Market Update 5/15/2020
May 15, 2020
Corn market finished lower on the week after the USDA increases 20/21 carryout. Although the report was bearish overall, a glimmer of hope was seen as they expect ethanol grind to be higher than private analysts’ estimates. Regionally, corn basis bids firms significantly as the country elevator and ethanol producer look to fill space with the anticipation of a small number of acres planted in the Eastern North Dakota. Keep in mind while setting futures targets that basis will likely be much narrower during the next marketing year. Ethanol margins improved on the week as plants continue stagger production between plants. However, we have a long way to go before the corn crop is made and little corn is for sale at these prices.
Soybean futures also finish the week lower in spite of the Chinese purchasing 30 million bushels for Oct/Nov delivery. They have also made it clear that they fully intend to honor their phase one commitment. Basis continues to rise with exporters finding very little participation in the business from the elevator and farmer. With local harvest basis at –80X, we believe that it is time to start locking a portion of your production, especially for ground that you are certain will be planted. Everything that we are seeing happen with hogs does not bode well for soybean meal, it will be difficult to find any uptick in demand from the soybean crusher, we must participate in the export business.
While it seems that the market bears have been the winners as of late, we are seeing an increase in demand for all commodities as we begin to reopen the economy. People are going out to Texas Roadhouse and ordering that extra basket of buns. They are starting to burn e85 as they commute to their jobs. We are figuring out what we need to do to reopen these meatpacking plants. We continue to facilitate international trade. Agriculture is a cyclical industry and we will have times of boom and times of bust. As we continue to open this country back up, optimism levels will rise.
Locally, the weather forecasts are finally starting to change for the better. Temperatures in the next week are pushing highs of the low 80s accompanied by the normal North Dakota wind, which will help speed up the drying process. The forecast shows us in a dry pocket with no precipitation for the next week. Hot, windy, and no rain. It sounds like a great recipe to get in the field!