Updated: July 19th, 2019
  
Closing Prices:
DEC. 2019 CORN $4.37
NOV. 2019 SOYBEANS $ 9.19
SEPT. 2019 KC WHEAT $ 4.40
 
Weekly Change: Corn finished 23 lower for the week, Soybeans finished down 12,
and Wheat finished off 27 for the week. 

 

 

 

We need help!

Do you know of someone looking for a career working with ag producers and a passion for the markets? If so, we’d like to hear from them.  AgWest is currently looking for a few good folks that can help service the growing demands from our farming partners.  Currently we have the below openings:

  • Broker & Broker Assistant at our Yuma, CO, Paola, KS, and Beresford, SD locations

For more details and to submit an application, please click HERE.


Crop Conditions – July 15th

 

CORN:  10% Excellent and 48% Good. This is slightly better than last week with a 1% gain in the Good category. Last year on this date corn was rated 21% Excellent and 51% Good.

 SOYBEANS: 8% Excellent and 46% Good. This was a slight gain from last week when the Excellent category stood at 7%.  Last year on this date soybeans were rated 16% Excellent and 53% Good.
 

Crop Progress – July 15th

 

CORN: 

  • 17% of the nation’s corn is silking or beyond which compares to 59% last year and the five-year average for this date stands at 42%.   

 

SOYBEANS:

  • 22% of the nation’s soybeans are blooming. Last year on this date 62% was blooming and the five-year average stands at 49%.

 

WINTER WHEAT:

  • 57% of the nation’s winter wheat is harvested compared to 72% last year on this date. The five-year average is 71% harvested.  

 

Managed Funds

 

Corn: In just 8 weeks, beginning in mid-May, the funds flipped from a record “short” corn position to nearly 200,000 contracts “long” as of last week’s “Commitment of Traders” report. That is a swing of a half million contracts and the largest flip of a position during the six-year timeframe on the following graph. Just short of 300,000 contracts is the largest “long” position in recent years, and the all-time high of just over 400,000 contracts leaves some potential for additional buying. That is room for additional fund length and it also means there is plenty of selling potential from current levels.  
 Soybeans: Same as in the corn, the funds had hit an all-time record “short” position for soybeans in early May and then the planting delays kicked in. Funds covered over 100,000 contracts of their “short” position, but remain “short” approximately 42,000 contracts. Those who are bullish beans would view this as plenty of potential buying power left from the funds.
 
KC Wheat: Yet another commodity that struck a record “short” position last spring. Much like beans, the funds had a buying surge in recent weeks, but they remain nearly 18,000 contracts “short” KC Wheat.
 
 
Chicago Wheat: Funds were not as negative Chicago as was the case with KC Wheat. Their “short” position last spring didn’t come close to approaching a record. The funds are currently 30,000 contracts “long.”
 

Ethanol

 

Production topped out a few weeks back and it appears there is a downtrend trying to develop. On the flip side, stocks are certainly trending higher and are currently larger than the previous five years on this same date. The difficult economics in the ethanol world have been well advertised and cash corn rallying over a buck since mid-May (in many areas) is not helping. Greater demand heals many things, but additional demand seem to be an uphill battle for ethanol. The RSF waivers issued to small refiners by the EPA seems to have put a tight lid on the need for additional domestic ethanol.

 

If, in fact, the 2019 corn crop turns out to be much smaller than currently advertised, price rationing will be required to kill some demand. The ethanol industry is poised to be an easy target for killing some corn demand as higher corn prices will likely trim production.
 

Weather

 

Next week will bring some relief from the extreme heat and could be much cooler by the end of the month. Time will tell and these extended weather runs can certainly change. The market hasn’t been much worried about the extreme heat so we will see if the below average temperatures concern folks given the late plantings. 
 
 

 Heat is a good thing as long as the crop has an adequate moisture profile. According to the latest drought monitor map, the U.S. is better shape for the month of July than has been the case in most years. 

Trade & China’s Economic Woes

 

China’s second quarter GDP slipped to 6.2% which is a 27-year low. Analysts contribute this to mundane domestic demand and negative implications from the U.S. tariffs. As always, numbers out of China are viewed with a degree of skepticism and some analysts believe the true GDP figure is even lower than advertised. 

 

Larry Kudlow, Trump’s top economic adviser, said on Monday… “We expect China to be announcing shortly some large-scale purchases of farm goods and services.” It seems our markets are no longer riding the “trade-war” roller coaster as corn, beans and wheat were down hard on Monday with follow-through pressure continuing through most of the week.  Unfortunately, this storyline is not new, expectations and hopes of big ticket agriculture orders have been tossed around the trade talks since last November’s first face-to-face meeting with the U.S. and China. Now, many months later, the market is still expecting and hoping for the same big buy orders. Again, this was Monday’s news and by mid-week the opposite side was voicing their opinion. See below’s segment published in Bloomberg. 

 

(Bloomberg) -- President Donald Trump’s trade war will change forever the way top importer China buys its soybeans. That’s according to Archer-Daniels-Midland Co., one of the world’s largest agricultural commodities trader. The tit-for-tat tariff spat, which has already shrunk purchases of American beans, probably will mean China will try to reduce its dependence on the U.S. by buying from elsewhere and improving yields of its own production, ADM Chief Financial Officer Ray Young said. “Going into the trade war, the thought process was that China couldn’t survive without buying any U.S. soybeans,” he said. “It’s turned out to be wrong. China can survive without buying any U.S. soybeans, partly due to the ASF issue that has unfolded.” “U.S. agriculture will have to be less reliant on China as a destination for soybeans and other agriculture products,” he said. “When we think about the psychology of U.S.-China relationships, you come to this conclusion that they are going to try to figure out how to become less reliant on the U.S. longer term.”

 

No matter what side of the fence your opinion falls, more agriculture products moving through export channels is needed. Whether it’s meats, grains or oilseeds, inventories here at home need help from global end users. The picture is very cloudy going forward regarding when and how much product is agreed to move. Trying to outguess when trade relief comes is, just that, a guess. Many guessed it would not take this long and yet others feel it could take many more months. The simple fact is no one knows or can predict when, or what amount finally gets agreed upon. Your 2019 plan is fully engaged and ready for the “what if,” no need to waste energy on trying to forecast this political outcome. 

July 1 Cattle Inventory Unchanged

 

All cattle and calves in the United States on July 1, 2019 totaled

103 million head, unchanged from the 103 million head on July 1, 2018.

 

All cows and heifers that have calved, at 41.7 million head, were slightly

below the 41.8 million head on July 1, 2018. Beef cows, at 32.4 million head,

were unchanged from a year ago. Milk cows, at 9.30 million head, were down

1 percent from previous year.

 

All heifers 500 pounds and over on July 1, 2019 totaled 16.4 million head,

1 percent above the 16.3 million head on July 1, 2018. Beef replacement

heifers, at 4.40 million head, were down 4 percent from a year ago. Milk

replacement heifers, at 4.10 million head, were down 2 percent from previous

year. Other heifers, at 7.90 million head, were 5 percent above a year

earlier.

 

Steers 500 pounds and over on July 1, 2019 totaled 14.7 million head, up

1 percent from July 1, 2018.

 

Bulls 500 pounds and over on July 1, 2019 totaled 2.10 million head,

unchanged from July 1, 2018.

 

Calves under 500 pounds on July 1, 2019 totaled 28.1 million head, down

1 percent from July 1, 2018.

 

Cattle and calves on feed for the slaughter market in the United States for

all feedlots totaled 13.6 million head on July 1, 2019. The inventory is up

2 percent from the July 1, 2018 total of 13.3 million head. Cattle on feed in

feedlots with capacity of 1,000 or more head accounted for 84.4 percent of

the total cattle on feed on July 1, 2019, down slightly from previous year.

The combined total of calves under 500 pounds and other heifers and steers

over 500 pounds (outside of feedlots) is 37.1 million head. This is slightly

above the 37.0 million head on July 1, 2018. 

 

Calf Crop Down Slightly

 

The 2019 calf crop in the United States is expected to be 36.3 million head,

down slightly from last year's calf crop. Calves born during the first half

of 2019 are estimated at 26.5 million head, down slightly from the first half

of 2018. An additional 9.80 million calves are expected to be born during the

second half of 2019.

 

 

 

Have a great week!

 

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS SUBSTANTIAL RISK OF LOSS INVOLVED IN TRADING FUTURES AND OPTIONS WHICH MAY NOT BE SUITABLE FOR EVERYONE. HOWEVER, THE RISK INVOLVED WITH PURCHASING OPTIONS IS LIMITED TO THE PREMIUM PAID PLUS TRANSACTION COSTS. THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF AGWEST AND IS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY AGWEST. IF YOU ARE NOT AN EXPERIENCED USER OF THE DERIVATIVES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, THEN YOU SHOULD NOT RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS
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