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Ag Marketing IQ
We realize the farm industry is in a complex state, trying to manage risk with low prices and now a black swan. The best advice today is to concentrate on lowering costs of production, locking in any profits that you can to minimize exposure on the farm, and protecting the upside with a cheap option so that you experience increasing revenue per acre in an up market.
February didn’t exactly end on a positive note for new crop corn and soybean markets. December 2020 corn finished the month with a new contract low while November soybeans slumped to the worst level in more than nine months. Worries about big South American crops, uncertain Chinese demand and the impact of the coronavirus combined for a bearish punch to the gut.
The USDA WASDE report will be released on Tuesday, March 10. Traditionally, there is little change in the supply category for this report. The USDA will likely not change planted or harvested acres on this report, nor will they adjust yield. The current U.S. supply of grain will likely mirror the February report. Exports are important as we continue to monitor global demand for our grains. Recently the sorghum market stole the spotlight in terms of exports, but we need to also see continuous weekly demand for corn, beans, and wheat.
USDA’s latest round of export inspection data, out Monday morning, showed another mixed round of results, but the bulls had a few pieces of encouraging news to chew on. Corn totals eased slightly but remain seasonally high, while soybeans and wheat showed moderate improvements from a week ago.
The coronavirus outbreak may create a unique set of fertilizer pricing opportunities and challenges for U.S. farmers later this spring.
China was back in the market for U.S. sorghum for the first time in years this week. China bought 4.3 million bushels of sorghum.
USDA’s latest grain export sales report, covering the week ending February 27, didn’t have a lot of supportive data for struggling grain prices this morning, although wheat volume landed moderately ahead of the prior four-week average. Corn and soybeans, in contrast, slumped moderately below their prior four-week averages and struggled to stay within trade estimates.
Export sales were reported two days this week. China bought 4.3 million bushels of sorghum on Wednesday and Japan and unknown destinations bought corn on Friday.
Cash corn prices were mostly unchanged around the Corn Belt yesterday. May futures prices faltered again this morning on coronavirus fears. The price decline came in spite of the fact China granted tariff exemptions of a year to crushers looking to purchase U.S. soybeans, a move that reassured markets China is willing to make good on their Phase 1 promises. The ICE Dollar Index traded lower this morning and stronger than expected export results yesterday lifted Minneapolis futures prices up half a cent this morning. However, continued coronavirus fears weighed on Chicago and Kansas City wheat prices. Spot basis bids on soft red winter wheat at a Chicago elevator weakened $0.15 to $0.30 over May futures prices. Cash prices for hard red winter wheat in the Plains held steady yesterday. Grain movement continued to be slow due to depressed cash offerings.
Corn prices followed global stocks lower. Cheaper Brazilian soybean prices and reduced purchases from China drug the soybean complex lower to end the week. May futures lost $0.0575. Minneapolis wheat built off this morning’s gains. Chicago and Kansas City wheat did not fare as well after following global stocks lower on coronavirus concerns.