Charts of the Day – June 2, 2020

Corn
Soybeans
Chicago Wheat

Afternoon Market Commentary – June 2, 2020

by: Chris Betz

Corn Soybean Wheat
Old Crop (futures month, change, settle price) CN0 1’0 324’2 SN0 10’0 850’4 WN0 7’2 508’0
New Crop (futures month, change, settle price) CZ0 2’2 338’0 SX0 8’2 860’4 WN1 4’4 533’4

Soybeans were supported by an export announcement of 132,000 metric tons of soybeans sold to China for the 2020/2021 marketing year. This eased trader worry that China has halted buying of U.S. beans. A cheaper USD will also help U.S. export competitiveness.

Wheat was under pressure with the latest Egyptian tender going to Ukrainian wheat as well as improved forecasts for EU/Black Sea crops.

Weekly crop progress showed corn 93% planted versus 88% the week prior. Beans progressed to 75% planted from 65% the week before. Winter wheat was seen as 51% good to excellent, a drop from 54% the previous week. Winter wheat headed was 77% versus 81% on average.

Michigan corn was seen as 83% planted versus 77% on average. Soybeans were 76% planted versus 62% on average. Winter wheat was seen as 55% good to excellent, and 20% headed versus 30% on average.

July corn is struggling to stay above the 50 day moving average which is resistance at 327’4. Support is the 20 day at 320 then the contract low at 309. Key resistance is the 100 day at 355’6.

July soybeans showed some resistance around 858-861. The key 100 day is still a jump higher to 880’4. Support is the recent low at 828’4 then the contract low at 818’4.

July Chicago wheat closed back below the 20 day, which turns to resistance at 511’2. Next resistance is the 40 day at 524’4 with the key 200 day above there 529. Support is the recent low at 493’6 then the contract low at 468’2.

Technical Thoughts – May 14, 2020

By: Ken Lake

July corn has nearly completed a short-term move lower and now has support at 314 and then the contract low 309.  The lost demand for corn in the ethanol sector will not recover quick enough for producers with old crop corn to expect to see July futures much higher than 320.  Advance sales on any strength and count on further support from the federal government in the form of soon to be announced program payments related to losses related to Covid19.  MAC merchandisers will have details.

USDA did not help corn’s situation this week as they posted a 2020/21 carryout of 3.3 billion bushels.  Some analysts believe under the right conditions that number could balloon to closer to 4 billion bushels. Recall that the low set in the May futures was 300.  That will be the downside target of the July contract (and subsequent other contracts) unless we see lower acres and/or lower yield potential going into first notice days of those contracts.  Long-term downside targets for December futures is 300.  I don’t see a trade above the 20 day moving average, 334, in the near future but if we do get a surprise and an extension to 339, advance sales.

July soybean futures have been getting support from Chinese purchases but the Administration’s talk of blaming China for Covid19 threatens the achievability of the trade deal.  At this point we will not achieve the goals for the trade deal at the current pace of Chinese buying.  Continue to market old crop soybeans on strength.  Currently momentum indicators are pointing to lower values.  There is no current upside target.

November soybeans values are pointing lower, near term.  There is longer term expectations of higher values as current US carryover stocks are not burdensome.  Support is 843 then 830.  Upside target is 858.

In July wheat, it should be clear by now that the highs are behind us.  Today’s trade to 496 came dangerously close to the low set on March 13th of 494.  Therefore 494 is support.  A trade below 494 opens risk to the contract low, 468.  No sales are recommended here, however, if we get into harvest with a strong basis and little futures carry, the recommendation will likely be to sell right off the combine regardless of price.

Robert’s Thoughts – March 26, 2020

By: Robert Geers

Last week I mentioned that the country elevator was turning to the things they know and that is a market without ethanol.  We continue to see ethanol plants across the US shut down, reduce hours, or take extended maintenance shut downs.  While this is all happening the country elevator is still open, receiving grain, shipping grain, and finding feed and export markets for grain.  We are also preparing equipment and filling storage space with nutrient and chemistry products for the upcoming agronomy season and we will be ready.

It is also important that as the ethanol markets work through this challenging time that we be patient and understanding of the situation they are in.  As we are asked/ordered to social distance or stay home to reduce the spread of COVID-19 and the stress it could put on our health care system, we will drive significantly less.  In the coming weeks we could see miles driven down anywhere from 25-50%, the ethanol market did not ask for that but they are doing what they need to do to survive what should be a temporary situation.

At MAC we feel fortunate to work in agriculture, an essential industry and will continue to serve the needs of our customers, while protecting the health of customers, our employees, friends, families and communities.  If you have any questions or concerns please reach out to us. We’re here to help.

Fertilizer Update – January 6, 2020

By: John Ezinga

Thoughts in the new year by product:
The charts below represent 10 year time frames of the corn price relationship with each product.

  • Red= HOLD or caution before buying
  • Yellow = NEUTRAL
  • Green= BUY!

As you can see from the long term urea affordability index chart above it is clearly in what I call the buy zone as the price per pound of N as compared to corn is under 10%. If you need urea it would be smart to get it bought now. We are 70 bucks off the highs from last spring and seem to have found a bottom in the paper markets. I expect prices to improve from here. Although I do not expect them to rally significantly I do expect them to rebound 20-40 going into spring application season.

The chart below on 28% shows a buy signal as well. I hear there are a lot of import tons working through the system so there may be deals to be had if there is some desperation amongst the traditional holders of 28% at this time of year. In either case the price is not going to hurt you at these levels and likely will look pretty smart in the spring.

PHOSPHATE

Obviously this chart (Phosphate affordability index) is pointing to a year in which you should be clearly building your soil P levels. We are at 10 year lows and this product should be bought. I expect that like urea this product has found a bottom and will rebound so do not drag your feet to get coverage here if you need it.

POTASH

Potash is not as clear-cut as N and P. It is hovering on a neutral rating on my affordability index vs corn. I think that the Potash cartel is in control of their pricing and supply and so therefore tips the scale into a buy rating from me. If it does set back, I would expect it to be very modest.

Other products:

10-34-00
I expect flat pricing here forward with a spike right in the demand season.

AMS
We are awash in AMS…buy as you need.

SOP
If you were not aware, MAC Middleton is warehousing Sulfate of Potash and organic SOP too!! Call for pricing.

Gypsum (ag grade)
If you have gypsum in your normal spreading program you will find that prices have moved up 15-25 bucks a ton since last year. The driving culprit is the temporary closure of mines in Alabaster, MI. US Gypsum is working thru some expansion problems with the DNR and will be out of supply for the next 2 years or so. We have synthetic gyp available.

ATS
Supply should be very adequate

NH3
With lack of fall usage there should be good supply for spring application.

Contact us for specific products you would like to quote or be updated on.