WEEKLY COMMODITY REPORT

07/08/2019

Prices are Volatile, Trending Down 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 close of trading on Friday July 5th compared with values for Friday June 28th (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. Planted soybean acreage is down 10 percent compared to 2018 to 80.0 million acres, the lowest since 2013.

Soybean and soybean meal prices retreated this past week on lack of any definitive outcome from the bilateral discussions between the Presidents of China and the U.S. on June 29th during the G-20 Meeting. A token order of 0.5 million metric tons of soybeans was placed by government-affiliated traders in China on June 28th. This quantity should be compared with 21.4 million metric tons delivered to China in 2017 before the advent of the trade dispute.

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 projection of reduced yields.

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 435 (423)

Sept. 439 (426)

Soybeans (cents per bushel)

July 872 (900)

Sept. 881 (911)

Soybean meal ($ per ton)

July 304 (313)

Sept. 307 (317)

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

COMMODITY CHANGE FROM PAST WEEK

Corn: July quotation up 12 cents per Bu            (+2.7 percent)

Soybeans: July quotation down 28 cents per Bu (-3.1 percent)

Soybean Meal: July quotation down $9 per ton.  (-2.9 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 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.

For comparison commodity prices posted by the Dalian Mercantile Exchange in $US per short ton* during the first week of July 2019 with comparable CME values in parentheses were:

Corn $250 ($155)

Soybeans $447 ($300)

Soybean meal $463 ($304)

*(conversion Rmb6.8=$US1)

The June 11th 2018 WASDE Report #589, 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. The Quarterly USDA Grain Stocks Report was posted on the July 5th edition of EGG-NEWS.

Unless shipments of corn and especially soybeans to China resume in volume, which is unlikely, 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. Patriotism can only go so far----.


















































































































































































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