hey, I'm digging deep to find something bullish!
- July corn is going nowhere in a hurry…prices tried for a breakout yesterday only to get pushed back down near unchanged as we closed. Prices are already trading lower than yesterday's low in the overnight session - a close here would favor the bears for another push to the retest $3.09.