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Market shock with the USDA report

Hold steady. Stick to your plan.

USDA shocked the market on its stocks and acreage report June 30 pegging 2020 corn and bean acres well below expectations. Prior to the release of numbers, traders were looking for about a 2-million-acre switch from corn to beans. The report pegged corn acres at 92.0 million vs. 97.0 in March and 83.8 million acres for beans compared to March estimates of 83.51 acres. 

Stocks for corn came in at 5.22 billion bushels compared with the average trade guess of 4.99 billion. For beans it came in at 1,386 million bushels compared to the average trade guess of 1,381. 

To say that June can be volatile would be an understatement this year. Markets rallied the first half of June on weather concerns, then a nice rain broke the market for four days. This drove corn into new lows, and beans lost 20¢. Markets rallied into the June 30 report only to catapult once the shocking numbers were released. Corn was held in check by its 100-day moving average of $3.53-2. Beans rallied to the top of their recent range near the $8.85 area. 

All eyes will be on weather during July with current expectations for a warmer and dryer month. 

Now, what does all this mean for your marketing? Well, famers are still big holders of old-crop grain. Demand remains touch-and-go as U.S. corn prices are above export competitors’. Then, of course, there is the drama of trade negotiations. Not to mention continued concerns over the new coronavirus!

You cannot let down your guard. The rally following the June 30 report is a gift and should be managed as such. Use it to add to old-crop cash sales and get hedges in place on new crop. If your crop has received ample rain, forward price. There is still a good chance for prices to slide back to their lows, or even further, come harvest. 

Crop ratings have steadily improved and indicate above trend line yield for corn at around 180 a bushel and for beans around 52 bushels. This still would give us an ample supply with the current demand forecast. July’s Supply and Demand report will reflect the bullish acre numbers but could also see adjustment made to the demand picture that may reflect the slow export sales pace for corn this year so far. 

Soybeans will continue to react to any and all China news which, in an election year, could remain volatile. 

The best thing you can do in this environment is stick to your marketing plan and take advantage of summer rallies. They usually are violent and short-lived. Making sales during this time is rarely the wrong thing to do come harvest. 

If you have questions, you can reach Cathy at cekstrand@s-pelmwood.comTo learn more, visit TotalFarmMarketing.com.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation. 

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