The Federal Reserve wrapped up its regular two-day meeting June 10. The Fed did not make any changes to interest rates as the Fed is still very much against negative interest rates. But what the Fed did do is they reinforced their commitment to continue to stimulate the economy by continuing their massive balance sheet expansion (buying Treasury, MBS, and corporate bond ETF securities, as well as leading money).

The Fed also spooked the stock market with the comment that the U.S. gross domestic product will likely fall by 6.5% in 2020 and that there is considerable risk over medium time.

The 2020 planting season is nearing completion as most crops are near their final planting date for full crop insurance coverage, but for some, the rain the first weekend of June all but put an end to the 2020 planting season in the Northern Plains. Most regions in the east are reporting 2 plus inches of rain, which has put most right back to having completely saturated soils. Northern South Dakota, northern Minnesota, and North Dakota will see a large number of acres going to prevented planting, and with this last blast, it will result in a lot of soybeans acres not getting planted as well. As of June 7, North Dakota only had 74% of its soybeans planted, and last planting date for insurance being June 10. That leaves 26% of the state’s 6.6 million acres (1.7 million) left to plant.

The market focus last week was on the U.S. Department of Agriculture's June Crop Production report. It is not because this is an important report, usually, but over the past year it seems USDA’s reports have held a little more importance than before.

For wheat, the report was neutral old crop and negative new crop because of a larger than expected increase in both U.S. and world stocks. For old crop, exports were cut by 5 million bushels which increased ending stocks by 5 million bushels to 983 million bushels (just 3 million bushels more than the trade expected). For new crop, the yield was increased by 0.3 bushels to 49.8 bushels, which increased production by 11 million bushels to 1.877 billion bushels (that was 21 million bushels more than the trade expected). New crop ending stocks increased by 16 million bushels to 925 million bushels (25 million bushels more than the trade expected).

USDA’s world wheat numbers had old crop ending stocks increasing by 700,000 metric tons to 295.8 million metric tons (1.2 million metric tons more than the trade expected). World new crop ending stocks were increased by 6 million metric tons to 316.1 million metric tons (8.4 million metric tons more than the trade expected). On the world front, USDA increased Australia’s production 2 million metric tons but cut the European Union's production 2 million metric tons and Ukraine production 1.5 million metric tons.

As far as specific countries, some are starting to increase production estimates as favorable weather is improving crop potential. Russian officials increased their production estimate to 82.7 million metric tons versus 81.2 millon metric tons last month and compared to USDA’s 77 million metric tons. Australia officials are estimating production at 26.7 million metric tons versus 21.3 million metric tons in March and USDA’s 24 million metric tons.

USDA’s June Crop Production estimate was friendly for both old and new crop corn. For old crop, USDA cut harvested acres by 100,000 and yield by 0.4 bushels to lower production 46 million bushels to 13.617 billion bushels. Ethanol demand was also cut 50 million bushels. The cut in production was largely due to the resurveying of North Dakota. USDA cut North Dakota harvested acreage by 100,000 acres, putting it at 3.13 million. North Dakota's yield dropped 10 bushels per acre to 131 bushels, which in turn lowered North Dakota production 45.4 million bushels to 421.48 million bushels. Old crop ending stocks increased by 5 million bushels to 2.103 billion bushels (66 million bushels lower than the trade expected).

For new crop corn, ending stocks were up 5 million bushels (increase in beginning stocks) to 3.323 billion bushels (just 1 million bushels more than the trade expected).

South American production was left unchanged at 101 million metric tons for Brazil (1.6 million metric tons higher than expected) and 50 million metric tons for Argentina (1 million metric ton higher than expected). For world numbers, old crop ending stocks dropped 1.8 million metric tons to 312.9 million metric tons (1.5 million metric tons less than the trade expected). World new crop ending stocks were lowered by 2.1 million metric tons to 337.9 million metric tons (2.2 million metric tons less than the trade expected).

Ethanol production continues to show improvement. Last week’s ethanol report was friendly to corn for the seventh week in a row. Production was up and stocks were lower. Ethanol production was estimated at 837,000 barrels up 9% (72,000 barrels) from the previous week but 24% behind last year. Stocks were at 21.8 million, a 3% decline (674,000 barrels) from the previous week and steady with last year (and the lowest stocks estimate for 2020).

USDA’s June Crop Production report was neutral for old crop soybeans and friendly for new crop. For old crop, production was lowered 5 million bushels, exports were cut 25 million bushels and crush was increased 15 million bushels. That increased ending stocks by 5 million bushels to 585 million bushels (8 million bushels more than the trade expected). Production was cut due to the resurveying of North Dakota, which resulted in a 50,000-acre cut in harvested acres and a cut in the state's yield of .5 bushel. For new crop, crush was increased by 15 million bushels which lowered ending stocks by 10 million bushels to 395 million bushels (46 million bushels less than the trade was expecting).

USDA left Brazil’s production unchanged at 124 million metric tons (trade was expecting a 1 million metric ton decrease) and Argentina’s was cut 1 million metric ton to 50 million metric tons (600,000 metric tons less than the trade expected).

Old crop world ending stocks were lowered by 1.1 million metric tons to 99.2 million metric tons (1.8 million metric tons lower than the trade expected). New crop world ending stocks were lowered by 2.1 million metric tons to 96.3 million metric tons (3.5 million metric tons lower than the trade expected).

As of June 7, winter wheat conditions improved 1% to 51% good to excellent, 30% fair, and 19% poor very poor (1% lower than expected). Winter wheat heading was estimated at 85% versus 77% last week and 88% average. Winter wheat harvest was estimated at 7% versus 3% last week and 7% average, 5% lower than expected.

Spring wheat planting progress was estimated at 97% (as expected) versus 91% last week and 99% average. Spring wheat emergence was estimated at 81% versus 67% last week and 91% average. Spring wheat crop rating was estimated at 82% good to excellent, 17% fair, and 1% poor, up 2% above last week and expectations. North Dakota producers are estimating durum planting progress at 97% complete versus 87% last week and 100% average. Emergence was estimated at 77% versus 52% last week and 80% average. Jointing was estimated at 7% versus 3% last week and 20% average. Durum crop condition rating was estimated at 82% good to excellent, 15% fair, and 3% poor/very poor.

Spring wheat in North Dakota is 95% planted. But it is hard to get excited about slow planting progress when the crop is rated at 82% good to excellent, 1% higher than last year. The report is showing no spring wheat rated as poor.

Corn planting progress continues to trend higher than its five-year average pace but has slowed down dramatically. As of June 7, 97% of the nation’s corn was planted, up 4% for the week, and 3% ahead of average, but 1% slower than expected. North Dakota is slowly catching up, showing progress at 87% competed, now 9% behind average. Corn’s crop rating remains strong though at 75% good to excellent, which was 1% better than expected.

Soybean planting progress is also nearing completion. As of June 7, 86% of the nation’s crop had been planted, 11% increase from the previous week and 7% ahead of average, but 1% behind expectations. North Dakota is 74% planted, 17% behind average. This equates to 1.7 million acres of North Dakota's soybeans left to be planted. Soybeans crop rating remains strong though estimated at 72% good to excellent, up 2% from the week and 2% higher than expected.

Now that the USDA June Crop Production report has been released, the market will focus on weather for the next few weeks. As of now the short-term weather forecast and six-to-10-day forecasts are negative. They are calling for the exact weather the U.S. needs, warm and dry. This will not only help advance winter wheat harvest, but it will also help wet soggy areas to dry out and allow for plants a chance to grow. The Northern Plains is looking at temperatures to remain in the mid-70s to mid-80s and remain dry for the next 10 days.

And in true fashion, the eight-to-14 day forecast has turned to be a little negative as well. The forecast is valid for June 18-24. Temperatures are expected to turn to be below normal for North Dakota, Montana and South Dakota but remain above normal for everywhere else. Precipitation is expected to be below normal for North Dakota, Montana, South Dakota and Minnesota, normal to above normal for the Corn Belt, and below normal for Oklahoma, Texas and the rest of the Delta states. In other words, if this forecast holds, weather continues to be non-threatening through the third week of June.

In all, although the weather has not been completely perfect, weather has been close enough to ideal to help the crops to continue to improve.

Live cattle struggled this past week because of pressure from another week of disappointing cash trade. Losses were trimmed late in the session due to position squaring as traders try to bring the soon-to-expire front month June live cattle contract more in line with cash. Cutout prices continue to struggle as pork cutouts dropped 18% last week and 40% from the recent high set on May 11. Beef cutouts dropped 20 straight days and are 28% lower from the previous week and 45% off the recent high from May 12.

Losses were trimmed because of the lack of deliveries against the June contract due to June’s steep discount to cash. USDA estimated last week’s beef export sales pace at 20,734 metric tons, the fourth largest for 2020. Second quarter beef production is estimated at 6 billion pounds, an increase of 370 million from last month. 2020 beef production increased to 26.67 billion pounds.

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