Markets are getting hit hard this am with corn down 8-10 and soybeans down 7. Favorable weather forecasts for a warm and wet July are weighing on the crops and outside markets are worried about the rising number of COVID cases leading to a second slowdown in consumer demand.
Over 34,500 new COVID-19 cases were recorded yesterday. This fell just short of the previous record set back on April 24th when New York was in the midst of attempting to control the outbreak there. Both Texas and Florida each hit new records as officials begin to fear that hospitals there could soon be overwhelmed. This has led to Disney delaying the opening of their theme parks in Florida. Elsewhere, Nevada’s Governor has ordered that the public are required to wear masks when they go out. This is a rather predictable disturbing turn of events and we suspect that the next two-weeks will be key.
The potential second wave is proving problematic for public officials across the country who had hoped the disease would subside seasonally like the flu. However, it does not appear to be that type of situation and that COVID outbreaks can just pop up and explode. This is not good news for the hospitality and food service industries who had hoped to get things back on track.
Producers should actively be making sales now for any crop they have to move this fall. The CBOT has no reason to rally and I expect basis levels will widen out with the lack of space to store this year’s crop. My opinion is that while prices may look bleak now, just imagine what they could be this fall with a huge carryout from 2019, a huge crop in 2020 and the strong potential for a second wave of COVID shutting down the country again. $3 corn could look like a great price!
Have a Safe day!