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Afternoon Market Recap for April 7, 2020

Corn breaks an eight-session losing streak.

Soybeans near even Tuesday, with wheat taking moderate losses

Tuesday brought another round of mixed results to the grain markets. Corn was the lone bright spot, with prices up more than 1% on a round of bargain buying and short-covering after eroding for the past eight straight sessions. Soybeans finished with minor losses, meantime, while wheat prices suffered a moderate setback on a round of technical selling after USDA reported better-than-expected crop quality ratings late yesterday afternoon.

Some severe weather, including a round of tornadoes, is possible for parts of the eastern Corn Belt and mid-Atlantic states tonight into tomorrow. Damaging winds and hail are also possible with these storms. Later in the month, NOAA predicts some dry conditions in the upper Midwest but seasonally wet weather elsewhere in the central U.S. between April 14 and 20, with much colder-than-normal conditions likely for much of the country during this time, per the agency’s latest 8-to-14-day outlook.

Stocks saw another round of significant gains on Tuesday, with the Dow up 403 points in afternoon trading to 23,083 as investors remain cautiously optimistic that new coronavirus cases are on the decline. Energy futures continue to struggle, meantime, with crude oil down almost 5% this afternoon to fall back below $25 per barrel. Diesel was down nearly 1%, with gasoline down around 4%. The U.S. Dollar also softened moderately.

On Monday, commodity funds were net buyers of soybean (+2,500), soyoil (+3,500) and CBOT wheat (+4,000) contracts but were net sellers of corn (-11,000) and soymeal (-4,500).

Corn prices finally attracted some bargain buyers Tuesday after trending lower eight previous consecutive sessions. Prices peaked midmorning but held onto gains of more than 1% by the session’s close. May and July futures each picked up 3.75 cents to close at $3.3150 and $3.3725, respectively.

Corn basis bids were narrowly mixed at multiple interior river terminals Tuesday and dipped 2 cents lower at an Ohio elevator while holding steady elsewhere across the Midwest today.

The Renewable Fuels Association expects between 2 billion to 3 billion gallons worth of capacity come offline as social distancing measures across the country has severely curbed fuel demand. Click here to learn more about how this trend could affect the amount of corn acres U.S. farmers plant later this spring and view our interactive map to see what ethanol plants have reduced or idled production in your area.

Meantime, the U.S. Energy Information Administration expects Q2 domestic gasoline consumption to fall about 24% year-over-year, with fuel ethanol blending expected to drop 27% this quarter relative to 2019. EIA released its annual Summer Fuels Outlook earlier this week. Gasoline consumption typically peaks from April to September.

USDA still plans to resurvey farmers in Michigan, Minnesota, South Dakota and Wisconsin who reported unharvested acres in 2019. If warranted, the agency will publish adjustments in its May World Agricultural Supply and Demand Estimates (WASDE) report.

South Korea purchased 2.3 million bushels of corn from optional origins (likely from South America) in a tender that closed earlier today. The grain is for arrival in late September. Another South Korean group purchased 5.2 million bushels of corn for arrival in August. USDA also plans to contact North Dakota farmers “at a later date.”

Taiwan issued an international tender to purchase 2.6 million bushels of corn from the U.S., Brazil, Argentina or South Africa in an international tender that closes Wednesday. The grain is for shipment in June or July, depending on origin.

Preliminary volume estimates were for 305,783 contracts, firming 33% above Monday’s final count of 229,331.

Soybean prices wobbled Tuesday on some uneven technical maneuvering, ultimately spilling slightly into the red by the close. Traders will be closely watching for evidence that farmers are switching significant acres from corn to soybeans in the coming weeks. May futures slipped 0.75 cents to $8.5475, while July futures inched 0.25 cents lower to $8.61.

Soybean basis bids were steady to week across the central U.S. Tuesday, dropping 1 to 4 cents lower at multiple Midwestern locations today.

The latest Purdue University / CME Group Ag Economy Barometer saw its largest-ever one-month drop in farmer sentiment in March. Sentiment tumbled 47 points lower to a score of 121, which is still actually slightly net positive. It’s worth noting that last month’s survey was conducted between March 16 and 20, when business closures and other social distancing measures were only starting to ramp up across the country. “It appears producers are bracing for challenging financial times leading into the 2020 planting season,” per Purdue’s James Mintert.

Who qualifies for the Coronavirus Aid, Relief and Economic Security (CARES) act? Should you apply? Ag lawyer Gary Baise tackled those questions and more in his latest “Defending Agriculture” blog. Click here to learn more.

Preliminary volume estimates were for 181,000 contracts, jumping moderately ahead of Monday’s final count of 136,755.

Wheat prices continue to seesaw this week, moving moderately higher on Monday but erasing those gains today on a round of technical selling partly spurred by better-than-expected crop quality and worries over export demand moving forward. May Chicago SRW futures fell 6.5 cents to $5.4925, May Kansas City HRW futures dropped 2.25 cents to $4.7350, and May MGEX spring wheat futures also lost 2.25 cents to $5.2525.

USDA reported 62% of the U.S. winter wheat crop is in good-to-excellent condition, trending slightly above 60% seen the same time a year ago. Another 29% was rated fair, with the remaining 9% rated poor or very poor. Analysts had expected the agency to show lower quality ratings, with an average guess of 56% rated good-to-excellent.

Ukraine is slowing its wheat export pace by about two-thirds from a month ago to free up more supplies for domestic use, according to the country’s economy ministry. Around 84.5 million bushels will be available for export through the end of June. Ukraine is one of the world’s top wheat exporters.

France’s soft wheat planted acres is expected to drop 7.5% from a year ago and reach a 17-year low with 11.367 million acres, per the country’s farm ministry, which cited adverse fall weather rather than coronavirus disruptions for the decline.

Japan hopes to purchase 4.7 million bushels of food-quality wheat from the United States and Australia in a regular tender. Of the total, 73% is expected to be sourced from the U.S.

Preliminary volume estimates were for 145,182 CBOT contracts, trending moderately above Monday’s final count of 94,039.


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