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Markets Start Firmer Watching World Currency Movements

US soybeans have become the most competitive in the world through January

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Ethanol Recovery Continues

  • US ethanol production, for the week ended 5/29/20, posted the fifth consecutive weekly increase, rising to 225 million gallons per week from 213 million gallons per week in the previous period.
  • Last week's production was a 42% increase from the lowest level seen six weeks ago at 158 million gallons/week.
  • This week's corn for ethanol usage was 28 million bushels less than last year, bringing the 2019/20 estimated decline to 371 million bushels.
  • The USDA's last forecast was for a 428 million bushel decrease for the marketing year, which still has 13 weeks left.
  • FBN’s Take On What It Means For The Farmer: The EIA report showed another increase in gasoline demand, leading to increased ethanol use (see Chart of the Day). However, it will be difficult to catch up to the current USDA corn use forecast. The agency may reduce the estimate modestly in next week’s monthly report, depending on the outlook for a seasonal increase along with the economy continuing to recover.

More US Soybean Sales Confirmed

  • Exporters reported sales of 186,000 tonnes of soybeans for delivery to unknown destinations; 66,000 for old-crop and 120,000 for new-crop.
  • US soybeans have become the most competitive in the world through January as the Brazilian Real has risen 16% from its recent low.
  • Brazil shipped a record 16.3 million tonnes of soybeans in April, followed by 15.5 million in May as the currency fell to a record low.
  • Brazil has exported approximately 40% of last year’s production, compared with about 28% in the previous two years at this time.
  • FBN’s Take On What It Means For The Farmer: The recent jump in the value of the Real in relation to the Dollar has decreased the incentive for Brazilian farmers to sell and for importers to buy. This should lead to greater sales for the US, though the final amount may rely on continued large sales to China where political tensions have increased uncertainty around trade. Fortunately, as stocks are eventually drawn down in Brazil, the US will have the only exportable supplies left until South America’s harvest next year.

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

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