Winter wheat crop surprisingly biggerUSDA raised its winter wheat crop estimate 11 million bu. from last month. The national average winter wheat yield is now estimated at 52.1 bu. per acre, up 0.4 bu. from last month.

HRW: 743 million bu., up 10 million bu. from last month and 25 million bu. above the average pre-report estimate. The Kansas wheat crop is estimated at 318.5 million bu., up 13 million bu. from last month.

SRW: 297 million bu., unchanged from last month.White winter: 225 million bu., up 1 million bu. from May.

ENSO-neutral likely through summerThere is roughly a 60% chance of ENSO-neutral conditions (neither La Niña nor El Niño are present) through summer, according to the U.S. Climate Prediction Center (CPC). Odds tip slightly in favor of La Niña developing during fall and winter, though CPC puts it at no more than a 46% likelihood. Kyle Tapley, senior ag meteorologist with Maxar, says: “La Niña may develop a bit too late to significantly impact the U.S. corn and soybeans crops, but it does lead to some hotter and drier risks to the forecast for the balance of the summer.”

China prominent buyer of ag goodsChinese old-crop purchases of U.S. ag commodities for the week ended June 4 included 337,000 metric tons (MT) of soybeans, 667,000 MT of sorghum and 209,500 running bales of cotton, along with 2,600 MT of pork for 2020 deliv-ery. For 2020-21, China bought 517,000 MT of soybeans, 63,000 MT of HRW wheat and 161,700 bales of cotton.

USDA also announced daily soybean sales to China of 63,000 MT for 2019-20 and 657,000 MT for 2020-21. Another 120,000 MT of beans were sold to “unknown” for 2020-21.

Dicamba use allowed through July 31EPA is canceling registrations for dicamba formulations in line with a Ninth U.S. Circuit Court of Appeals ruling. However, EPA said farmers and commercial applicators can still spray dicamba on crops through July 31 — if they had the chemicals in their possession on June 3.

Corn and beans pause, wheat weakens — Corn and soybean futures paused last week following potential upside breakouts from the extended sideways ranges. USDA’s June Supply & Demand Report was generally neutral for the corn and soybean markets (see News page 4) and triggered little price response. While the corn and soybean crops are off to strong starts, summer forecasts are trending hotter and drier, and export demand is heating up for soybeans. The wheat market was pressured by USDA’s surprising increase to its winter wheat crop estimate (see first item below) and seasonal pressure as harvest picks up. Cattle futures continued to drift sideways, as traders let the cash market fall to narrow its premium. Hog futures continued to pull back from the early May highs.

Modifications to CFAP rulesUSDA’s changes to the Coronavirus Food Assistance Program (CFAP) include: Clarifying the definition of “Slaughter Cattle – fed cattle” to be animals with a weight of 1,200 lbs. or more that are intended for slaughter; that payment calculations for livestock specify they are based on unpriced livestock sales and apply to livestock inventory owned between April 16 and May 14. The change adds a definition of ‘unpriced’ to be “based on whether a forward contract, agreement, or similar binding document was in place as of Jan. 15, 2020.”

Dairy operations that dissolved on or after March 31 will also be eligible for payments. There were also changes made for specialty crops.

USCA: more aid to avoid ‘industry-wide financial collapse’The U.S. Cattlemen’s Association (USCA) wants CFAP aid

to cover cattle sales from Jan. 15 to May 15 versus the Jan. 15 to April 15 period in the rule. The group also wants actual losses to be covered instead of 25% and raised concerns on the payment limit of $250,000 per producer or entity.

Ethanol rebounding, but still laggingU.S. ethanol production rebounded for a sixth straight week, though it was still down nearly 24% from the same week last year. Implied ethanol demand hit an 11-week high and use is outpacing production. That pulled ethanol stocks to their lowest level since the week ended Dec. 27.

Democrats could gain full controlCook Political Report House Editor David Wasserman’s cur-rent election predictions:

• If the election were held today, Democrats would cap-ture control of the White House and Senate — and retain control of the House.

• Presumptive Democratic presidential candidate Joe Biden’s likely choice for a running mate: Kamala Harris.

• He now expects House Ag Chairman Collin Peterson (D-Minn.) to win a close race against likely GOP candidate Michelle Fischbach.

News this week...2 — Corn, soybean and spring wheat conditions improve. 3 — Meat exports slowed, but pork still record-strong in April. 4 — No major changes to U.S. balance sheets.

June 13, 2020 Vol. 48, No. 24

Go to ProFarmer.com

June 13, 2020 / News page 2

Follow us on Twitter:@ProFarmer@BGrete

@ChipFlory@JWilson29

@DavisMichaelsen@MeghanVick

Big jump in Aussie wheat crop pegThe Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) hiked its 2020-21 wheat production estimate by more than 25% from March to 26.7 MMT. That would be up 11.5 MMT (76%) from last year’s crop and 8.8 MMT (49%) above the three-year average. Heavy rains along the country’s east coast broke the three-year drought cycle, prompting farmers to plant more wheat on improved yield prospects.

The Australian Bureau of Meteorology expects most of the country to remain wetter than normal during the com-ing three months. Climate models are currently neutral, but the bureau says La Niña, which favors above-normal rainfall, could develop in the months ahead.

On June 11, USDA raised its 2020 Australian wheat crop forecast by 2 MMT to 26 MMT. Its 2020-21 Aussie wheat export projection was also increased 2 MMT to 17 MMT.

Rains improve Russia’s wheat cropRecent rains across southern and central Russia have improved crop conditions, prompting Russia-based consult-ing firms to raise production estimates for the country’s wheat crop. IKAR raised its 2020 Russian wheat crop esti-mate by 2.4 MMT from last month to 78 MMT. The firm also increased its 2020-21 Russian wheat export forecast by 1 MMT to 35 MMT. SovEcon has an even stronger view of the crop, raising its wheat estimate by 1.5 MMT to 82.7 MMT.

USDA kept its 2020 Russian wheat crop forecast at 77 MMT. It expects the country to export 36 MMT of wheat, up 1 MMT from its May projection.

EU wheat crop pegs declining Grain trade association Coceral lowered its forecast for wheat production in the European Union (including Britain) to 129.7 MMT, down 5.7 MMT from last month due to dry-ness in top producers France, Germany and Denmark. Consultant Strategie Grains cut its 2020 EU wheat crop esti-mate by 2 MMT to 130.9 MMT, saying hot and dry condi-tions hurt crop prospects before rains returned this month.

Strategie Grains cut its EU 2020-21 wheat export forecast by 500,000 MT to 26.1 MMT, which would be down from an estimated 35.3 MMT in 2019-20.

USDA lowered its 2020 EU wheat crop forecast by 2 MMT to 141 MMT.

Dryness may cap Argy wheat acres Dry weather in Argentina could upend farmer plans to plant a record 7 million hectares (17.3 million acres) to wheat in 2020-21, reports the Rosario Grain Exchange. Last month, the exchange projected record sowings could push production to a new high of 22 MMT.

Corn, soybean crop ratings improveUSDA’s “good” to “excellent” ratings for the corn crop improved one point to 75%, while the soybean crop increased two points to 72%. Illinois’ crops showed the most improve-ment, rising nine points for corn and 11 points for soybeans after a week of warmer, drier weather. Roughly two-thirds of both crops in Illinois are now rated “good” to “excellent.”

When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 2.6 points to 385.1 points and the soybean crop rose 4.0 points to 374.2 points. The corn crop is rated 8.3 points above the five-year average for this date, while the soybean CCI is 3.9 points above average.

Spring wheat conditions rise, tooUSDA increased its “good” to “excellent” rating for the U.S. spring wheat crop to 82% as of June 7, up two points from the previous week. On our weighted CCI, USDA’s weekly condition ratings equated to a 391.8 rating for the spring wheat crop, which was up 5.3 points from the previous week and 17.0 points above the five-year average.

Cotton crop off to a subpar startUSDA’s weekly cotton crop rating declined one point to 43% “good” to “excellent.” On our weighted CCI, the crop dropped 3.2 points to 345.5 points and is now 7.5 points below the five-year average for the first week of June. Only 30% of the Texas crop, which accounts for more than one-third of total U.S. production is rated “good” to “excellent.”

Brazil trims corn crop estimateBrazil’s statistics agency Conab cut its Brazilian corn crop estimate by 1.3 million metric tons (MMT) to 101 MMT, which would still be up slightly from the record 2018-19 crop. The reduction was driven by a smaller safrinha corn crop estimate of 74.2 MMT, which was down 1.7 MMT from the May outlook as drought clipped crop prospects.

Conab raised its 2019-20 Brazilian soybean crop estimate by nearly 100,000 metric tons (MT) from last month to 120.4 MMT.

USDA kept its 2019-20 Brazilian corn and soybean crop estimates at 101 MMT and 124 MMT, respectively.

Conab expects Brazil to export 75 MMT to 77 MMT of soy-beans and 34.5 MMT of corn this year. Last week, USDA kept its new-crop Brazilian soybean export forecast at 83 MMT but lowered its corn export outlook by 1 MMT to 35 MMT.

June 13, 2020 / News page 3

U.S. meat exports slowed by Covid-19The U.S. exported 641.3 million lbs. of pork in April, which was a record for the month but down 8.6% from the all-time high in March. Despite slowdowns from Covid-19, pork exports rose 22.3% versus April 2019 due largely to a 365% surge in shipments to China. For the first four months of 2020, pork exports at 2.664 billion lbs. were up 35.2% from the same period last year, with shipments to China up nearly six-fold and accounting for 30% of the total.

Beef exports totaled 235.2 million lbs. in April, down 12.0% from March and 3.4% under year-ago. Shipments to leading buyer Japan increased month-over-month and year-over-year. For January through April, U.S. beef exports totaled 1.004 billion lbs., up 6.9% from the same period last year. Year-to-date exports to Japan, South Korea and Canada rose, while shipments to Mexico declined. A drop in shipments to Hong Kong was nearly offset by higher exports to China.

Covid-19 slams Chinese factory pricesChina’s May producer price index (PPI) fell 3.7% versus year-ago — the sharpest drop since March 2016. Factory gate price dropped amid contractions in export orders as the Covid-19 pandemic restricted domestic and global demand.

China’s consumer price index (CPI) increased 2.4% last month, which was the weakest reading since March 2019. Food prices increased 10.6% compared with last year, fueled by an 81.7% surge in pork prices, though that was the small-est year-over-year gain in pork since September 2019.

Deep contraction for global economy Covid-19 will cause the global economy to contract by 5.2% this year, according to the World Bank. If Covid-19 lock-downs are extended beyond this month, it says the eco-nomic hit will be greater. The Organization for Economic Cooperation and Development (OECD) calls for a 6.0% drop in global economic growth, while warning a second wave of Covid-19 would cause a 7.6% contraction. The World Bank expects the U.S. economy to shrink 6.1% this year, while OECD forecasts U.S. GDP will contract 7.3%.

OECD forecasts 5.2% global growth next year, though it will be only 2.8% if a second wave of Covid-19 spreads around the world. The World Bank expects the global economy to grow 4.2% next year.

Shortest recession on record? The U.S. economic downturn that began in March might

already be subsiding based on the strong May employment data, according to CNBC’s Andrew Ross Sorkin. He notes the shortest recession on record is a six-month period in 1980, saying: “This downturn may be shorter, but could be the most severe since World War II.”

Producer Crop Comments...Please send crop comments to editors@profarmer.com.

Black Hawk Co. (northeast) Iowa:“I traveled down to around the Quad Cities area this past weekend. I’m no USDA crop watcher, but if I was, nearly every field I saw along the route I would have rated ‘good’ or ‘excellent.’ Recent heat really boosted crop growth.”

Central Illinois:“Drove eight miles on each side of Dalton City. I would categorize corn fields as: 8 good; 11 ok; 28 bad; and 44 just planted or not yet planted.”

Iroquois Co. (east-central) Illinois:“We missed all of the rain from Cristobal and the 15-day forecast has almost no rain chances. Pretty sure we are going from freeze, flood to drought in 45 days.”

Kandiyohi Co. (central) Minnesota:“Corn and soybeans look excellent right now. Corn is past knee-high.”

Renville Co. (central) Minnesota:“Crops look great, but dryness will be a concern if we don’t start getting rains. My lawn is dry — not unusual for late July or August, but it is for early June. I have not seen it this dry in early June.”

Clay Co. (southeast) South Dakota:“Corn is filling in nicely and beans coming along. Subsoil moisture remains in great shape — ditches still have standing water along I-29.”

Logan Co. (northwest) Kansas:“Crops are starting to show stress from heat and dry-ness. Will start my pivots soon.”

West Texas:“I’m a custom harvester and I never remember a day we didn’t cut wheat because of wind in Texas. June 9 was our day — it was ugly. That was as bad a wind as I have ever seen sustained in June.”

Oklahoma Panhandle:“I can honestly say I had never seen knee-high green- snapped corn before the June 9 windstorm.”

Weak China trade data, but huge soybean imports in May China’s overall imports plunged 16.7% versus year-ago in May, the sharpest decline since January 2016. Chinese exports fell 3.3% last month after a surprising 3.5% increase in April. That resulted in a record trade surplus of $62.9 billion.

Chinese soybean imports surged more than 27% last month to 9.4 MMT, the largest monthly total since December. Chinese soybean stocks were tight following Covid-19 slowdowns and crush margins improved, while new-crop Brazilian exports increased. Chinese soybean imports are expected to top 9 MMT again in both June and July. USDA raised its 2019-20 Chinese soybean import forecast by 2 MMT to 94 MMT.

June 13, 2020 / News page 4

Corn — USDA raised its old-crop ending stocks forecast 5 million bu. from last month to 2.103 billion bushels. USDA lowered its 2019 corn production estimate by 45 million bu. to 13.716 billion bushels. That was more than offset by a 50-million-bu. cut to estimated corn-for-ethanol use to 4.9 billion bushels.

USDA also raised its new-crop corn carryover projection 5 million bu. to 3.323 billion bu., the result of bigger beginning stocks (old-crop ending stocks). USDA made no changes to its new-crop usage projections this month.

• USDA 2019-20 price: $3.60, unchanged from last month; 2020-21: $3.20, unchanged.Global carryover excluding China: 2019-20 at 105.8 million metric tons

(MMT), down 820,000 metric tons (MT) from last month; 2020-21 at 139.8 MMT, up 250,000 MT from May.

Soybeans — USDA increased its old-crop soybean ending stocks forecast by 5 million bu. from last month to 585 million bushels. USDA lowered its 2019 soybean crop estimate by 5 million bu. to 3.552 billion bushels. On the demand side of the old-crop balance sheet, USDA increased crush by 15 million bu. to 2.14 billion bu. and cut exports by 25 million bu. to 1.65 billion bushels.

USDA cut its new-crop soybean carryover projection by 10 million bu. to 395 million bushels. New-crop supplies were increased by 5 million bu. on the higher old-crop carryover. That was more than offset by a 15-million-bu. increase to projected crush to a record 2.145 billion bushels.

• USDA 2019-20 price: $8.50, unchanged from May; 2020-21: $8.20, unchanged.Global carryover excluding China: 2019-20 at 73.0 MMT, down 2.1 MMT

from last month; 2020-21 at 68.6 MMT, down 2.6 MMT from May.

Wheat — USDA boosted its old-crop wheat ending stocks forecast by 5 mil-lion bu. from last month to 983 million bushels. The only change to the old-crop balance sheet was a 5-million-bu. reduction to exports, which are now estimated at 965 million bushels.

USDA increased its new-crop wheat ending stocks projection by 16 million bu. to 925 million bu. on an 11-million-bu. bigger crop estimate and higher beginning stocks. USDA made no changes to its new-crop usage projections.

• USDA 2019-20 price: $4.60, unchanged from May; 2020-21: $4.60, unchanged.Global carryover excluding China: 2019-20 at 145.0 MMT, up 220,000 MT

from last month; 2020-21 at 154.2 MMT, up 4.5 MMT from May.

Cotton — USDA raised its old-crop cotton ending stocks forecast by 200,000 bales from last month to 7.3 million bales. The only change was a 200,000-bale cut to domestic use to 2.5 million bales.

USDA raised its new-crop cotton carryover projection by 300,000 bales to 8 million bales. The increase came amid bigger beginning stocks and a 100,000-bale reduction in domestic use to 2.8 million bales.

• USDA 2019-20 price: 59¢, unchanged from last month; 2020-21: 57¢, unchanged. Global ending stocks excluding China: 2019-20 at 63.3 million bales, up 2.4

million bales from last month; 2020-21 at 69.1 million bales, up 3.7 million bales from May.

Corn CarryoverU.S. (Bil. Bu.)/Global* (MMT)

Soybean CarryoverU.S. (Mil. Bu.)/Global* (MMT)

Wheat CarryoverU.S. (Mil. Bu.)/Global* (MMT)

Cotton CarryoverU.S. (Mil. Bales)/Global* (Mil. Bales)

* Without China

* Without China

* Without China

* Without China

Global stocks adjusted more than U.S. carryoversby Editor Brian Grete and Sr. Market Analyst Jeff Wilson

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson • Washington Policy Analyst Jim Wiesemeyer

Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis Michaelsen • Sr. Economist Alan BarrettSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2020 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber

Feed MonitorFEED

Corn Game Plan: You should plan to go hand-to-mouth corn feed needs until the market confirms that it has reached a price low. At that point, we will likely increase forward coverage.

Meal Game Plan: On June 10, we advised livestock producers to cover all July soy-bean meal needs in the cash market. We will wait for confirmation of a low or re-newed weakness to add coverage.

Corn II’20 67% III’20 0% IV’20 0% I’21 0%

Meal II’20 100% III’20 33% IV’20 0% I’21 0%

Analysis page 1

$317.30

$304.10

DAILY JULY MEAL

DAILY JULY LEAN HOGS

Position Monitor

HOGS - Fundamental AnalysisNearby futures slumped to seven-week lows while deferred contracts hit four-week highs, a sign a low may be near. Cash weakness tied to backlogged supplies and the plunge in cutout values will limit rallies. National slaughter capacity is improving and a big Saturday kill pushed weekly processing above a year ago. Demand for pork is outstanding as price discounts to beef push more cuts into consumers’ shopping carts. China continues to actively ship prior sales but new business has been poor the last six week. U.S. pork remains the cheapest global supply. A weaker dollar may aid sales into 2021 to all importing nations.

Game Plan: Futures have dis-counted falling pork prices, ignor-ing improving grocer demand. More China exports will signal a low. We’ll evaluate hedges after the next rally.

BEEF CUTOUT VALUE (PER CWT.)

PORK CUTOUT VALUE (PER CWT.)

Position MonitorGame Plan: Hedges are risky with futures trad-ing below the cash market. We are willing to keep all risk in the premi-um-priced cash market at this time.

Feds Feeders II’20 0% 0% III’20 0% 0% IV’20 0% 0% I’21 0% 0%

A close above $101.50 would target resistance at $108.25.

Initial support at $95.45 aligns with the 40-day

moving average (green line).

The 40-day moving average (green line) near $57.10 remains

initial resistance. Stronger resistance is the downtrend

near $57.50.

Strong support is the April 6 contract low at $49.00.

DAILY AUGUST LIVE CATTLE

$101.50

CATTLE - Fundamental AnalysisDaily slaughter has reached the highest point since late March, keeping steady pressure on once-inflated wholesale beef prices. Cash cattle also slid lower with the retreat in product prices, but are reaching levels of support as grocer demand for beef has improved quickly with the lower prices. Export sales improved last week as new business jumped to the highest since mid-March. Key customers South Korea and Japan topped the sales list—a welcome development. Lows are due by early July before feedlot numbers seasonally decline. Restaurant reopenings should add underlying support, but that also poses the risk of a virus resurgence.

$108.25

$66.10

$297.50

$95.45

$86.75

June 13, 2020ANALYSIS

Lean Hogs II’20 0% III’20 0% IV’20 0% I’21 0%

Initial resistance is the broken support line at $297.50.

Initial support is the contract low at $281.50.

$281.50

$49.00$49.00

June 13, 2020 / Analysis page 2

$5.30 1/2

DAILY JULY SRW WHEAT

WHEAT - Fundamental AnalysisSRW - Prices retreated to support after USDA forecast larger U.S. and world output, leading to a record global carryover projection. Funds added to short positions and now trade focus is on how the weather plays out in the Black Sea countries and Europe ahead of harvests next month.

Position Monitor

Game Plan: We may advise hedges and/or cash sales on a close below the March lows. Also, be prepared to sell into strength if disappoint-ing rainfall and coverage occurs in Europe and the Black Sea areas into early July.

Initial resistance is at $5.30 1/2. Key resistance is the

downtrend line near $5.40.

Initial support isat $4.94 1/4.Weekly support is at $4.77 (not shown).

$4.94 1/4

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (JULY)

CORN - Fundamental AnalysisFutures tested support and recovered by late week as funds covered shorts. USDA did not raise its carryover forecasts as much as feared after making a smaller cut in old-crop ethanol use. Ethanol demand is rising, with gasoline demand up 56% since hitting a low in early April. Weekly ethanol production rose for a sixth week and stocks declined to the lowest this year. Weather is the focus, with warm, dry conditions into June 22 expected to be relieved by rain. Those rains will need to verify or fund short-covering may accelerate. Crop conditions point to strong U.S. crop potential. U.S. and global inventories are forecast to be abundant so rallies are selling opportunities.

Initial resistance is at $3.55 1/4.Strong resistance is at $3.75.

Initial support is the40-day moving averagenear $3.36 and the uptrend near $3.33. Strong support is theApril 21 contract low at $3.25 1/2.

DAILY DECEMBER CORN

$3.55 1/4

$3.25 1/2

$3.75

DAILY JULY CORNPosition Monitor

Game Plan: On June 10, we advised corn hedg-ers and cash-only marketers to enter a standing order to sell another 10% of 2019-crop in the cash market if July futures hit $3.34. We plan to make new-crop sales if old-crop orders are hit. Funds are heavily short the market, so there’s potential for the corrective rally to extend. But the upside is limited and the seasonal pattern is down through summer, barring a weather rally.

A close above the June 8 high at $3.34 3/4 would target $3.38 1/4 and the downtrend near $3.48.

Initial support is the uptrend line and the 40-day moving average near $3.21. Strong support is theApril 21 contract low at $3.09.

$3.34 3/4

$3.09

$3.38 1/4

’19 crop ’20 crop

Cash-only: 60% 0% Hedgers (cash sales): 50% 0% Futures/Options 0% 0%

’19 crop ’20 crop

Cash-only: 100% 30% Hedgers (cash sales): 100% 30% Futures/Options 0% 0%

June 13, 2020 / Analysis page 3

DAILY JULY HRS WHEATDAILY JULY HRW WHEAT

HRW - Prices failed to respond to rising global values as export demand is limited for U.S. supplies. HRW wheat supplies are shrinking but are currently estimated to be more than adequate to meet demand. Dry weather and drought invading the Southern Plains may take the top end off final yields but may not support prices without better exports.

$8.87

DAILY NOVEMBER SOYBEANS

HRS - Futures fell on the rising global supply story. Weather is too dry in the eastern Canadian Prairies and too wet in Alberta, keeping a floor under spring wheat prices. Rain is needed in some areas of both Australia and Argentina after dry weather the past 30 days depleted soil moisture reserves. A weaker U.S. dollar may help boost exports.

$8.36 3/4

$9.00

A close above the downtrend near $5.34 may target $5.51 1/2.

Strongsupport is at the $5.02contract low.

A close above $4.73 would turn the trend higher.

$4.73

Initial support is at $4.38 3/4. $4.27 1/4

$5.51 1/2

$5.02

$5.14

$4.38 3/4

Initial resistance is at $8.87. Stronger resistance is $9.00.

Initial support is the broken downtrend near $8.65. Strong support is at 8.36 3/4.

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (JULY)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (JULY)

SOYBEANS - Fundamental AnalysisSoybeans tested support and rebounded in late-week dealings. U.S. soybeans are competitive and China is buying (see News page 1). USDA trimmed both world and U.S. new-crop carryover forecasts, adding additional support. It looks like China will continue to scoop up U.S. supplies for the foreseeable future. USDA Chief Economist Robert Johansson said that Chinese agricultural purchases are lagging historical averages, but he expects large purchases in the fourth quarter to bring them into Phase I compliance. Crop conditions have improved with warmer temperatures but dry weather this week will diminish soil reserves, increasing moisture needs into early July.

Initial support is at$8.61 1/4. Strongersupport is the March 18 low at $8.29 and the contract low at $8.18 1/2.

$9.20 1/2

$8.29

$8.61 1/4

Position Monitor ’19 crop ’20 crop

Cash-only: 85% 0% Hedgers (cash sales): 85% 0% Futures/Options 0% 0%

Game Plan: On June 10, we advised soybean hedgers and cash-only marketers to enter a standing order to sell another 10% of 2019-crop in the cash market if July futures hit $8.85. That would get hedgers and cash-only marketers to 95% priced for old-crop. We’ll likely make 2020-crop sales if the old-crop order is hit. China buying U.S. supplies is positive. Weather will be traders’ focus through the summer.

DAILY JULY SOYBEANS

$8.18 1/2

$8.97 1/2

$8.77 1/2

A close above $8.77 1/2 would target stronger

resistance at $8.97 1/2.

June 13, 2020 / Analysis page 4

’19 crop ’20 cropCash-only: 100% 10% Hedgers (cash sales): 100% 0% Futures/Options 0% 25%

75.61

New Member App Download the Pro Farmer app, included with your membership! Search for “Pro Farmer” in your app store. Available on Apple and Android devices.

USDA Cattle On Feed ReportLow placements cut feedlot numbers.

FRI 6/192:00 p.m. CT

5

USDA Export Sales ReportWatching for more China business.

THUR 6/1811:00 a.m. CT

4

USDA Crop Progress ReportCorn, soy ratings may improve.

MON 6/113:00 p.m. CT

3

NOPA Crush ReportMay processing remained large.

2

USDA Export Inspections Soy shipments may rebound.

MON 6/1510:00 a.m. CT

1

WATCH LIST

MON 6/1511:00 a.m. CT

major rally phase, so be prepared to sell. The median date that rallies started

has been June 25, but some began in early June to as late as early August in the past 40 seasons.

The median gain was 93¢. That’s the middle of the range of gains from as little as 41¢ in 2005 to as much as $5.10 in 2012. The average gain in the 36 years was $1.23. In 2019, the summer price rally was 58¢.

November closed June 1 at $8.52 1/4. That projects a rally near $8.93 to per-haps as high as $9.45, depending on the Chinese purchases and weather. That’s why on June 10 we advised you to place a standing order to sell another 10% of old-crop if July soybean futures hit $8.85.

Summer rallies in November soybeans have occurred 90% of the time since 1980 and prices just confirmed an upside breakout to start June.

Rallies after June occurred every year except 1982, 1992 and 2004 when then- record crops were produced and 2014 when prices were still in retreat after the 2012-drought induced rally.

Our definition for a rally in November futures is when prices rise above a side-ways pattern or long-term downtrends are broken. November beans broke above both of those patterns on June 3 and extended gains last week.

There are some years that have mul-tiple rallies from June through September. But most years only have one

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Interest Rates: Last week, the Federal Reserve signaled near-zero percent short-term rates will likely persist through 2022 to nurture economic recovery from Covid-19.

Economic activity will shrink 6.5% in 2020, but bounce back to 5.0% next year, followed by 3.5% growth in 2022, accord-ing to the Fed’s latest projections. The jobless rate is forecast at 9.3% this year before falling to 6.5% in 2021 and 5.5% in 2022. Unemployment above the long-

GENERAL OUTLOOKterm target of 4% will justify the Fed keeping rates near zero for longer.

Low rates should support long-term stock market strength and weakness in the dollar, and could lead to spillover sup-port for commodities, especially gold.

The Fed signaled it may want to control the yield curve with more purchases of government bonds and mortgages to depress long-term rates. The Fed fears a return of the virus, slowing growth.

DAILY DECEMBER COTTON

Game Plan: Hold short hedges in Decem-ber futures to cover 25% of expected 2020 production. Plan to make cash sales on rallies into the 62¢ to 65¢ area.

Position Monitor AVERAGE COTTON BASIS (JULY)

COTTON - Fundamental AnalysisDeclining crop conditions and rising acreage abandonment concerns in dry Texas are supportive. Exports are active, with China buying and shipping U.S. cotton. Worries about a second wave of Covid-19 outbreaks and big world inventories will likely cap gains.

COTTON EXPORT BOOKINGS (’000 BALES)

WEEKLY 10-YEAR NOTE YIELD VS. 2-YEAR NOTEFed projections it will keep

interest rates low for at least two years, leading to a narrowing in

the 10-year note premium. A narrowing spread may

pressure the dollar.

Initial support at the 40-day moving average

near 58.00¢ is backed by support at 56.44¢.

Initial resistance is at 61.00¢.Stronger resistance is 65.80¢.

56.44¢56.44¢55.11¢55.11¢

61.00¢61.00¢

65.80¢65.80¢