TFM – This Week in Commodities 9-13-19

Corn bounces on lower production forecast.

Corn prices made a nice reversal getting back most of what was lost last week. December corn finished 1-1/2 cents higher today at 368-3/4, up 13-1/4 for the week. The contract made a new low (352-1/4) to start the week then crept higher ahead of the USDA’s Supply and Demand report on Thursday. The USDA lowered yield by 1.2 bushels per acre to 168.2. This is 8.2 bushels below last year’s average. Acres were left unchanged. However, adjustments to ethanol and export demand in the 2018/2019 marketing year raised this season’s beginning stocks by 85 million to 2.445 billion and another 25 million reduction to 2019/2020 ethanol demand more than offset my lower demand. Ending stocks for the 2019/2020 season are projected to decline 256 million year-over-year to 2.19 billion bushels. The final yield is expected to decline further. The USDA’s yield data shows the lowest ear count per acre in the last 7 years. The trend is for that number to decline by the final yield estimate in January. There is still pressure on prices from the decline in ethanol demand. The White House has proposed a plan to increase the blend requirements for 2020 by 1 billion gallons which has not yet been agreed to by senators from farm states in a meeting this week. The president was set to meet with representatives from oil producing states today.


Soybeans traded higher on improved trade progress with China.

November soybeans finished today up 3-1/4 cents at 898-3/4. This is up 41 cents for the week after making a new low for the move on Monday. This weekly reversal suggests at least a short term low could be in. Soybean futures traded sharply higher this week on positive progress in US/China trade. November soybean futures were already trading as much as 23 cents higher on the day ahead of the USDA’s Supply and Demand report on reports that China had bought 10 cargos of soybeans out of the Pacific Northwest. On Friday, in response to the US announcing it would delay additional tariffs set to start October 1st, China said it would exclude some agricultural products including soybeans and pork from additional tariffs. The USDA report added more fuel to the rally as US production was lowered to 3.63 billion, down 47 million from the August estimate based on a .6 drop in yield to 47.9 bushels per acre and no change to acres. Ending stocks for 2019/20 were lowered 115 million bushels to 640 million. Carry in from 2018/19 was lowered 65 million bushels on higher exports and crush. The 2019/20 demand numbers were kept mostly unchanged. Global soybean ending stocks for 2019/20 are lower as reduced stocks for Argentina and the United States are partly offset by higher stocks for Brazil.


Wheat higher despite growing global stocks

All three wheat contracts continued to recover from recent lows. Weekly stochastics on the winter wheats are beginning to converge and the December spring wheat contract is about to cross over positive. This is a signal prices could continue to rebound from oversold levels. However, the USDA didn’t give the wheat any bullish news to push it higher. Despite the USDA leaving the US balance table. unchanged (the average guess was for slightly higher ending stocks), world ending stocks came in at a record 286.5 million metric tons (10.5 billion bushels). This is due to higher beginning stocks and lower global usage. Both Russian and Australian crops were lowered.


Spot Cheese Gains Another 5 Cents While Futures Remain Neutral

The spot market seems determined to continue to bid the spot cheese market higher, as it gained another 5 cents today. The gains were shared by blocks and barrels, as they gained 6 and 4 cents respectively. This now brings the spot cheese price to $2.0625/lb on the block/barrel average. Whey prices and nonfat powder remain unchanged on the day near the highs of the week. Butter prices actually gained an impressive 5 cents on the week on over 55 loads traded. This could be the potential bottom after the recent washout in spot butter prices.

Spot cheese demand hasn’t slowed down at all throughout this week. The block/barrel average price closed over $2.05 per pound at the highest price of the week. Futures didn’t respond much to the move, potentially skeptical that the breakneck pace can continue. If futures remain skeptical for too long again and spot cheese continues to go higher we could see another limit move higher.


Lisa Heder

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