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Corn Outlook:
Earlier this year we all knew that geopolitics were driving the grains higher and, eventually, they would collide with the fundamentals. That has happened with corn futures falling 13 percent from their May high. Where do they go now? The funds have abandoned their longs, and the market has fallen to a level that may begin to attract commercial interest. However, a long road is ahead as weather is non-threatening through the third week of June. In the crop report, the USDA left production unchanged at 15.9 BB, the yield at 183.0 bpa, and ending stocks at 1.960 BB. Meanwhile, global stocks rose 3.7 million tons to 281.2 million. Argentina’s production is up 2.0 million tons to 61.0 million with Brazil up 3.0 million to 138.0 million. Bottom line—there were no surprises in the report and it is back to weather.
Bean Outlook
Will China buy soybeans as President Trump alluded to several weeks ago? This is what drove the market higher, but what happens now as China is silent? In my opinion, they may stand pat and wait until the mid-term election. If the Democrats take the house, President Trump will become a lame duck president and likely face a third impeachment. Should this occur, China may turn a blind eye to additional purchases. In the crop report, the USDA left production unchanged at 4.4 BB, the yield at 53.0 bpa, and ending stocks at 310 MB. However, global stocks are up 100,000 tons to 124.9 million tons. Argentina’s production is up 2.0 million tons to 50.0 million while Brazil is unchanged at 180.0 million. The bottom line is there is nothing in the report for the bulls.
Wheat Outlook:
Wheat has been under intense selling pressure, but that may be ending as excessive rainfall is causing quality concerns and possible harvest delays. Last week, harvest was 11 percent complete compared to 4 percent a year ago and 6 percent for the average. In the crop report, the USDA lowered ending stocks 18 MB to 744 MB but increased global stocks 400,000 tons to 275.4 million. All wheat production is down 18 MB to 1.543 BB with the winter crop down 18 MB as well to 1.030 BB. Bottom line—the report is slightly friendly from production being lowered.
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