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July 06, 2020 | FBN Insights | Kevin McNew

Ag Markets Begin Week Higher on Midwest Weather Forecast

Crop conditions are likely to be steady to possibly slightly lower when reported later this afternoon

July Weather Critical 

  • Timely rainfall in the last 10 days of June left crops in good condition.
  • Temperatures to begin July were above normal, but were accompanied by mostly normal precipitation. 
  • The forecast continues to be warmer with less rain than normal, which would lead to net drying conditions.
  • This could lead to some potential crop stress as corn reproduction begins.
  • Areas that become too dry may then struggle during the soybean reproduction and filling stages.

FBN’s Take On What It Means: Crop conditions are likely to be steady to possibly slightly lower when reported later this afternoon. FBN expects the market to be volatile as the severity of the weather forecast changes and the potential impact on crops is assessed. We would look at further rallies as opportunities for catching up with crop sales and hedging new crop production as stocks may be less burdensome, but will likely still leave the market well supplied. Please consult your Hedge Command and or FMA for details and updated recommendations.

Export Sales Mostly Weaker

  • Old crop soybean sales, for the week ended 6/25/20, were 8.9 million bushels, down from 22.1 million last week and a new marketing year low.
  • Total commitments of 1,655 million bushels have already reached a level which could allow USDA's 1,650 million bushel export projection to be met.
  • Corn sales were below expectations at 14.2 million bushels, but up from 8.2 million in the previous week.
  • Wheat sales of 15.2 million bushels were down from 19.1 million the prior week.
  • Sales of upland cotton were down 35% from the previous week at 67,300 running bales.

FBN’s Take On What It Means: The amount of grain actually shipped to China will determine whether the current USDA 2019/20 export projection is met, especially for soybeans. USDA could reduce its corn export forecast soon with FBN already smaller than USDA’s current projection.  Wheat commitments are off to an average start given the onset of the new marketing year. 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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