Morning Comments; Tuesday, May 19th, 2020
Agrivisor - SETZ - Tue May 19, 6:32AM CDT

As expected, a large amount of planting took place across the United States last week. The US corn crop is 80% planted which is right at expectations. Soybean planting was a little slower than expected at 53%, which is still ahead of the five-year average. Given recent weather and where planting needs to be done, advancement may start to slow. The equity markets shot higher yesterday, which finally put some pressure on the US dollar. While still at historically high values, the setback will likely start to spur export interest. The biggest outside influence that has turned more favorable for commodities is the rise in energy demand. While still not close to the levels seen prior to the Covid-19 outbreak, it appears as though the worst may be behind us for now. The biggest story in the market is the possibility of a vaccine being discovered that would help with the Covid infection. This remains a long way from being ready for mass usage, but the simple fact progress has been made is positive. Several investors have claimed they were waiting for a vaccine before re-entering the markets, and now that this is here, we will likely start to see more buying surface. Funds are already heavily long in the soy complex, so buying would likely be most notable in corn. That said, long-term fundamentals currently support soybeans over corn, so we could continue to see buying in that complex. This is all dependent upon how long it takes for a vaccine to be approved, and if we see a resurgence of Covid as states start to reopen. Trade will continue to monitor trade developments between the US and China today as tensions are rising, even though China has booked several soybean cargos in recent days. The latest rift centers on technology issues and how the US wants to again block Huawei products. This could jeopardize the entire Phase 1 agreement.

Highlights

* Rains delay plantings in parts of US

* Planting interest is now on fringe areas

* China seems to disregard President Trump comments on trade

* China wishes to build commodity reserves

* Funds add to corn short, soybean long positions

* New crop corn/soy ratio 2.54:1

* Brazil 2021 soybean crop already 30% sold

* Energy product demand rising

* Global economy remains worrisome

* Basis values starting to firm in some regions

Corn

* Corn 80% planted, 71% is average

* Corn is 43% emerged, 40% is average

* Funds hold historically large short position

* Reports of more ethanol plants coming back on-line

* Export basis continues to firm

Soybeans

* Soybeans 53% planted, 38% is average

* Soybeans 18% emerged, 12% is average

* Larger acres/carryout is likely

* Gulf basis weakens, indicates all exports are to China

* Wet weather to delay plantings

Wheat

* Winter wheat 52% G/E, -1%

* Spring wheat 60% planted, normal is 80%

* US wheat values at 7-month low

* Australian share of global market rises to 8%

* Black Sea share of world market is 33%

Livestock

* Slaughter continues to recover

* Weekly numbers +47,000 cattle, +238,000 hogs

* Slaughter still unlikely to reach pre-Covid numbers

* Packers seeing higher weights on re-opening

* Slight increase seen in restaurant demand

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.




 

Market Commentary provided by:

Karl Setzer Grain Commentary