TOP STORIES:
Wheat Rally Extends on Black Sea Drought
Wheat for July delivery rose 3% to $5.13 3/4 a bushel on the Chicago Board of Trade Wednesday, up the second consecutive day as managed money funds covered short positions on reports of lower Russian grain supplies. Soybeans for July delivery rose 0.5% to $8.46 3/4 a bushel. Corn for July delivery fell 0.5% to $3.19 1/2 a bushel.
Running Dry: July wheat futures outpaced their corn and soybean counterparts on the CBOT Wednesday. According to grains traders, the short covering by managed money funds was in reaction to reports Russian and Eastern European wheat crops are being stressed by drought-like conditions.
"It continues to be dry in parts of Europe and Russia," said Don Roose of U.S. Commodities.
USDA, FDA Chart Path to Keep Farms, Food Plants Open Amid Coronavirus Pandemic
The U.S. Department of Agriculture and U.S. Food and Drug Administration unveiled an agreement to prevent coronavirus-driven disruptions to fruit and vegetable production, echoing steps the government has taken to ensure the operation of meat and poultry processing facilities during the pandemic.
The USDA and FDA signed a memorandum of understanding charting a course for the USDA to invoke the Defense Production Act, a Korean War-era law, to keep running FDA-regulated facilities that grow, process or store food. The measure comes as activity is ramping up at farms and packing houses across the country, and agricultural workers from North Carolina to California have tested positive for the virus.
STORIES OF INTEREST:
USDA Aid Payment Announcement Leaves Questions -- Market Talk
12:46 ET - The USDA's announcement of how $16B in aid payments to agricultural producers in the US will be apportioned left traders and farmers alike with a lot of questions. "The USDA tried to make it as complicated as possible to understand that program," quips Dave Marshall of First Choice Commodities. Traders say that the agricultural markets as a whole are unclear as how producers will receive aid payments. In its announcement yesterday, the USDA said producers of non-specialty crops like corn and soybeans will be paid based on inventory subject to price risk held as of January 15, 2020, which is 50% of a producer's total production in 2019 or their inventory of old crop-- whichever is smaller--multiplied by the commodity's applicable payment rates. (kirk.maltais@wsj.com; @kirkmaltais)
Ethanol Production Slowly Improves -- Market Talk
1128 ET - US ethanol production continues to improve after hitting a record low last month, rising 46,000 barrels per day to 663,000 barrels per day this week according to the EIA. Meanwhile, ethanol inventories continue to decline, with inventories down 564,000 barrels to 23.626 million barrels. While this movement was expected by grains traders, the movements are not as large as traders expected. (kirk.maltais@wsj.com; @kirkmaltais)
THE MARKETS:
Livestock Futures Finish Down -- Market Talk
15:11 ET - Livestock futures on the CME finish trading with August live cattle futures down 1.5% at 97.625 cents a pound and lean-hog futures down 0.8% at 55.8c. For hog futures, today's close continues the lower trend established earlier this month, with the contract shedding roughly 10c a pound in the past two weeks, or 14%. According to livestock traders, there's signs hog cutouts will likely continue to slide going into June, with a recovery unlikely until buying for the Independence Day holiday begins. (kirk.maltais@wsj.com; @kirkmaltais)