Morning Grain Market Research

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The sun is shining, and planters are rolling, so disaster averted, right? Of course, we know that is not entirely accurate, but it would appear that markets are breathing a sigh of relief now that planters are rolling once again across a relatively broad swath of the Midwest. We did see corn values gap lower to begin the week, but I would not place much emphasis on that as we remain above the 3rd gap higher that was left back on the 28th of May, short-term indicators are oversold, and we have a boatload of growing season risk still ahead. The trade will be intently focusing on the progress in Illinois, Indiana, Ohio, and South Dakota, but overall, they are expecting to see completion somewhere between 75% and 85%.

Thankfully it would appear that we have the threat of tariffs against Mexico behind us as President has signed an immigration and security pact with that nation this morning. You might want to keep your finger crossed for just a bit longer though as it still needs to be ratified by the Mexican legislature and President Trump has already threatened immediate tariffs if they fail to do so.

In case you were curious, speculative funds have completed their move from the dark side and in fact are now net long. Over the past three weeks or so they have purchased over 370,000 futures and options contracts and currently are long around 87,000 contracts.

Chinese import numbers have been released for the month of May, which came through at 7.36 MMT. This was 24% below the 9.69 MMT they imported in the same month last year and slightly below the 7.64 million they unloaded in April. For the year to date, they have now imported 31.75 MMT, which is down 12.2% compared with last year. Granted, we are getting a disproportionate share of the total as compared with years past, but the impact of African Swine Fever would appear evident in these numbers.

One more day until the release of the June production and supply/demand estimates, and once again here are some trade survey estimates; Total 2019 corn production is pegged at 14.251 billion bushels with an average yield estimate of 172.4 bpa. Bean production of 4.123 billion using a yield of 49 bpa. Domestic ending stock for 2018/19 are estimated to be 2.123 billion for corn, 1.004 billion in beans and 1.121 billion for wheat. 2019/20 ending stocks are then expected to come through at 1.917 billion for corn, 983 million for beans and 1.118 billion for wheat. The 2019/20 wheat crop is expected to total 1.883, which 1.251 billion coming from winter wheat. The average estimate for Argentine corn is 49.28 MMT and Brazil 99.86, making a combined total of 149.14 MMT or 5.87 billion bushels. Argentina beans are expected to total 56.09 MMT and Brazil 117.22 MMT for a combined 173.31 MMT or 6.368 billion bushels. 2018/19 Global ending stock are estimated to be 325.44 MMT for corn, 113.33 MMT beans and 274.7 MMT in wheat. Then for 2019/20, the estimates look for 304.96 MMT corn, 112.99 MMT beans and 290 MMT of wheat. We all know the June report is generally just an exercise in statistical number crunching but outside of an update on South American production, the figures tomorrow will be dismissed even before they are issued.

There is nothing earth-shattering happening in the outside markets as we begin the week either. The biggest highlight is that gold us under decent pressure but this after a solid rally last week, and energies are fractionally higher. The dollar has bounced this morning but has been struggling as of late and looks more and more as if it may have finally confirmed a peak. More on that later.

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