Good Morning,

Yesterday’s report came in pretty close to the middle of expectation. With terrible demand in the first quarter of the year, the USDA made cuts across the board. The numbers that hurt are the new crop balance sheet for corn. Ethanol is expected to bounce back in production, but not nearly enough. Feed and exports are expected to gain some demand back, and some would say the USDA’s forecast would be too large. The phase one deal was supposed to support corn, beans and wheat prices, but the Corona Virus has slowed that. The carryout in corn is really big at 3.3 billion bushels, which is the the largest since the 80’s, when the government had to start set aside programs and government storage. (Set aside programs are desperately needed now in my opinion) The bean carryout was not nearly and negative at 400 million bushels, but when you add them all up it’s going to be a continuation of a tough year.
The US House is expected to vote on a new relief bill for 3 Trillion dollars Friday. The bill is named the Heroes Act, and will still have to pass the Senate next. In the bill, 16.5 billion dollars will be marked for direct farm payments, and also send financial assistance to the Ethanol industry. The USDA will be briefing on 16 billion dollars worth of aid that would be available in June or later. The USDA would like to get the money out to farmers before the Heroes Act would pass in June, and set up another round of payments for fall.
Beans have the best chance to rally long term in my opinion. Corn could get better if crude oil would get back to the mid 30’s but an increase in prices will result in an increase in production and reset the whole thing again. China has the ability to make the US carryout in beans disappear if they buy what they say they are going to, but when has that happened?
Markets are lower today with corn down 4 and soybeans down 9. As I stated in Mondays commentary, producers should take advantage of any bounce in the market because there is little to no reason for this market to move higher and the longer you hold out the worse it could get.

Have a Safe Day!

Garry Gard