Grain Exchange – 5/5/2020

Increasing political tension between the U.S. and China over the Chinese cover-up around the severity of their COVID-19 outbreak and good planting conditions in the U.S. are pressuring row crop values. Meats rallied sharply on developing shortages and some positive U.S. re-opening news.  China will be on holiday this week so demand news will be muted. The outlook is growing more concerning as any large-scale political setback with China that ends their meager adherence to the Phase 1 trade deal, would be a brutal blow for markets already struggling.

Crude oil prices have stabilized and rallied back to the $20 a barrel level.  Gasoline use and miles driven were higher last week and are expected to improve as most states begin to re-open small businesses and lift travel restrictions.

Corn: Corn prices wobbled slightly this morning. Gains in the energy complex as more Americans return to work led July futures $0.0075/bushel to $3.16 higher this morning, but fast planting progress and expectations of a large crop left September futures prices unchanged to lower this morning at $3.22. More corn planted than expected with 51% complete vs. 39% average and 45-50% estimated.

Soybeans: Expectations of a large crop as planting progress moves faster than expected as well as ongoing concerns over U.S. relations with China kept soybean futures price gains depressed this morning. As of this post November beans were up 0.02 cents at $8.48. Bean planting was also further along than expected with 23% complete vs. 11% average and 21% estimated.

The United Kingdom and U.S. will begin trade negotiations today. The trade talks come as both countries continue to grapple with the coronavirus pandemic and seek to diversify supply chains away from China. The negotiations are the first major trade prospects for the U.S. in 2020 and may not end favorably for U.S. farmers, due in large part to European preferences against genetically modified food crops.

We are all living in a different world now, but the American farmer will continue doing what he has done all along and that is to feed the world and to be proud of it! Stay safe and stay healthy.