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This week we go over our thoughts on coronavirus and what a second wave could mean to the macro markets. We also talk about the upcoming Planted Acres and Quarterly Stocks report to be released on June 30, at 11 am central. Make sure you take a listen to this week’s Turner’s Take podcast.
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Grain & Oilseeds
The Planted Acres and Quarterly Stocks report will be released tomorrow at 11 am. The market is looking for a reduction in corn acres. The USDA reported acres at 97 million in March and many in the trade are looking for 94 million to 96 million tomorrow.
Below is my supply and demand table for new crop corn acres and yield scenarios. My bullish estimate is 94mm acres planted and a 175 yield. That puts corn ending stocks at 2.5 billion and corn is still below $3.50 basis Dec futures during harvest lows. The good news is that scenario lets corn rally 20 cents and the lows are in for the year.
The market neutral scenario is 95mm acres and trend line yields of 178.5 bpa. Ending stocks are just under 3 billion and it argues for corn to test $3 by harvest. The bearish scenario is 96mm acres and a 180 bpa national average. In this case ending stocks are still around 3.3 billion and prices are sub $3 during harvest basis Dec 2020 futures.
Once this report comes out I think trades quickly move onto the weather.
Corn Supply and Demand with Acreage and Yield Scenarios
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WEATHER
The forecasts for the next two weeks turned hotter and drier over the weekend. Below is the 8-14 day temperature and precipitation maps from the NOAA. The weather will be hotter than normal with average precipitation. The next four to six weeks is when corn and soybeans are made. Corn will be pollinating and soybeans will be blooming/flowering. These are critical times for corn and soybean production and the market will add weather premium if the forecasts stay hot and get drier for extended periods of time.
NOAA 8-14 Day Temperature Forecast Map
NOAA 8-14 Day Precipitation Temperature Map
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