U.S. takes stronger stance re: ChinaThe door was opened for President Donald Trump to take actions against China after its legislature approved national-security laws on Hong Kong. The U.S., along with Australia, the United Kingdom and Canada, say China violated its inter-national obligations regarding Hong Kong. Beijing says it’s an internal matter. A revocation of Hong Kong’s favored trading status is not anticipated, nor is Trump expected to cancel the Phase 1 trade deal with China. But Trump was reportedly set Friday to announce the U.S. will cancel the visas of some Chinese graduate students and researchers. Beijing does not want to incinerate the relationship with the U.S., given the enormous economic benefits, nor is it willing to back down.

China’s U.S. ag purchases continueFor the week ended May 21, USDA reported 2019-20 net sales to China totaling 192,372 metric tons (MT) of soybeans, 180,107 MT of sorghum, 9,880 MT of corn, 1,414 MT of wheat, 58,556 running bales of cotton, 6,075 MT of pork and 1,561 MT of beef. For 2020-21, USDA reported sales to China of 200,000 MT of soybeans and 113,168 running bales of cotton.

USDA also reported daily soybean sales last week totaling 126,000 MT for old-crop and 264,000 MT for new-crop to China.

China hedging bets in case U.S. trade relations break downChina reportedly purchased 10 to 14 vessels of Brazilian

soybeans for September and October delivery last week.

China to curb U.S. chicken buysThe president of Sanderson Farms says a slow recovery in Chinese restaurant demand after Covid-19 restrictions were lifted means China could be “out” of the market for U.S. chick-en in June. China aggressively imported U.S. chicken after a ban was lifted last November, but now it has excess supplies.

Needed sunshine, heat in forecastForecasts call for warmer and drier conditions across the Corn Belt the first half of June. Heat and sunshine will boost crop emergence and allow planting/replanting to advance.

Corn shows signs of a bottom — Funds covered some of their hefty net short position in corn futures to close out May, signaling a potential upside breakout from the extended sideways range. Front-month corn futures rose to their highest level since mid-April on the continuation chart. But funds must have a catalyst to keep covering shorts as seasonals point the corn market lower from June (see News page 2). Soybean futures were slightly higher last week, but they remain rangebound. All three wheat markets firmed slightly as crop estimates in Europe and the Black Sea region were lowered. Cattle futures appear poised for an upside breakout from the three-week consolidation range as the cash market firms. Hog futures ral-lied after Memorial Day but gave back those gains and then some to finish the week.

USDA clarifies eligibility for CFAPUSDA released the following clarification of contracts/risk management strategies that are eligible/ineligible for Coronavirus Food Assistance Program (CFAP) payments.

Eligible contracts (Entered on or before Jan. 15):• Basis contract • Basis fixed contract• Delayed price contract • Deferred price contract• No price establishedIneligible contracts (Entered on or before Jan. 15):• Cash contract • Hedge-to-arrive contract• Fixed price contract • Window contract• Forward price contract • Option contract• Cash forward contract • Futures fixed contract• Minimum price contract • Futures contract

Next ag aid a matter of when, whatThe Phase 4/CARES 2 aid package is likely still a ways off, as Democrats and Republicans have differing views on what’s still needed. Plus, Republicans want to see impacts from current aid before crafting the next package.

For ag, most sources expect the next bill to include addi-tional payments to producers for 2020 crops, a boost in USDA’s Commodity Credit Corp. borrowing authority and livestock indemnity payments. Additional funding for food/crop pur-chases and more aid for SNAP/food stamps is also likely.

Ethanol output continues to reboundU.S. ethanol production rose 61,000 barrels per day (bpd) to 724,000 bpd, though that’s still down 30% from when Covid-19 restrictions started and 31.5% below year-ago. Ethanol stocks dropped below pre-Covid levels, signaling plants have room to expand ethanol production. Key is how much gaso-line demand rebounds during the summer driving season.

U.S. Q1 GDP revised lowerThe U.S. economy contracted at a 5% annual rate in the first quarter, down from the initial estimate of 4.8%. This was the biggest quarterly decline since the fourth quarter of 2008. Second-quarter GDP will plunge further.

News this week...2 — Studies point December corn lower from June forward.3 — Feedlot data shows supplies heavily backed up. 4 — Our early scenarios for new- crop corn, beans and wheat.

May 30, 2020 Vol. 48, No. 22

Go to ProFarmer.com

May 30, 2020 / News page 2

Follow us on Twitter:@ProFarmer@BGrete

@ChipFlory@JWilson29

@DavisMichaelsen@MeghanVick

IGC: Record global corn, wheat cropsThe International Grains Council (IGC) expects historic global grain production of 2.23 billion metric tons (BMT) this year, up 53 million metric tons (MMT) from 2019, amid record corn and wheat crops. IGC forecasts the global corn crop at 1.169 BMT, up 51 MMT from last year. It expects the world wheat crop to total 766 MMT, up 4 MMT from last year, though European and Black Sea region crops are declining (see the following items). IGC lowered its 2020 global soybean crop forecast by 1 MMT from last month, but it is still expected to rise 27 MMT from last year.

Despite the record corn crop estimate, IGC expects global corn ending stocks to drop 12 MMT from 2019-20. Global wheat ending stocks are forecast to rise 16 MMT from 2019-20.

EU slashes wheat crop forecastThe European Commission slashed its 2020 EU wheat pro-duction forecast by 4.3 MMT to 121.5 MMT. That would be down 9.3 MMT (7.1%) from last year. Much of the decline is expected in top EU producer France, where the commission forecasts a 7.3-MMT year-over-year decline.

The commission cut its 2020-21 wheat export forecast for the 27-country bloc by 1.5 MMT to 26.5 MMT, which would be down 6 MMT (18.5%) from this marketing year.

Drought cuts Ukrainian wheat cropUkraine’s state-run weather forecasting center cut its win-ter wheat crop estimate to 23.3 MMT, which would be down more than 10% from last year. But Ukraine’s grain union says the country’s corn crop could be a record 37 MMT. Ukraine’s economy minister expects the country to produce a total grain crop between 65 MMT and 68 MMT this year, down from a record 75 MMT in 2019.

Ukraine won’t stop wheat exportsUkraine has hit its wheat export quota of 20.2 MMT, according to ag consultant APK-Inform. The country’s deputy economy minister says the government does not plan to increase the quota, but also that “we do not plan any restrictions.” The lack of action despite the wheat export quota being hit suggests the Ukrainian government feels comfortable there will be plentiful supplies to meet domestic needs. If an export quota for 2020-21 is needed, it won’t likely come until near the end of the marketing year.

Russian wheat crop cut, tooIKAR cut its Russian wheat crop estimate to 75.6 MMT, which is down 1.6 MMT in the past two weeks, signaling recent rains were too late to help the driest areas.

Despite the smaller crop, consultant SovEcon expects Russian wheat exports to rise 4 MMT to 36.8 MMT in 2020-21.

Corn crop off to strong startUSDA’s initial condition ratings pegged the corn crop at 70% “good” to “excellent,” in line with the 10-year average. But there’s quite a divide in conditions between the west-ern Corn Belt and the eastern Belt. USDA’s “good” to “excellent” ratings are 82% in Nebraska, 81% in both Iowa and Minnesota, 74% in South Dakota, 67% in both Missouri and North Dakota, and 63% in Kansas. Conversely, USDA rates only 49% of the crop in the top two categories in Michigan, 54% in Ohio, 55% in Illinois and 64% in Indiana. The outlier in the eastern Belt is Wisconsin at 79%.

When USDA’s ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), corn starts at 377.9 points, which is 1.7 points below the 10-year average for the end of May.

Seasonal studies: December corn futures are headed lowerIn years when corn stocks-to-use is projected above

17.5% (as it is for 2020-21), December futures typically fall by an average of nearly 15% through fall, excluding 1993. Including that year, corn still dropped nearly 10%.

W h e n U S D A ’ s initial corn condit ion rating is 70% or greater (as it is this year), December f u t u r e s drop on a v e r a g e about 10% from June 1 t h r o u g h September.

Fut u res will likely face price p r e s s u r e through at least sum-

mer unless there’s a weather event or China actively buys U.S. corn, causing funds to cover their large short position.

December corn futures based on stocks-to-use

June July Aug Sept Oct Nov

105

100

95

90

85

80S/U 17.5%-plus S/U 17.5%-plus,

excluding 1993

Other years

December corn futures based on initial crop condition

June July Aug Sept

110

105

100

95

90

85

70%-plus good to excellent

All years

Less than 67% good to excellent

May 30, 2020 / News page 3

Covid-19 impacts on feedlot activityUSDA’s Cattle on Feed Report estimated there were 11.2 million head of cattle in large feedlots (1,000-plus head) on May 1, down 5.1% from last year. That was the fewest num-ber on feed for this date since 2017, and 43,000 head less than the five-year average. April placements plunged

22.3% from year-ago, while marketings plum-meted 24.3%. Placements were the second lowest for April since USDA’s

data series began in 1996. Marketings were record-low for the month. The report also showed an increase of 10,000 head in feedlot “disappearance,” reflecting animals that were moved off of feed and put back on grass due to slaughter disruptions.

The backlogged feedlot situation created by Covid-19 slowdowns and closures at slaughter plants were reflected in the number of cattle on feed for an extended period. Cattle on feed for 120 days or more increased 9.2% from last year, with those in feedlots for five months or more up 12%.

China April pork imports record-largeChina imported a record 400,000 metric tons (MT) of pork in April, according to its customs data, up 170% from last year. Through the first four months of the 2020 calendar year, China imported 1.35 million metric tons (MMT) of pork, also up 170% from the same period last year.

In addition to aggressive imports, Beijing continues to auc-tion state-owned pork stocks. China has sold at least 330,000 MT of pork from reserves so far this year. China’s ag minis-try says supplies now exceed demand, which has caused domestic pork prices to decline 26% since April. But China’s pork production is still shy of domestic demand, meaning more imports and sales of reserve stockpiles will continue.

China also brought in 160,000 MT of beef in April, up 28% from last year. Beef imports the first four months of the year rose 54% to 680,000 MT.

China’s top hog farm to triple outputWens Foodstuffs Group Co. Ltd., China’s largest hog pro-ducer, built nine new pig operations that will produce 1.2 million pigs per year during the first quarter of the year, despite challenges related to the Covid-19 pandemic. It has 79 other projects planned or under construction that will have capacity to produce 7.75 million pigs and 260 million chickens per year as the government provides incentives to increase hog production after African swine fever cut the country’s hog herd by more than 50%. Wens raised 18.5 mil-lion hogs in 2019 and hopes to triple its output by 2024.

Producer Crop Comments...Please send crop comments to editors@profarmer.com.

Bremer Co. (northeast) Iowa:“A little heat mixed with recent rain means our beans should finally take off. It’s been really slow out of the ground with cool temps, but the beans are starting to come along nicely.”

Woodbury Co. (west-central) Iowa:“Despite a few challenges, I’m very thankful for how our crops are looking at this point. There’s a lot of potential, but a long way to go.”

Fremont Co. (southwest) Iowa:“We’ve had plenty of rain. Corn looks good, but some soybeans are uncomfortably wet right now.”

Red River Valley, North Dakota:“Soils are starting to dry out, but it’s certainly not a good situation to get our crops planted. I have never seen anything like this spring — ever.”

LaMoure Co. (southeast), North Dakota:“Finally started our 2019 corn harvest.”

West-central Minnesota:“Our corn is recovering nicely from the freeze. Ten days since the freeze and it’s showing good growth.”

Southeast Minnesota:“Rain makes grain, but this is too much. We’ve had 7.2 inches since May 16.”

Dawson Co. (central) Nebraska:“Only had one field of corn to replant from the freeze. Otherwise, corn and soybeans are responding to the sun.”

Sedgwick Co. (south-central) Kansas:“Wheat is about two weeks from the earliest being ready to harvest. Corn looks good and is about a foot tall.”

Kankakee Co. (east-central) Illinois:“Dried up enough to scout fields. After eight to nine inch-es of rain I found a refrigerator, a dead fish, a tire and a washout the size of a tractor in fields five miles apart. I have never seen so much dirt moved by one storm.”

Knox Co. (southwest) Indiana:“Now that the White River flooding is receding, my best guess is we have 450 to 500 acres to replant.”

Allen Co. (northeast) Indiana:“My wait to have close to perfect planting conditions was spoiled by Mother Nature. Now I’m dealing with crust in corn that planted beautifully.”

USDA Average actual estimate (% of year-ago)

On Feed May 1 94.9 95.1Placed in April 77.7 77.4Mkted in April 75.7 75.1

Cattle on Feed Report

USDA raises grocery price forecastApril food-at-home (grocery) prices increased 2.7% from March, the largest month-to-month increase in 30 years, and 4.1% higher than last year. USDA now expects grocery prices to rise 2.0% to 3.0% in 2020, up from its prior outlook for prices to increase 0.5% to 1.5%. Food-away-from-home (restaurant) prices are still expected to increase between 1.5% and 2.5% this year.

May 30, 2020 / News page 4

New-crop corn ending stocks will rise. We project soybean and wheat carry-

over will decline unless there’s excellent weather. Our new-crop balance sheets look at three weather scenarios for each markets. Corn: Our old-crop ending stocks forecast

is 47 million bu. higher than USDA’s, primar-ily due to lower corn-for-ethanol use. While ethanol demand has started to recover, sum-mer driving demand will be less (potentially far less) than normal.

For 2020-21, our “average” weather scenario uses a slightly higher-than-trendline yield, reflecting the strong start to the growing sea-son in many areas. But our planted acreage is down 1.2 million from USDA’s March inten-tions. We expect total supplies to swell more than 2 billion bu. and use to increase just over 1 billion bushels. That will cause ending stocks to surge more than 1 billion bu. and the average cash price to drop to $3.00. Even under “poor” weather, corn ending stocks would swell and prices would drop. Soybeans: We have about the same outlook

for old-crop ending stocks and price as USDA.For the 2020-21 marketing year, we increased

planted acreage 1 million acres from USDA’s March intentions and raised the yield by 1.2 bu. per acre from trendline with average weather. That would cause total supplies to rise nearly 400 million bu. from this year. But we expect use to increase even more, pulling ending stocks down slightly from this year, though we expect a lower average cash price. The poor and excellent weather scenarios would shift ending stocks enough to have significant price impacts. Wheat: Our old-crop ending stocks are

slightly higher than USDA’s forecast, though not enough to negatively impact price.

For 2020-21, we expect ending stocks to fall under the average and poor weather scenari-os, which would support higher cash prices. Even with excellent weather, we expect end-ing stocks to hold steady, though price is likely to decline slightly.

Corn Supply/Demand 2019-20 2019-20 2020-21 2020-21 PF/Doane Proj. USDA PF/Doane USDA Poor Average ExcellentPlanted (mil. acres) 89.7 89.7 97.0 95.0 95.8 97.0Harvested (mil. acres) 81.4 81.4 89.6 87.0 88.3 89.6Yield (bu./acre) 167.8 167.8 178.5 171.0 180.0 186.0 million bushels Beginning Stocks 2,221 2,221 2,098 2,145 2,145 2,145Production 13,663 13,663 15,995 14,877 15,894 16,666Imports 45 41 25 48 36 24Total Supply 15,928 15,925 18,118 17,070 18,075 18,835 Feed and Residual 5,700 5,700 6,050 5,550 5,900 6,200Food, Seed, Industrial 6,355 6,305 6,600 6,700 6,700 6,750 Ethanol for Fuel* 4,950 4,900 5,200 5,300 5,300 5,350Total Domestic Use 12,055 11,905 12,650 12,250 12,600 12,950Exports 1,775 1,775 2,150 2,150 2,275 2,350Total Use 13,830 13,780 14,800 14,400 14,875 15,300 Carryover 2,098 2,145 3,318 2,670 3,200 3,535Days’ Supply 55.4 56.8 81.8 67.7 78.5 84.3Stocks-to-use Ratio 15.2% 15.6% 22.4% 18.5% 21.5% 23.1%Proj. avg. price/bu. $3.60 $3.50 $3.20 $3.30 $3.00 $2.75 * “Ethanol for Fuel” is included in the Food, Seed & Industrial total.

Soybean Supply/Demand 2019-20 2019-20 2020-21 2020-21 PF/Doane Proj. USDA PF/Doane USDA Poor Average ExcellentPlanted (mil. acres) 76.1 76.1 83.5 84.0 84.5 85.0Harvested (mil. acres) 75.0 75.0 82.8 83.1 83.6 84.1Yield (bu./acre) 47.4 47.4 49.8 47.0 51.0 54.0 million bushels Beginning Stocks 909 909 580 585 585 585Production 3,557 3,557 4,125 3,906 4,265 4,541Imports 15 15 15 19 15 14Total Supply 4,481 4,481 4,720 4,510 4,865 5,140 Crush 2,125 2,120 2,130 2,100 2,140 2,170Exports 1,675 1,675 2,050 1,975 2,050 2,125Seed 97 98 100 104 102 100Residual 4 3 35 31 33 45Total Use 3,901 3,896 4,315 4,210 4,325 4,440 Carryover 580 585 405 300 540 700Days’ Supply 54.3 54.8 34.3 26.0 45.6 57.5Stocks-to-use Ratio 14.9% 15.0% 9.4% 7.1% 12.5% 15.8%Proj. avg. price/bu. $8.50 $8.50 $8.20 $9.00 $8.10 $7.75

Wheat Supply/Demand 2019-20 2019-20 2020-21 2020-21 PF/Doane Proj. USDA PF/Doane USDA Poor Average ExcellentPlanted (mil. acres) 45.2 45.2 44.7 44.5 44.7 45.0Harvested (mil. acres) 37.2 37.2 37.7 37.0 37.6 38.2Yield (bu./acre) 51.7 51.7 49.5 47.5 49.2 51.5 million bushels Beginning Stocks 1,080 1,080 978 990 990 990Production 1,920 1,920 1,866 1,758 1,850 1,967Imports 105 100 140 152 140 128Total Supply 3,105 3,100 2,984 2,900 2,980 3,085

Food 962 966 964 965 967 969Seed 60 59 61 65 63 61Feed/Residual 135 135 100 100 115 140Total Domestic Use 1,157 1,160 1,125 1,130 1,145 1,170Exports 970 950 950 920 925 925Total Use 2,127 2,110 2,075 2,050 2,070 2,095 Carryover 978 990 909 850 910 990Days’ Supply 167.8 171.3 159.9 151.3 160.5 172.5Stocks-to-use Ratio 46.0% 46.9% 43.8% 41.4% 44.0% 47.3%Proj. avg. price/bu. $4.60 $4.60 $4.60 $5.00 $4.70 $4.50

Weather will have greatest impact on soybean marketby Editor Brian Grete and Chief Economist Bill Nelson

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson • Washington Policy Analyst Jim Wiesemeyer

Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis Michaelsen • Sr. Economist Alan BarrettSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2020 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber • Division President Grey Montgomery

Feed MonitorFEED

Corn Game Plan: We have no forward cov-erage past June 1. You should plan to go hand-to-mouth until the market confirms that it has reached a price low. At that point, we will likely increase forward coverage.

Meal Game Plan: We have no forward coverage after June 1. Plan to keep pur-chases at hand-to-mouth levels. The next sharp break may offer attractive long-term buying opportunities.

Corn II’20 0% III’20 0% IV’20 0% I’21 0%

Meal II’20 0% III’20 0% IV’20 0% I’21 0%

Analysis page 1

$317.30

$304.10

DAILY JULY MEAL

DAILY JULY LEAN HOGS

Position Monitor

HOGS - Fundamental AnalysisFutures firmed after Memorial day but could not sustain the rebound. The pork cutout is in retreat as slaughter rates rebound. Packers have indicated they do not expect slaughter to get much above 90% of capacity, increasing the backlog of market-ready supplies. Still, reduced pork supplies through summer will help to keep the cutout elevated, which should support cash index. The online reservation service OpenTable showed restaurant business jumped to a 10-week high, with more states set to open sit-down dining the next two weeks. Focus is now on deteriorating Chinese relations and impacts on U.S. pork exports.

Game Plan: Futures’ discounts have narrowed but still remain below the CME cash index. We’ll evaluate late-summer and fall hedges after the next rally.

CHOICE BEEF CUTOUT ($/CWT.)

PORK CUTOUT VALUE ($/CWT.)

Position MonitorGame Plan: Hedges are risky with futures trad-ing far below the cash market. We are willing to keep all risk in the stronger cash market at this time.

Feds Feeders II’20 0% 0% III’20 0% 0% IV’20 0% 0% I’21 0% 0%

A close above $101.50 would target resistance at $108.25.

Initial support at the uptrending line near $98.80 is backed by the 40-day moving average (green line) near $93.25.

The 40-day moving average (green line) near $57.20 remains

initial resistance. Stronger resistance is at $66.10.

Initial support is at $54.25. Strong support is the April 6 contract low at $49.00.

DAILY AUGUST LIVE CATTLE

$101.50

CATTLE - Fundamental AnalysisCattle futures remain supported by firm packer bids. Cattle slaughter reached 110,000 head on May 27, the largest since April 6 when prices bottomed. That is still about 8% below the daily average in March. As slaughter recovers, beef prices continue to deflate but remain elevated and are producing packer margins of $1,000 per head. While beef prices decline and marketings remain backlogged, the Choice cutout continues to command a significant premium, a sign of strong consumer demand. The substantial discount to today’s cash cattle prices supports futures as does optimism for the reopening of global economies.

$286.50

$108.25

$76.875

$66.10

$80.50

$297.50

May 30, 2020ANALYSIS

Lean Hogs II’20 0% III’20 0% IV’20 0% I’21 0%

Initial resistance is at $286.50. Stronger

resistance is the broken support line at $297.50.

The contract low at $281.50 is initial support, followed by $278.00 on the continuation chart. $281.50

$49.00$49.00

$54.25$54.25

May 30, 2020 / Analysis page 2

$5.30 1/2

DAILY JULY SRW WHEAT

WHEAT - Fundamental AnalysisSRW - Futures rebounded on output cuts for crops in the EU, Ukraine and Russia and worries about hot, dry weather risks in the U.S. Plains. Upside may be limited until there are new weather risks. Still, look for price breaks to garner global importer buying. Wheat may be forming early seasonal lows.

Position Monitor

Game Plan: Be prepared to sell into strength if disappointing rainfall and coverage occurs in Europe and the Black Sea areas. Better ex-port news would also provide fresh strength to the market.

Initial resistance at the 40-day moving average (green line) near $5.26 1/2 is

backed by horizontal resistance at $5.30 1/2. Key resistance is the

downtrend line near $5.53.

Initial support is the March low at $4.94 1/4. Stronger support is at $4.60 (not shown). $4.94 1/4

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (JULY)

CORN - Fundamental AnalysisAfter three weeks of leaning on the short side of the market, funds covered a portion of those large bearish positions. A tilt toward warmer and drier weather helped to trigger buying, and as prices rose above key moving averages, active fund short-covering ensued. Warmer temperatures will boost growing degree units that have been running behind since April. Heat must continue into pollination to increase supply risks. Weekly ethanol data showed a continued recovery in production and demand, along with a fifth week of declining inventories. With production up 34% from the lows, plants continued to raise cash bids. Exports are routine and South America will be an aggressive competitor.

Initial resistance is at $3.43.Stronger resistance is at $3.55 1/4.

Initial support is the April 21 contract low at $3.25 1/2. Stronger support is at $3.10 on the continuation chart (not shown).

DAILY DECEMBER CORN

$3.55 1/4

$3.25 1/2

$3.75

$3.43

DAILY JULY CORNPosition Monitor

Game Plan: Make sure the stop-close-only or-ders for old- and new-crop hedges are in place as a close above the April 23 highs in corn futures could trigger an extended price cor-rection. Keep stop-close-only orders at $3.31 in July corn and $3.43 in December corn on hedges covering 50% of old- and new-crop supplies. Cash marketers should be prepared to increase old-crop sales on rallies.

A close above strong resistance at $3.31would target the downtrend near $3.54.

Initial support is the uptrend linenear $3.17 3/4. Stronger supportis the April 21 contract low at $3.09.

$3.31

$3.09

’19 crop ’20 crop

Cash-only: 60% 0% Hedgers (cash sales): 50% 0% Futures/Options 50% 50%

’19 crop ’20 crop

Cash-only: 100% 30% Hedgers (cash sales): 100% 30% Futures/Options 0% 0%

May 30, 2020 / Analysis page 3

DAILY JULY HRS WHEATDAILY JULY HRW WHEAT

HRW - Prices rallied from the March lows, but the extent of this rebound will largely depend on June weather. World prices are also firming, keeping U.S. wheat competitive in Asian markets amid recent dollar weakness. Russia wants lower domestic flour prices. The focus will be on Russian prices into harvest and any changes in export policies.

$8.87

DAILY NOVEMBER SOYBEANS

HRS - Spring wheat planting advanced to 81% completed, behind the 90% average for the week amid wet soils. Some delays also continue in the Canadian Prairies. New-crop HRS exports are beginning to pick up but remain about equal to last year’s pace. Market bulls will be watching for new sales with the recent weakness in the dollar.

$8.36 3/4

$9.00

A close above downtrending resistance near $5.23 would

target $5.51 1/2.

A close below the contract low at $5.02 would target support at $4.88.

A close above old support at $4.73 would turn the trend higher.

$4.73

Support is at the contract low of $4.27 1/4.

$8.31

$4.27 1/4

$5.51 1/2

$5.02

Downtrending resistance is near $8.67. Stronger resistance is at $8.87.

Initial support at the March 18 low of $8.36 3/4 is backed by contract-lowsupport at $8.31.

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (JULY)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (JULY)

SOYBEANS - Fundamental AnalysisSoybeans rebounded from support on hot, dry weather forecasts and a rebounding Brazilian currency. Soybean planting is off to a quick start, reducing crop risk until pod set in August. Rallies struggled to keep up with corn amid reports that China and Ukraine were buying Brazilian beans, despite their premiums to U.S. quotes. Beijing needs to assess the risk of deteriorating trade relations with President Donald Trump and potential Covid-19-related supply chain issues in Brazil and how the country protects itself from supply disruptions. Strong gains in world vegetable oil demand and prices were more than offset by new price lows in the soybean meal market.

Initial support is the March 18 low at $8.29. Stronger support is at the April 21 contract low at $8.18 1/2.

$9.20 1/2

$8.29

$8.61 1/4

Position Monitor ’19 crop ’20 crop

Cash-only: 70% 0% Hedgers (cash sales): 70% 0% Futures/Options 0% 0%

Game Plan: On May 27, we advised soybean hedgers and cash-only marketers to enter a standing order to sell another 15% of 2019-crop in the cash market if July futures hit $8.70. This would push old-crop cash sales to 85%. We want to be patient on many new-crop sales, with November futures below the spring crop insurance price. Any rallies near $8.90 would be selling opportunities.

DAILY JULY SOYBEANS

$8.18 1/2

$8.95 3/4

$8.77 1/2

A close above $8.61 1/2 wouldwould target stronger resistance

at $8.77 1/2 and $8.95 3/4.

May 30, 2020 / Analysis page 4

’19 crop ’20 cropCash-only: 100% 10% Hedgers (cash sales): 100% 0% Futures/Options 0% 25%

75.61

New Member App Download the Pro Farmer app, included with your membership! Search for “Pro Farmer” in your app store. Available on Apple and Android devices.

Census Export Sales ReportWatching April meat, ethanol sales.

THUR 6/410:00 a.m. CT

5

USDA Export Sales ReportWatching for more China business.

THUR 6/47:30 a.m. CT

4

USDA Crop Progress ReportFirst soybean condition rating.

MON 6/13:00 p.m. CT

3

USDA Ethanol Crush ReportSharp drop in corn grinding likely.

2

USDA Export Inspections Corn shipments remain active.

MON 6/110:00 a.m. CT

1

WATCH LIST

MON 6/12:00 p.m. CT

The Brazilian currency has rallied more than 12% against the dollar since falling to a record low on May 8. Rising Covid-19 cases in Brazil may encourage China to increase purchases of U.S. beans to insure against shipping interruptions.

Hot, dry weather this week will begin to get speculators watching for any signs of an extended adverse weath-er pattern for new buying incentives.

With the U.S. crop off to a good start, rallies need to be rewarded with both old- and new-crop sales. If Trump later this summer believes he is going to lose the November election, risks increase that he will turn very aggres-sive against China. Beijing has already turned up the heat.

The soybean market will require a shot of demand to reach our latest old-crop sales orders (see Analysis page 3).

After recent purchases and renewed pledges by Beijing that it will work to implement the Phase 1 trade agreement, the market has struggled to extend rallies.

Traders are concerned about rising tensions in U.S./China relations on mul-tiple fronts. China reportedly bought fall-delivered Brazil beans last week.

Prices are stuck in a broad, sideways range, catching traders selling weakness and then begging them to get long on rallies. Total open interest in soybeans is more than 90,000 contracts higher than a year ago, suggesting there is some upside potential in the near term.

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Currencies: Last week, China set a reference rate for the yuan at its weakest point in 12 years, a signal that Beijing sees the benefits of a weaker currency as it grapples with an economic slowdown and rising tensions with Washington.

The People’s Bank of China set a daily midpoint for the yuan at 7.1293 per dollar, the lowest level since February 2008. It effectively tells the world how far China is prepared to allow its currency to move.

GENERAL OUTLOOKA weaker currency makes China more

competitive with other exporting nations, including the United States. So, this can be seen as a very provocative gesture.

The yuan rose above 7 per dollar in August, prompting President Donald Trump to accuse Beijing of manipulat-ing its currency. The Covid-19 pan-demic, with sensitive issues for both countries, amps up the tensions between the two largest economies.

DAILY DECEMBER COTTON

Game Plan: Hold short hedges in De-cember cotton futures to cover 25% of expected 2020 production. We plan to extend cash sales on further rallies.

Position Monitor AVERAGE COTTON BASIS (JULY)

COTTON - Fundamental AnalysisPlanting was 53% done last week, in line with average, with some delays noted in the Southeast. China has been the domi-nant buyer of U.S. cotton for four con-secutive weeks, but given mounting ten-sions, traders should not be surprised if China cancels some earlier purchases.

COTTON EXPORT BOOKINGS (’000 BALES)

MONTHLY CHINESE YUAN VS. DOLLAR

The yuan’s growing weakness versus the dollar will increase tensions with the White House.

Initial support at thethe 40-day moving average (green line) near 56.60¢ is backed by horizontal support at 55.11¢. Strong support is the April 2 contract low at 50.18¢. 50.18¢50.18¢

Initial resistance is at $59.50¢.Stronger resistance is

the downtrend line near 64.18¢.

59.50¢59.50¢

55.11¢55.11¢