AgriVisor Market Recap

Thursday, April 02, 2020
For a change of pace, corn futures were actually the leader in early trade today. Corn took its support from solid weekly export sales and a rebound in the energy complex. Rumors circulated today that Russia and Saudi Arabia may scale back crude production which would hopefully ease pressure on the entire energy complex. Soybeans were also firm early in the session with support coming from crush data for the month of February. Wheat was on the negative side however as weekly sales were a marketing year low, and other countries have announced plans to up their wheat exports. Wheat also continues to correct from being overbought. All commodities were limited by low trader volume and limited fresh news. 

Export sales for the week ending March 26th favored corn and soybeans over wheat. Corn sales for the week totaled 42.3 million bu on old crop and 800,000 bu on new crop. Soybean sales were split with 35.2 mbu old crop and 4.2 mbu new crop. As mentioned, old crop wheat sales were a marketing year low at 2.7 mbu due to heavy cancellations, but new crop totaled 6.8 mbu. Corn and soybean sales were above the volume needed to reach yearly projections, while wheat fell short. 

Trade is starting to pay closer attention to the new crop bookings in weekly sales reports. So far, new crop marketings are running at historically low levels. At the present time the United States has sold 69.3 mbu of corn, 19.4 mbu of soybeans, and 42.3 mbu of new crop wheat. Unless these numbers improve soon, we could se bearish demand projections when the USDA releases its initial new crop balance sheets in May. 

The Fats and Oilseed crush report for February was released after the close yesterday and showed higher than expected soybean usage during the month. A reported 182 mbu of soybeans were crushed in February, 5 mbu more than expected. This was also 19 mbu more than what was crushed in February 2019. It is likely we will see this number continue to edge high as the US sees less ethanol production and a reduced availability of distiller grains for feeding. 

The economy received negative news today with the release of the weekly unemployment figures. Last week a reported 6.6 million US citizens filed for unemployment, a record weekly number. For the past two weeks a total of 10 million people have lost their jobs, and economists believe this could double in the next few weeks. It is not out of the question that it could take weeks, if not months, for the actual number of lost jobs to show up given the delays in reporting. 

Global weather remains a prime topic in price discovery. Conditions in Brazil remains abnormally dry, with 64% of the country’s corn growing area seeing less than 50% of its normal precipitation in the past 30 days. It is also dry in Argentina, and while this will impact yield, it will allow for rapid harvest. In the US conditions remain wetter than normal ahead of the spring planting season, although some fieldwork is being reported. The real area of focus is on the Upper Plains where another winter storm is forecast. This could bring up to 10 inches of snow to North Dakota where a reported 25% of last year’s corn crop still needs to be harvested. 

Not only has the Coronavirus impacted grains and soybeans, but livestock as well. We have seen several days of sharp losses in cattle and hogs recently as demand falls across the US. We did see a spike in consumer demand as the outbreak of the virus started, but this has subsided. We also continue to see US restaurants close which is lessening demand for meats as well as other products. The concern is this will only add to an already building US pork supply, especially with no end in sight to the virus outbreak.