Morning Comments; Thursday, June 25th, 2020
Agrivisor - SETZ - Thu Jun 25, 6:36AM CDT

We are starting to see mixed field reports from across the Corn Belt, which is not uncommon as the growing season gets underway. This is especially the case on corn where yield estimates are starting to vary a considerable amount. In regions where weather conditions have been favorable, we have seen yield estimates rise, with some topping the 180 bushel per acre mark. This is only 1.5 bpa above what the USDA projected in the June WASDE report, but would be enough to add from 125 to 150 million bu of production to current estimates given projected corn plantings. This also seems like a minimal amount but would be enough to push ending stocks on corn closer to the 3.5 billion bu level. There is little doubt we would see additional market pressure if this number starts to be projected. At the same time, other field reports are calling for lower corn yields as they have seen drought develop in recent weeks. This is mostly in the Plains, but other regions are reporting drier than normal soils as well. These regions claim their corn yield will be under trend this year. It is quite likely that both of these possibilities are correct depending upon where you are. Historically, current data does indicate a corn yield that would come in under what the USDA is presently predicting. This is based off similar years with similar crop ratings and soil conditions. Most indications are the final corn yield at this time would be closer to 174 bpa than the 178.5 bpa the USDA is projecting. We have the critical month of July right in front of us, which is where many agronomists claim corn yield is determined. We are seeing the same outlooks in soybeans, but they are not getting much attention given the length of the growing season for the crop.

Highlights

* EU may impose travel restrictions on US

* US may elevate tariffs on EU

* Crop conditions to stabilize this week

* Areas of crop stress to shrink

* Crude oil volatility building

* US ethanol production +6.2% last week

* Highest weekly production since March

* Corn use for ethanol jumps to 91 mbu

* Concerns build over Covid economic recovery

* Positioning increases for June 30th reports, month and quarter end

Corn

* EU lowers import tariff

* So Africa crop up 38%

* Export basis remains steady

* WCB basis 18 cents under ECB

* Trade questions Chinese interest

Soybeans

* China accounts for 30% of US soy exports

* Canadian canola crop is variable

* Summer export basis is weaker

* 75 cent spread between interior and export basis

* Open interest declining

Wheat

* Harvest pressure building

* Yields mostly above expectations

* EU wheat weaker, pressures US

* Lower US dollar a benefit for demand

* Damage reports to Plains wheat increasing

Livestock

* US beef supply is growing

* US pork supply lowest since 2011

* US slaughter numbers growing

* Brazil firms agree to Non-Covid certification

* Hog inventory report after close

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Karl Setzer Grain Commentary