Commodity wrap - Corn, Soybean, Oil, Coffee

Corn:

• Corn planting in the US accelerated last week due to less rainfall

• Possible losses due to belated planting as well as adverse weather conditions

• Total acreage sown in corn could be lower due to belated planting

• The latest WASDE report brought larger than expected falls of yield, it also showed falls of production and ending stocks

• Corn prices seem to be en route to continue climbing

The WASDE release showed notable declines in case of forecasts for yield, output and ending stocks of US corn. Bloomberg

The US corn planting season keeps going. Source: Bloomberg

Quality of corn crop is the weakest since 2013. Source: Bloomberg

Soybean:

• Pace of planting has increased due to better weather conditions

• There is no progress in the US-China trade dispute

• A meaningful increase of pork prices in China due to lowered supply which could act toward lesser demand for soybean

• The WASDE report did not offer reasons behind a rebound in soybean prices

• US soybean output should not be changed

The WASDE report did not show too many changes in forecasts compared to the previous release. Source: USDA

Soybean prices did not get support from the WASDE release yesterday. The US-China trade battle should limit upward potential for prices. Source: xStation5

Oil:

• US oil inventories keep mounting which seems to be at odds with the seasonal pattern

• The current OPEC/non-OPEC output cuts agreement should be extended

• Russia seems to be unwilling to continue cutting its output

• Russia sees a comfortable level for Brent prices between $60 and $65 per barrel

• The US may impose sanctions on a trade deal between the EU and Iran

• Iran does not want to leave the cartel

• The latest EIA report showed lowered forecasts of US crude supply growth

• ETFs keep liquidating their longs in the oil market due to economic growth concerns

Oil prices keep declining on the back of concerns over global economic growth. The base scenario may see the price falling to $55 or so. Source: xStation5

Coffee:

• May ICO report showed an increase of global coffee exports by 4.6% YoY in April

• The annualized rate of growth in the past 5 years was 2.2%

• Supply overhang in this season is expected to be at around 3.41 million bags

• Shorts have been trimmed by speculators of late

• BRL keeps strengthening against the US dollar

A notable reduction of shorts led to a clear bounce in the net position. Notice that this position hovers around its extreme levels seen over the past 18 months. Source: Bloomberg

BRL is strengthening against the US dollar, however, a rise in coffee prices could be even larger. In the short term, coffee seems to be well priced. Source: xStation5