Smaller crop pegs coming Sept. 11 USDA is widely expected to lower the corn and soybean crop estimates from its August pegs of 15.278 billion bu. for corn and 4.425 billion bu. for soybeans. The September estimates will be the first to incorporate objective field data, along with farmer surveys and satellite imagery. USDA’s National Agricultural Statistics Service also resurveyed corn and soy- bean harvested acreage in Iowa following the Aug. 10 derecho. Smaller crop forecasts typically lead to reductions in demand. With China aggressively buying U.S. corn and soy- beans, the World Board’s changes to the demand side of the new-crop balance sheets will be closely scrutinized. China still has a lot of buying left Chinese purchases of U.S. ag goods (less forestry) totaled $7.72 billion through July, according to USDA’s Foreign Ag Service. According to Farm Bureau analysis, Chinese pur- chases were 44% below the pace needed to meet its Phase 1 commitment. From August through December, China would need to buy around $23 billion of U.S. ag goods — an average of $4.6 billion per month to reach the Phase 1 target. Since 2010, the U.S. has only exported more than $4.6 billion of ag goods to China once — November 2013. The monthly figure has only topped $4 billion six other times over that span. China corn supply crunch tightening China will have about a 25-million-metric-ton (MMT) corn deficit in 2020-21 if exports don’t increase from the projected 7 MMT, according to state-run China National Grain and Oils Information Center. Beijing has used aggressive sales of state- owned reserves to bridge the gap the past five years. But state-owned reserves are about exhausted and prices of remaining stocks are now at or above levels of imported corn. China already has 7.5 MMT (296 million bu.) of U.S. corn purchases on the books for 2020-21, with another 1.2 MMT (47 million bu.) in daily corn sales announcements from USDA last week. Given the supply crunch and its Phase 1 commitments, we wouldn’t be surprised to see China import 10 MMT (394 million bu.) or more of U.S. corn in 2020-21. Soybeans continue higher, hogs surge — November soybean futures extended their strong rally off the August lows, as funds remained active buyers amid falling crop forecasts. December corn futures paused after failing to find fresh buyers above the July highs. Fund short-covering in the corn market eased, despite declining crop estimates from private firms. Wheat futures posted modest gains, led by strength in HRS contracts. Traders’ reaction to USDA’s Crop Production and Supply & Demand Reports on Friday will set the price trends for grain and soy futures into fall. Cattle futures extended their corrective pullback amid weak- ening cash cattle prices. Front-month lean hog futures surged to the highest level since late May as weekly export sales were the most since last November, led by strong Chinese purchases. CFAP 2 rules coming this week USDA Secretary Sonny Perdue says details about the second round of Coronavirus Food Assistance Program (CFAP 2) will be announced this week. The payments will be designed to compensate farmers for losses incurred from April 15 through the end of this year. Perdue said there would be no payments for ethanol producers, textile mills and other pro- cessors of ag commodities. USDA would need additional authority from Congress to make those kinds of payouts. Federal deficit may hit $3.3 trillion! The federal deficit projection from the Congressional Budget Office for fiscal year 2020 would be more than triple the level from last year and 16% of GDP — the largest since 1945. Much of the red ink this year has been caused by pandemic aid. The federal deficit is likely to go higher as Congress enacts future Covid-19 legislation (see News page 4). U.S. trade deficit hits 12-year high The U.S. trade deficit surged to $63.6 billion in July, the largest imbalance since July 2008. The July deficit was driven by a record 10.9% increase in imports. Exports rose by a smaller 8.1%. The trade deficit with China totaled $31.6 billion, an 11.5% increase from the June imbalance. The U.S. had an ag trade deficit of $601.5 million in July, as exports totaled $10.314 million against imports of $10.915 million. Through July, the U.S. ag trade surplus stood at $1.133 billion. A surplus of $2.167 billion is needed the final two months of the fiscal year to achieve USDA’s implied level of $3.3 billion, which would be a 48-year low. Jobs growth slowed in August The U.S. economy added nearly 1.4 million non-farm pay- rolls last month, which was in line with expectations but down nearly 363,000 jobs from the revised July figure. The unemployment rate dropped more than expected to 8.4% — the lowest level since the pandemic started. In August, the number of permanent job losses stood at 3.4 million, an increase of 2.1 million since February. News this week... 2 — Corn, soybean crop estimates declining. 3 — Gov’t payments boost farm income forecast. 4 — Impasse continues, but more Covid aid coming. September 5, 2020 Vol. 48, No. 36 Go to ProFarmer.com
Transcript
Smaller crop pegs coming Sept. 11USDA is widely expected to lower the corn and soybean crop estimates from its August pegs of 15.278 billion bu. for corn and 4.425 billion bu. for soybeans. The September estimates will be the first to incorporate objective field data, along with farmer surveys and satellite imagery. USDA’s National Agricultural Statistics Service also resurveyed corn and soy-bean harvested acreage in Iowa following the Aug. 10 derecho.
Smaller crop forecasts typically lead to reductions in demand. With China aggressively buying U.S. corn and soy-beans, the World Board’s changes to the demand side of the new-crop balance sheets will be closely scrutinized.
China still has a lot of buying leftChinese purchases of U.S. ag goods (less forestry) totaled $7.72 billion through July, according to USDA’s Foreign Ag Service. According to Farm Bureau analysis, Chinese pur-chases were 44% below the pace needed to meet its Phase 1 commitment. From August through December, China would need to buy around $23 billion of U.S. ag goods — an average of $4.6 billion per month to reach the Phase 1 target. Since 2010, the U.S. has only exported more than $4.6 billion of ag goods to China once — November 2013. The monthly figure has only topped $4 billion six other times over that span.
China corn supply crunch tightening China will have about a 25-million-metric-ton (MMT) corn deficit in 2020-21 if exports don’t increase from the projected 7 MMT, according to state-run China National Grain and Oils Information Center. Beijing has used aggressive sales of state-owned reserves to bridge the gap the past five years. But state-owned reserves are about exhausted and prices of remaining stocks are now at or above levels of imported corn.
China already has 7.5 MMT (296 million bu.) of U.S. corn purchases on the books for 2020-21, with another 1.2 MMT (47 million bu.) in daily corn sales announcements from USDA last week. Given the supply crunch and its Phase 1 commitments, we wouldn’t be surprised to see China import 10 MMT (394 million bu.) or more of U.S. corn in 2020-21.
Soybeans continue higher, hogs surge — November soybean futures extended their strong rally off the August lows, as funds remained active buyers amid falling crop forecasts. December corn futures paused after failing to find fresh buyers above the July highs. Fund short-covering in the corn market eased, despite declining crop estimates from private firms. Wheat futures posted modest gains, led by strength in HRS contracts. Traders’ reaction to USDA’s Crop Production and Supply & Demand Reports on Friday will set the price trends for grain and soy futures into fall. Cattle futures extended their corrective pullback amid weak-ening cash cattle prices. Front-month lean hog futures surged to the highest level since late May as weekly export sales were the most since last November, led by strong Chinese purchases.
CFAP 2 rules coming this weekUSDA Secretary Sonny Perdue says details about the second round of Coronavirus Food Assistance Program (CFAP 2) will be announced this week. The payments will be designed to compensate farmers for losses incurred from April 15 through the end of this year. Perdue said there would be no payments for ethanol producers, textile mills and other pro-cessors of ag commodities. USDA would need additional authority from Congress to make those kinds of payouts.
Federal deficit may hit $3.3 trillion!The federal deficit projection from the Congressional Budget Office for fiscal year 2020 would be more than triple the level from last year and 16% of GDP — the largest since 1945. Much of the red ink this year has been caused by pandemic aid. The federal deficit is likely to go higher as Congress enacts future Covid-19 legislation (see News page 4).
U.S. trade deficit hits 12-year highThe U.S. trade deficit surged to $63.6 billion in July, the largest imbalance since July 2008. The July deficit was driven by a record 10.9% increase in imports. Exports rose by a smaller 8.1%. The trade deficit with China totaled $31.6 billion, an 11.5% increase from the June imbalance.
The U.S. had an ag trade deficit of $601.5 million in July, as exports totaled $10.314 million against imports of $10.915 million. Through July, the U.S. ag trade surplus stood at $1.133 billion. A surplus of $2.167 billion is needed the final two months of the fiscal year to achieve USDA’s implied level of $3.3 billion, which would be a 48-year low.
Jobs growth slowed in AugustThe U.S. economy added nearly 1.4 million non-farm pay-rolls last month, which was in line with expectations but down nearly 363,000 jobs from the revised July figure. The unemployment rate dropped more than expected to 8.4% — the lowest level since the pandemic started. In August, the number of permanent job losses stood at 3.4 million, an increase of 2.1 million since February.
News this week...2 — Corn, soybean crop estimates declining.3 — Gov’t payments boost farm income forecast. 4 — Impasse continues, but more Covid aid coming.
September 5, 2020 Vol. 48, No. 36
Go to ProFarmer.com
September 5, 2020 / News page 2
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July soy crush tops expectationsU.S. soy processors crushed 184.5 million bu. of soybeans in July, according to USDA, eclipsing the previous record of 179.4 million bu. for the month set last year. The crush pace increased 4.1% from June. For the first 11 months of the 2019-20 marketing year, soybean crush totaled 1.99 billion bu., 4% above the same period in 2018-19. The crush pace for August needed to be only 170 million bu. to reach USDA’s 2019-20 forecast of 2.16 billion bushels. As a result, we expect USDA to raise its old-crop crush estimate by 10 million bu. to 15 million bu. in the Sept. 11 Supply & Demand Report.
Soyoil stocks at 2.124 billion lbs. were down 147 million lbs. from June, despite the stronger crush. Soyoil use for June was the most ever for the month and this data sug-gests July consumption was also a record.
Corn use rose in July, but...Corn-for-ethanol use totaled 424.4 million bu. in July, according to USDA, up 45.2 million bu. (11.9%) from June but 26.4 million bu. (5.9%) below year-ago. Corn consumed for all industrial purposes totaled 477.2 million bu., up 10.5% from June but down 6% from July 2019. Through the first 11 months of 2019-20, corn-for-ethanol use totaled 4.442 billion bu., down 9.8% from the same period last year. To hit USDA’s forecast of 4.85 billion bu., August ethanol grind needed to be 408 million bushels. Based on weekly ethanol production data from the U.S. Energy Information Administration, that forecast will be reached or exceeded by a few million bushels.
Disappointing summer fuel consumptionAfter demand for gasoline surged from mid-April to late
June after Covid-19 restrictions were eased or lifted, con-sumption has stayed relatively flat the past two months and remained well below pre-pandemic levels.
Brazil tariff on U.S. ethanol restartsBrazil allowed a non-tariff quota for ethanol imports to expire on Aug. 31. Shipments of U.S. ethanol will be slapped with a 20% tariff unless the non-tariff quota is reintroduced. Brazilian officials are expected to hold a meeting soon on the matter. Under the tariff-free quota system, Brazil exempt-ed up to 750 million liters of imported ethanol from tariffs annually, virtually all of which were U.S. supplies.
Brazil exports: soy slows, corn surgesBrazil exported 6.2 MMT of soybeans last month. While that was up from 5 MMT it shipped in August 2019, the figure was well below the 10.37 MMT exported in July.
Brazilian corn exports totaled 6.48 MMT last month, up from 4.15 MMT in July but well shy of the 7.3 MMT the country shipped in August 2019.
Consultant cuts yield, crop forecasts Disappointing rainfall and hot temps in late August are leading to a poor finish to the growing season. As a result, Crop Consultant Dr. Michael Cordonnier cut his corn yield estimate by 2 bu. to 176 bu. per acre and his soybean yield by 1 bu. to 51 bu. per acre. He now estimates the corn crop at 14.69 billion bu. and the soybean crop at 4.23 billion bushels.
Others lowering crop estimates, tooStoneX (formerly INTL FCStone) lowered its U.S. corn
crop estimate to 15.085 billion bu. on a yield of 179.6 bu. per acre. The firm cut its soybean crop estimate to 4.388 billion bu. on a yield of 52.9 bu. per acre.
Linn & Associates Inc. pegs the corn crop at 14.625 billion bu. on a yield of 176.6 bu. per acre and the soybean crop at 4.250 billion bu. on a yield of 51.2 bu. per acre.
Allendale Inc. forecasts the U.S. corn crop at 14.980 bil-lion bu. on a yield of 178.28 bu. per acre and the soybean crop at 4.311 billion bu. on a yield of 51.93 bu. per acre.
Crop conditions continue to dropUSDA lowered its “good” to “excellent” rating for the U.S. corn crop another two points as of Aug. 30. The amount of corn rated “poor” to “very poor” increased two points to 14%. USDA dropped its rating for the soybean crop in the top two categories by three points to 66% and raised the bottom two categories by two points to 10%.
When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped another 6.3 points to 357.6 points. The corn CCI rating was 11.6 points (3.1%) below the five-year aver-age for the end of August. The soybean crop dropped 6.6 points over the past week to 360.7 points. However, that was still 3 points (0.8%) above the five-year average.
Biggest Canada wheat crop in 7 yearsCanadian all-wheat production is estimated by Statistics Canada at 35.74 million metric tons (MMT), up 10.5% from last year on higher yields and harvested acres. Canadian spring wheat production is estimated at 25.9 MMT, up only slightly from last year as plantings declined. Durum produc-tion is pegged at 6.93 MMT, up sharply from 5 MMT last year.
Canada’s canola crop is estimated at 19.4 MMT, down 0.4% from last year. StatsCan made the long-awaited adjustment to its canola production estimate for the 2019 crop, which was raised 628,000 metric tons to 19.48 MMT.
*Average prices expected for the indicated time periods based on available information. Forecasts will be revised as necessary to reflect changing market conditions. Diesel prices are from Inputs Monitor.
Producer Crop Comments...Please send crop comments to [email protected].
Guthrie Co., (west-central) Iowa:“Something I’ve never experienced before. Disking corn down on Sept. 1. Sad deal.”
Washington Co., (southeast) Iowa:“Definitely a year where the lighter soils are shutting down early. There’s going to be a lot of yield variance.”
Dubuque Co., (northeast) Iowa:“Finding physoderma and early plant death with stalk rots and cannibalization.”
Iroquois Co., (east-central) Illinois:“Received a nice rain Sept. 1. With corn at half milk line and beans just starting to turn, it should be beneficial.”
Atchison Co., (northwest) Missouri:“Our first-planted corn is down to 21% moisture at the end of August. Soybeans are really showing the quality of the ground after the heat.”
Champaign Co., (east-central) Illinois:“Driving through west-central Illinois. They are getting a much-needed rain south of the Quad Cities. But from the windshield, conditions have seriously deteriorated in the past few weeks. I-80 west of Iowa City is ugly.”
Day Co., (northeast) South Dakota:“Another 0.5 inch of rain last night (Aug. 31). That’s now 1.5 inches to 2.5 inches here in the last eight days. And it’s 50 degrees right now. There will not be a poor finish to crops in our area.”
Thayer Co., (southeast) Nebraska:“Dryland yield potential is still in place. I’m estimating corn yields at 185 bu. to 195 bu. per acre. The dryland might outperform wind-damaged irrigated corn.”
Seward Co., (east-central) Nebraska:“Gonna have our worst beans here since 2012. Three weeks ago we were looking at probably near-record yields with average rainfall. But we didn’t get much.”
Jackson Co., (northeast) Kansas:“Got a one-inch rain that is helping soybeans fill.”
Gov’t payments trigger rise in farm income forecastU.S. net farm income is forecast to hit $102.7 billion in 2020, up $19.0 billion (22.7%) from 2019, according to an updat-ed projection from USDA’s Economic Research Service (ERS). In February, USDA forecast net farm income at $96.7 billion, a figure Pro Farmer noted was too low pending additional government pay-ments, which occurred. Net cash income is forecast at $115.2 billion, up $4.9 billion (4.5%) from 2019 and $5.6 billion higher than the February projection.
Direct government farm payments are forecast at $37.2 billion, a $14.7 billion (65.7%) increase from last year — a stark contrast to USDA’s February report, which forecast that there would be a decline in government payments to $14.9 billion.
The debt-to-asset ratio is seen at 14.0 in 2020 while the debt-to-equity ratio is pegged at 16.2, up from 13.3 and 15.8, respectively, in 2019.
The government payment forecast does not yet include any dollars from a second round of Coronavirus Food Assistance Program (CFAP) payments that are expect-ed from USDA soon. It also doesn’t include any disaster-related payments for those impacted by Hurricane Laura or the derecho storm that hit millions of acres in Iowa, Illinois and other states.
September 5, 2020 / News page 4
Tracking the ups and downs of the possibility and details of another Covid-19 aid package is about as
topsy-turvy as President Trump’s tweets. Here is our lat-est assessment of the situation.
Will there be a new aid package?Eventually, yes. But Senate Majority Leader Mitch
McConnell (R-Ky.) expressed doubts about whether Congress can get a deal on another pandemic relief pack-age when lawmakers return to Washington this week after a month-long recess. “I don’t know if there will be another package in the next few weeks or not,” McConnell said, noting talks between top administration officials and Speaker Nancy Pelosi (D-Calif.) haven’t been fruitful, and that any chance for bipartisanship in the Capitol has “descended” as the November elections approach.
McConnell still wants an accord. “I do think we do need to reach agreement,” he said, but “the cooperative spirit we had in March and April has dissipated.”
Other officials say a new aid measure is neededTreasury Secretary Steven Mnuchin testified to
Congress last week that parts of the U.S. economy urgent-ly need additional fiscal stimulus to fully rebound from the Covid-19 crisis. White House economic adviser Larry Kudlow agrees with Mnuchin on the need for more tar-geted virus relief such as an extension of the Paycheck Protection Program (PPP), more money for schools and unemployment assistance. He says stimulus “negotia-tions are taking place” on a daily basis.
San Francisco Fed President Mary Daly was the latest policymaker to call for renewed fiscal stimulus, saying reduced government spending measures could slow the economic recovery. Economists worry the expiration of extra unemployment benefits could trigger a drop in con-sumer spending and reassessments for U.S. growth.
Pelosi wants a big package, balks at ‘skinny’ measureHouse Speaker Nancy Pelosi (Calif.) and her fellow
Democrats want to go big on the next aid plan. The House-passed measure in May totaled $3.4 trillion. Pelosi compro-mised by reducing the price tag to just over $2 trillion, but the White House offered “just” $1.2 trillion, which she nixed. McConnell is facing pressure to limit spending, with many of his GOP colleagues noting growing budget deficits and debt.
Trump requests funds for USDA’s CCC and food stampsThe White House is asking Congress to include half a
dozen pandemic-related fixes in the next stopgap funding measure if they are not put into any future Covid-19 relief legislation first. The request would cover adjustments in appropriations funding ag programs, defense, homeland security and other federal programs through the middle or end of December. A stopgap is needed because none of the 12 fiscal 2021 appropriations bills have been signed into law.
The White House wants accelerated reimbursement to USDA’s Commodity Credit Corp. (CCC). The CCC antici-pates it will not have sufficient borrowing authority avail-able during the period of the stopgap. Without such fund-ing, “CCC would have to stop making payments as soon as the borrowing ceiling is reached, posing a serious risk for the farmers and ranchers supported by these pro-grams,” a White House document noted. USDA said it expects high demand for payouts from two major farm programs during fiscal 2021 triggered by declines in mar-ket prices or revenue levels. USDA said there could be “a near 100% increase in Agriculture Risk Coverage and Price Loss Coverage payments in FY 2021” versus FY 2020.
The White House request also includes additional man-datory funding for the Supplemental Nutrition Assistance Program (formerly food stamps) and for child nutrition programs such as school lunch and breakfast programs.
Perdue signals CFAP 2 is coming soonUSDA Secretary Sonny Perdue says another Coronavirus
Food Assistance Program (CFAP) is coming with or with-out Congress. USDA can tap CCC funding for a scaled-back plan that would include more direct payments and cover 2020 crops. But without Congress, USDA’s solo approach would not include indemnity payments to live-stock and dairy producers or ethanol industry payouts.
Why we are more upbeat than others for new aidFor the economic reasons previously detailed... and of
course, the Nov. 3 elections. As for the need for new ag aid, USDA’s updated farm
income estimates clearly show how government pay-ments have been a lifeline for many farmers/ranchers.
The legislative vehicle we see for the next aid package is a continuing resolution to fund the U.S. government into the new fiscal year that begins Oct. 1.
Next aid package: If, when and whatby Washington Policy Analyst Jim Wiesemeyer and Editor Brian Grete
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
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Corn Game Plan: You should re-main hand-to-mouth on corn-for-feed needs. We do not want to chase the rally. Be prepared to be a buyer on harvest weakness later this fall.
Meal Game Plan: You should have all soybean meal coverage in the cash market through the end of September. Our next downside target is $295 to $300 basis De-cember futures.
Corn III’20 0% IV’20 0% I’21 0% II’21 0%
Meal III’20 100% IV’20 0% I’21 0% II’21 0%
Analysis page 1
DAILY DECEMBER MEAL
$308.90
DAILY OCTOBER LEAN HOGS
Position Monitor
HOGS - Fundamental AnalysisStrengthening cash hog prices and firm pork values set the tone early in the week as domestic retailer demand remains strong. That helped keep rising pork supplies moving through the pipeline. Lower average weights than a year ago added to perceptions that backlogged animals from Covid-19 continue to decline amid large Saturday slaughters. The icing on the bulls’ cake came from strong weekly USDA export sales. Exporters sold the most pork since November, with China buying more than half of the 53,600 metric tons (MT) reported to all customers. It’s a story of improving demand versus big supply.
Game Plan: Fall and winter con-tracts don’t reflect typical seasonal price weakness. However, hedges are risky unless you can lock in a profit. Rallies are hedging opportunities.
CHOICE BEEF CUTOUT ($/CWT.)
PORK CUTOUT VALUE ($/CWT.)
Position MonitorGame Plan:Fed cattle h e d g e r s should be patient as downside risk is limited. But rallies will be selling opportuni-ties for marketings into 2021.
DAILY OCTOBER LIVE CATTLECATTLE - Fundamental AnalysisPackers methodically lowered bids last week with plenty of inventory to meet slaughter needs through the holiday-shortened week. Beef prices also set back but remain near year ago-levels and packer margins are strong. There were plenty of steaks and hamburger featured for the holiday weekend. If beef demand continues stronger than expected into the fall, that would help to keep a floor under cash and futures. Much of the weakness in futures has been tied to funds cutting long positions. Signs of stronger economic growth would help to bring speculative money back into the market.
$54.975
Initial resistance is at $108.375.The August high at $111.15 will be strong resistance.
Initial support is at $103.65 and $102.65.
$111.15
$103.65
$61.35
$102.65
September 5, 2020ANALYSIS
Lean Hogs III’20 0% IV’20 0% I’21 0% II’21 0%
Strong resistance is the January high at $318.70 (not shown).
Initial support is at $308.90. Stronger support is at $296.00.
$296.00
September 5, 2020 / Analysis page 2
$5.68 1/2
$5.25 1/4
$5.54 3/4
DAILY DECEMBER SRW WHEAT
WHEAT - Fundamental AnalysisSRW - Futures pushed higher on rising world market prices and Chinese buying of U.S. wheat,.China’s purchases are the highest in more than 20 years. Dryness in the Black Sea region ahead of planting added to price strength. Much of the buying was funds covering shorts.
Position Monitor
Game Plan: On Sept. 2, we advised both hedg-ers and cash-only marketers to add another 10% to cash forward contracts for harvest delivery of 2021-crop to get to 20% sold. Use rallies to get cur-rent with cash sales. Maintain the short hedges.
A weekly close above the July high at $5.54 3/4 would target a run at last week’s high at $5.68 1/2, with stronger resistance at the spring high at $5.77 1/2.
Initial support at40-day moving average (green line) at $5.32 is backed by horizontal support at $5.25 1/4.
CORN - Fundamental AnalysisPrices jumped to test the July highs after USDA announced big new sales to China. Total U.S. corn sales for new-crop delivery to all buyers are now the largest in five years with China accounting for a record 7.5 million metric tons (MMT), or almost 46% of the total. That does not include the daily sales of 1.2 MMT reported last week. Falling private crop estimates ahead of the USDA’s Crop Production Report on Sept. 11 added support. With corn prices rising more than 40¢ from the contract lows, much of the Chinese buying and smaller U.S. crop forecasts have been factored into prices. U.S. output is adequate to meet improved demand, especially with the 10% drop in ethanol production.
Strong resistance isat $3.73 3/4.
Initial support is at $3.59 3/4.Stronger support is at $3.54.
DAILY MARCH CORN
$3.54
$3.59 3/4
$3.73 3/4
DAILY DECEMBER CORNPosition Monitor
Game Plan: Use the rally to make catch-up sales to get current with advised cash sales for the 2020-crop. Don’t turn more bullish after the recent rally. Weather rallies historically over-shoot actual crop losses and September tends to be seasonally weak. Be prepared to make new sales around the Sept. 11 USDA Crop Pro-duction Report. We will likely lift hedges if we advise new sales above the July high.
Strong resistance is at the July high of $3.63. Above thatprice, resistance is clusteredfrom $3.70 to $3.85
Initial support is at $3.48 1/2. Stronger support is at $3.43 3/4.
HRW - Egypt bought Russian wheat at the highest price this season, but purchases were the smallest in eight months. World wheat trade has picked up as global importers worry about rising prices, despite supplies projected to be a record. The rally in U.S. export prices now exceed world values and could slow new sales in the weeks ahead.
DAILY MARCH SOYBEANS
HRS - Spring wheat is lagging gains in winter futures with Canada forecast to harvest its biggest crop in seven years. U.S. harvest was 69% done as of last week, trailing the 77% average. Traders will be watching the impact of upcoming rain on final production. The dollar reversed and pared recent losses. A stronger dollar may hurt exports.
Strong resistance is at $4.95.
Initial support is the uptrend line near $4.68.
$4.95Strong resistance is at $5.54 1/4.
Initial support is the uptrend line near $5.36.
$9.09 3/4
$5.54 1/4
$9.50
Strong resistance is at the January high at $9.78 (not shown). The rallywent vertical, warning that the buying enthusiasmmay soon wane.
SOYBEANS - Fundamental AnalysisFutures rose to the highest since January on increased purchases by China, pushing cumulative sales to the highest in five years. However, strong bookings at this stage of the year do not indicate the size of final Chinese demand. More sales and very active shipments will be needed the next four months with Brazilian farmers planning larger acreage after the currency devaluation pushed prices to a record. Soybean meal export sales are strong and crushing demand remains high. The Sept. 11 USDA crop update will offer the first field-based estimate this year and most are looking for reduced production. The $1 rally the past month has accounted for better China sales and a smaller U.S. crop.
Initial support is the uptrend line near $9.48. Stronger support is at $9.12 1/2.
Game Plan: Use the current market strength to make catch-up sales on final 2019 supplies and 2020-crop. The history of soybean ral-lies on supply concerns is for fast, steep ad-vances. Seasonals trends slightly favor bears during September. The supply story may be over by the USDA’s Sept. 11 Crop Production Report. Brazilian farmers are gearing up to plant a record crop beginning next month.
DAILY NOVEMBER SOYBEANS
Consecutive closes above the 2020 high at $9.82 3/4 from January may target strong weekly resistance at $9.95 to $10.00 (not shown).
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USDA Supply/Demand Report Focus on demand, ending stocks.
FRI 9/1111:00 a.m. CT
5
USDA Crop Production ReportNew corn, soybean crop estimates.
FRI 9/1111:00 a.m. CT
4
USDA Export Sales ReportWatching weekly sales to China.
FRI 9/117:30 a.m. CT
3
USDA Crop Progress ReportDid rains stabilize corn, soy crops?
2
Labor Day HolidayMarkets and government closed.
MON 9/71
WATCH LIST
TUE 9/83:00 p.m. CT
Since 1980, December corn rose 14 years but fell 26 times in September. But of the 18 years when corn prices rallied in August, only 1995, 2000 and 2010 did prices close higher in September. The contract fell 83% of the years.
Soybeans prices rose 15 times in September in the past 40 years. During the 19 years that November soybeans rose in August, the contracts continued higher in September in 1990, 1995, 1999, 2002, 2003, 2007 and 2010. That means prices ended lower 63% of the time after an August rally.
In the 19 years when December SRW futures rose in August, the market con-tinued higher 10 years. But its hasn’t occurred since 2007.
Corn, soybeans and wheat all rallied last month, a rare synchronized August price advance. It has only happened 10 times since 1980 and the last time it occurred was 2011.
However, when all three markets scored gains in August, it doesn’t signal further advances in September.
In the 10 prior years when all three markets rose in August, corn firmed only once in September, while wheat and soy-beans gained three times.
Looking at each individual market’s performance in August and its subse-quent September price moves, it doesn’t improve the odds for a corn rally this month but does somewhat for soybeans and wheat.
By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN
Chinese Yuan: The Chinese renminbi rallied to an 18-month high, up 5.4% against the dollar since bouncing from the 2019 low touched in late May.
The stronger currency will keep Beijing investing to boost domestic growth, but also cuts the cost of import-ed goods, especially U.S. farm products.
China’s economy continued to rebound in August, with a gauge of the services industry at the strongest level
GENERAL OUTLOOKsince early 2018 while manufacturing data was mixed.
China’s recovery is better than expect-ed as its export engine revs higher. The weak currency enabled it to claim 14% of world trade this summer, the highest for any country since the early 1980s. Consumer spending could add $100 bil-lion a year to growth, and foreign com-panies are investing in China’s domestic market, according to Morgan Stanley.
DAILY DECEMBER COTTON
Game Plan: Make sure you are current with advised 2020-crop sales. We are targeting sales at 68.00¢ to 70.00¢ or on a close below 64.00¢ in December futures.
Position Monitor AVERAGE COTTON BASIS (OCTOBER)
COTTON - Fundamental AnalysisFutures challenged the August highs on news China increased its import quota 400,000 MT, suggesting better U.S. exports into year’s end. But prices retreated. USDA will likely trim U.S. and world crop forecasts on Sept. 11. Traders will watch for changes in use.
COTTON EXPORT BOOKINGS (’000 BALES)
WEEKLY CHINESE RENMINBI VS U.S. DOLLAR
Initial support is at 64.00¢. Stronger support is the
40-day moving average(green line) near 63.45¢.
A close above the August high at 66.45¢ may spark a test of prior support from earlier this year in the 68.00¢ to 70.00¢ area (not marked).
