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Review of Agriculture Commodity Prices - May 2019
Commodity Prices
Corn prices continue to fall
Average corn prices fell 2% sequentially in April to $3.53/bu and 7% from year-ago levels.  There are several pressures on the price of corn.  First, the U.S. increased tariffs to 25% on $200 billion of Chinese goods on May 10.  President Trump also said that it is starting paperwork for 25% duties on another $325 billion in Chinese imports, while China announced retaliatory tariff hikes on $60 billion of U.S. goods.[1]   Second, the United States Department of Agriculture (USDA) May World Agriculture Supply and Demand Estimates (WASDE) report showed a 60 million bushel increase to the 2018/19 ending stocks to 2.095 billion bushels (verse expectations of 2.055 billion bushels driven by a 65 million bushel decrease in corn for ethanol usage and a 5 billion bushel reduction in imports.[2]   Third, South American corn output likely will increase 30-35% (up from an estimate of an increase of nearly 25% last month) reflecting the substantial increase in Brazil and Argentine corn production.[3]
It should be pointed out that South American weather conditions remain favorable and above historical averages.  Informa’s winter corn condition survey in early May found corn growing conditions to be the second highest in the survey’s history and none of the reporting states have winter corn rated in poor or very poor conditions.[4]
Another issue is moving grain within the United States to ports for export.  Due to flooding, parts of the Illinois is closed and the Chicago Mercantile Exchange declared Force Majeure on river loadouts of corn, wheat and beans[5].   
The positive for the price of corn is the wet weather which can move acres from corn to soybeans and help support the price of corn.  However, there are a number of negative fundamental factors that may curtail the use of corn (i.e. lower demand due to the effects of African Swine Flu).
Result:  Although there is some positives for corn (i.e. delayed plantings), it is tough to see corn push higher in the next few months as there are so many fundamental reasons why corn could trade sideways.
Trade Discussions Drive Soybean Prices…again.
April soybean prices declined 1-2% sequentially but declined 15% from year ago levels.  The future prices for soybeans to be driven by 1) U.S China trade discussions 2) South American Crop/weather conditions. 
A resolution of the Trade dispute would lead to higher prices for soybeans and lower US crush margins due to increased competition for US soybeans[6].  However, in the longer term, it is unknown how the trade disruption may lead to changing supply chains (i.e. China continue to source a higher percentage of beans from South America).
The South American soybean crop will likely be sizeable.  Yield data so far show early planted soybeans in central Argentina continue to be good in the mid to upper 50 bushel /acre yield.  Later planted soybeans yields are anticipated to be lower.  In Brazil, soybean production is expected to be 114.3 million tons down 4.9 million tons from last year.[7]
Result: Soybean prices would most likely see a pop higher in the event of a U.S.-China trade dispute resolution, but after that, there are significant headwinds to soybean prices.
Weak Export Prospects Pressure Wheat Prices
Average April wheat prices declined 1% sequentially to $4.51 a business and down 5% on a year-over year basis in April.  In general, growing conditions were quite good as compared to growing conditions in the South Hemisphere (i.e. Australia importing wheat for the first time in a decade due to drought).[8]    In the April WASDE report, the USDA raised its 2018/19 ending stocks by 5 million MT to 275.6 million MT (vs. expectations of 271 million MT) reflecting higher beginning stocks and lower domestic consumption estimates.[9]
Result: Out of the three commodities, wheat might have the most positive outlook (after discounting a pop in soybean prices if the U.S.-China trade dispute is resolved) due to some current shortages around the World. 
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[1] Commodity Catch-up – May 14, 2019 – BMO Capital Markets
[4] Commodity Catch-up – May 14, 2019 – BMO Capital Markets
[5] Commodity Catch-up – May 14, 2019 – BMO Capital Markets
[6] Commodity Catch Up – May 14, 2019 – BMO Capital Markets
[7] Commodity Catch Up – Ma 14, 2019 – BMO Capital Markets
[9] United States Department of Agriculture World Agriculture Supply and Demand Estimate – April 9, 2019