Morning Comments; Monday, May 18th, 2020
Agrivisor - SETZ - Mon May 18, 6:37AM CDT

Corn planting is expected to be in its final stages when we get tonight’s progress numbers. The question now is what may happen to remaining acres. Some of these are in regions where rainfall is again at elevated levels and producers are struggling to get in the fields. One of these is North Dakota where some of last year’s corn is still in the field. These areas may not be large though, and to see plantings decrease from the huge 97-million-acre prediction used in new crop balance sheets would not come as a surprise. The fact remains that even if the US would see planted acres decrease an expected 3 to 4 million, they would still be record sized and more than enough to produce a crop that would cover projected demand and then some. We are now at a stage where less attention will be on plantings and more on crop condition. Replants have taken place in some regions of the US where flooding took place in late April, and now we are hearing of the same in regions where the early May freeze happened. Replants do not necessarily mean we will see a decrease to production, but it does raise the possibility. Trade is also going to closely monitor plantings to see if producers push forward with plantings or take their prevent plant option like many have indicated. Trade will also closely monitor demand this week, mainly to see if China continues its string of soybean purchases. China has booked several vessels of soybeans in the past few weeks and the question now is if this continues as trade tensions between the two countries is escalating. The fact remains that China needs soybeans, and until the South American harvest begins next winter, the US is the only source in the global market.

Highlights

* Weather to turn more favorable this week

* Trade expects corn planting at 80% tonight, soybeans at 60%

* Market contains no risk premium

* More US ethanol plants back online

* Biofuel relief included in latest stimulus proposal

* Pockets of dry soil spreads in WCB

* China looks to expand US trade

* Argentine harvest winding down on soybeans

* US retail sales record low in April

* Land values being impacted by Covid as well

Corn

* US corn supply at 33 year high

* Gulf basis starting to firm

* Ethanol plants again posting fall bids

* South Korea continues to pass on US offers

* North Dakota nearly 90% unplanted

Soybeans

* Chinese soy inventory building

* Chinese projected soy imports a record 3.53 bbu

* May take China 5 months to work through recent arrivals

* Gulf basis weakens

* More reports of acreage shifting

Wheat

* Brazil reports record low wheat inventory

* Prevent plant likely in spring crop

* US may lose share of global market

* Privates believe US wheat production is over-estimated

* World market on track for 3rd consecutive record crop

Livestock

* US may increase Mexican beef imports

* Cut out values continue to soften

* US consumers may not return to restaurants

* Covid to reduce US meat demand 4%

* Chinese pork demand has slowed

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

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Karl Setzer Grain Commentary