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3 Big Things Today, June 5, 2020

Soybean strength is impressing traders.

1. Ag markets watch soybeans rally

This week’s farm markets have been driven by the strength in the soybean complex. With the U.S. dollar falling and the Brazilian real rising, U.S. soybeans are cheaper on the world export market. This has shifted business from Brazil to the U.S., with China being the biggest customer.

In overnight trading, the July corn futures are ¾¢ higher at $3.29. Dec. corn futures ½¢ higher at $3.43.
 
July soybean futures are 2½¢ higher at $8.70½. November soybean futures are 3¢ higher at $8.79¼.

July wheat futures are 1¾¢ higher at $5.25. 

July soymeal futures are $0.20 per short ton higher at $290.00. July soy oil futures are 0.25¢ higher at 28.07¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.07 per barrel lower at $36.74 per barrel. The U.S. dollar is higher, and the Dow Jones Industrials are bracing for today’s U.S. Jobs Report that is expected to show the nation lost 7.5 million jobs in May. If realized, the unemployment rate could rise to 19.4%, the highest since the Great Depression.

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Al Kluis, Kluis Advisors, says that wheat is leading the markets this week.

“The first week of June has provided a spark to the grain complex. Thursday felt like momentum traders were moving into the long side of soybeans and wheat. Corn is still burdened with the large short position held by the funds. However, we have seen how quickly the funds can unwind large positions and how it impacts prices. Are we in the midst of a short-term seasonal rally? The third week of June has a long track record of being a standout on the charts,” Kluis stated in a daily note to customers. 

2. USDA hands out first CFAP payment

USDA Secretary Sonny Perdue announced the USDA Farm Service Agency (FSA) has already approved more than $545 million in payments to producers who have applied for the Coronavirus Food Assistance Program (CFAP). FSA began taking applications May 26, and the agency has received over 86,000 applications for this relief program, according to a government press release Thursday.
 
“The coronavirus has hurt America’s farmers, ranchers, and producers, and these payments directed by President Trump will help this critical industry weather the current pandemic so they can continue to plant and harvest a safe, nutritious, and affordable crop for the American people,” said Secretary Perdue. “We have tools and resources available to help producers understand the program and enable them to work with Farm Service Agency staff to complete applications as smoothly and efficiently as possible and get payments into the pockets of our patriotic farmers.”
 
In the first six days of the application period, FSA has already made payments to more than 35,000 producers. Out of the gate, the top five states for CFAP payments are Illinois, Kansas, Wisconsin, Nebraska, and South Dakota. USDA has released data on application progress and program payments and will release further updates each Monday at 2:00 pm ET. 
 
FSA will accept applications through August 28, 2020. Through CFAP, USDA is making available $16 billion in financial assistance to producers of agricultural commodities who have suffered a 5% or greater price decline due to COVID-19 and face additional significant marketing costs as a result of lower demand, surplus production, and disruptions to shipping patterns and the orderly marketing of commodities.

3. This week’s export sales have been strong 

On Thursday, private exporters reported to the USDA export sales of 120,000 metric tons of soybeans for delivery to unknown destinations. Of the total, 60,000 metric tons is for delivery during the 2019/2020 marketing year and 60,000 metric tons is for delivery during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

Separately, the USDA’s Weekly Export Sales Report Thursday showed strong demand figures.

Corn = 665,000 metric tons vs. the trade’s expectations of between 450,000 to 1.2 mmt. 

Soybeans = 1.102 million metric tons. vs. trade’s expectations of 600,000 to 1.5mmt. 

Wheat = 616,800 mt. 

Soybean meal = 583,900 mt.

This week’s USDA report highlights include China buying a total of 465,00 tons of soybeans (43% old crop). One of the biggest ever sales of soymeal as the Philippines purchased 393,000 tons. Meanwhile, Japan and Colombia were the top U.S. corn buyers.

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