MAY 8, 2020
JULY FUTURES SETTLE DOWN FOR THE WEEK
- China Continues to Purchase Agricultural Goods
- U.S. Jobless Claims Continued to Increase Last Week
- Healthy Export Sales Report
- May WASDE to Come Next Week
July futures fell for the first half of the week, tumbling to a low of 53.20 cents per pound before regaining some lost ground. Wednesday and Thursday’s rallies brought futures back to 56.45 cents, but July ultimately settled at 55.39, down 194 points for the week. Open interest decreased 1,582 contracts to 174,593. Daily trading volumes remain low compared with the past few months’ activity.
OUTSIDE MARKETS
U.S.-China trade tensions eased this week as China continued to purchase U.S. agricultural goods and the White House backed off of talk about any additional retaliation against China, as long as they meet their phase one purchasing commitments. Markets have also been pleased with plans for economic re-opening in much of the developed world, but the bit of news that seemed to send the market jumping higher Thursday was China’s trade data, which showed a year-over-year increase of 3.5 percent for China’s exports for April. Analysts had expected China’s exports to sink 15.7 percent, so the news of resumed economic activity was a big boost. Unfortunately, U.S. jobless claims continued to increase at 3.169 million claims last week. With many U.S. states re-opening their businesses, markets will be eagerly watching for when continuing claims start to creep back down as a sign that people are beginning to get back to work.
EXPORT SALES
Once again, the U.S. Export Sales Report was very healthy. Shippers reported 370,300 bales of net new export sales and, coincidentally, the same number of bales shipped. Once again, this week’s largest buyer was China, with 217,500 bales ordered for shipment in the 2019/20 marketing year and another 22,000 bales for delivery in 2020/21 (i.e. after July 31). Vietnam was the second largest buyer at 102,600, and Taiwan was a distant third place at 18,300 bales. Despite the good numbers for Vietnam and Taiwan, it must be noted that the bulk of their sales were actually from previous times this marketing year. The USDA captured this fact through a separate paragraph on “Late Reporting” in the text of Thursday’s report, which helped to clarify the matter by segregating out the figures that shippers had previously failed to report.
THE WEEK AHEAD
Next Tuesday the 12th is a big day for traders and analysts. The USDA will be publishing the May WASDE report, which will contain both an updated version of the 2019/20 balance sheet and the first country by country look at the 2020/21 balance sheet. Uncertainty about the market is at an extreme level, and we tip our hats to the folks at the USDA who have the courage to put numbers on paper for the world to debate. Aside from the WASDE, traders will be watching the Crop Progress Report Monday to see how planting is coming along, and, as always, Thursday’s Export Sales Report will be closely scrutinized for more Chinese buying or any sign of a return in global demand.
IN THE WEEK AHEAD:
- Friday at 2:30 p.m. Central – Commitments of Traders
- Monday at 3:00 p.m. Central – Crop Progress Report
- Tuesday at 11:00 a.m. Central – WASDE Report
- Thursday at 7:30 a.m. Central – Export Sales Report
- Thursday at 2:30 p.m. Central – Cotton-On-Call Report