Good Morning,

Markets are lower today following yesterdays surge in the markets.

Uncertainty over supplies and fund short covering have led to the recent rally following the USDA’s WASDE report. The trade is still debating the damage from Monday’s derecho and the FSA acreage data have left many unknowns regarding the 2020 corn and soy crops. Traders have begun to price in the FSA farm Program participation data that showed 9M acres were enrolled in PP with nearly 5.4M being corn and 1.2M for beans. This was a 5M acres decline from the seeding forecast provided by NASS in March. Of the nearly 9M acres, the decline was led by the Dakotas that saw a 2.6M acres decline followed by a combined 1.3M loss in the southern Midwest and Delta for Louisiana, Mississippi and Arkansas.

I would caution reading into this too much as 2020 has been a less than normal year to say the least. Initial FSA data that comes out in August is often difficult to assess. Given that there was no penalty for farmers who enrolled late this year, comparing this year to any other years data would be difficult at best.

The total acres enrolled in the US farm programs totaled just 226M acres. This was down some 7M acres from last year when the horrendous weather last spring made enrollment a hot topic. But what is most glaring is the 19M drop from 2018’s figures. If PP acres are included this year’s totals enrollment in 2020 is off more than 17M from last year. In my opinion it is too early to make any fast judgement of the NASS data until we get a more information from them in September/October. NASS is not expected to update their numbers on 2020 planted acres until the October report.

With that said we still have the largest corn stocks in 33 years with both ethanol and feed demand overstated. Now there is a gap in the charts in December corn up at $3.42 that is a likely target, but there should be some decent resistance in that area given the enormous carry out possibilities.

Bottom line is that producers should reward the recent rally by making new crop sales! This crop is not getting smaller and prices will fade heading into harvest.

Have a Safe Day!

Garry Gard