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Afternoon Market Recap for April 9, 2020

Bearish WASDE data? No worries.

Corn, soybeans and wheat all track higher in Thursday’s session

USDA’s World Agricultural Supply and Demand Estimates (WASDE) report, out late this morning, gave more confirmation for what traders had already suspected – the COVID-19 pandemic has already created some moderate supply and demand ripples. With that assumption already baked in, grain markets were able to focus on other things, and Thursday’s session emerged as an opportunity for a round of technical buying for corn, soybeans and wheat.

Weather across the central U.S. may take a turn for the wetter heading into the weekend, with large portions of the Midwest and Mid-South expected to gather another 0.5” to 1” through Sunday, per the latest 72-hour cumulative precipitation map from NOAA. Further out, the agency’s 8-to-14-day outlook predicts drier but colder conditions probable from April 16 to 22.

On Wall St., the Dow is on pace for its best week in decades, jumping another 308 points higher to 23,741, with investors shrugging off another dismal unemployment report, focusing instead on an unprecedented aid package for businesses that totals $2.3 trillion. Energy futures continue to show plenty of volatility, with crude oil down 8% in afternoon trading to just above $23 per barrel. Diesel was down nearly 3% this afternoon, with gasoline narrowly mixed. The U.S. Dollar softened moderately.

On Wednesday, commodity funds were net sellers of all grain contracts, including corn (-4,500), soybeans (-1,000) soymeal (-2,000), soyoil (-3,500) and CBOT wheat (-1,000).

Grain markets will be closed tomorrow in observance of Good Friday. Have a safe, happy Easter weekend and come back Monday morning for a fresh round of grain marketing news and analysis.

Corn prices carved out modest gains Thursday after USDA served up no supply and demand surprises in its monthly WASDE report while reporting a better-than-expected round of export sales last week. May futures improved by 1.75 cents to $3.3175, with July futures up 1.25 cents to $3.3675.

Corn basis bids were mixed at two Midwestern elevators and firmed 5 cents at an Iowa processor Thursday while holding steady elsewhere across the central U.S. today.

USDA’s April supply and demand outlook for corn noted lower exports, an uptick in feed and residual use, plus lower feed, seed and industrial use. Feed and residual use got a nice boost, rising 150 million bushels to 5.675 billion bushels. However, corn used to produce ethanol tumbled 375 million bushels lower to 5.050 billion.

All told, USDA bumped corn stocks 200 million bushels higher to 2.092 billion bushels. Analysts were expecting a much more modest increase, with an average trade guess of 2.004 billion bushels. The season-average farm price for corn was lowered 20 cents to $3.60 per bushel.

Globally, 2019/20 corn production is up 1 million metric tons (39.4 million bushels) to 1.404 billion metric tons. USDA assumes “larger production, lower trade, fractionally higher use, and larger stocks relative to last month,” per its report.

Corn exports for the week ending April 2 climbed 72% above last week’s tally to a marketing-year high of 72.8 million bushels in old crop sales plus another 4.6 million bushels in new crop sales. That topped all analyst estimates, too, which ranged between 47.2 million and 74.8 million bushels. Japan was the No. 1 destination, with 27.7 million bushels. China also bought a significant amount, reaching 24.0 million bushels.

Corn export shipments were also a marketing-year high last week, with 50.8 million bushels. Japan (14.9 million) and Mexico (12.4 million) were the top two destinations.

China quadrupled its corn import estimates for 2019/20 to 157.5 million bushels, as the country looks for economical ways to meet its phase-one trade targets with the U.S. Chinese buyers have already booked around one-fourth of that total over the past month.

Brazil’s Conab estimates the country’s 2019/20 total corn crop at 4.010 billion bushels, moving slightly ahead of the group’s March projections.

South Korea remains an active buyer of corn, with a corn processor purchasing another 2.4 million bushels from Brazil in a tender that closed earlier today. The grain is for arrival in August.

Algeria purchased 1.6 million bushels of corn from Argentina in an international tender that closed yesterday. The grain is for shipment during the first half of May.

Colombia, a major buyer of U.S. grain, is suspending tariffs on corn, soybean and wheat imports through the end of June to keep production costs down on animal feed for its livestock sector. Colombia is the third-largest customer of U.S. corn and soymeal, but this move could shift some purchases to competitively priced South American grain.

If you’re worried about marketing grain during volatile times, Naomi Blohm has three pieces of advice: “Defense, offense, and don’t stop running!” Blohm explains each one in much greater detail in the latest Ag Marketing IQ blog.

Preliminary volume estimates were for 350,519 contracts, moving moderately higher than Wednesday’s final count of 314,421.

Soybean prices firmed more than 1% Thursday after USDA lowered its projections for South American soybean production, which triggered some technical buying. May futures climbed 9 cents to $8.6350, while July futures gained 9.25 cents to $8.71.

Soybean basis bids were mostly steady across the central U.S. Thursday but did tick a penny higher at an Illinois river terminal today.

U.S. soybean stocks moved higher than analysts expected, climbing from 425 million bushels in March up to 480 million bushels this month. Analysts were anticipating a smaller increase, to 430 million bushels. The change came because a bigger crush couldn’t overcome lower exports, seed use and residual use. USDA also projects a slightly lower season-average price for soybeans, sliding 5 cents lower to $8.65 per bushel.

Globally, USDA expects lower production, exports and stocks compared to its March estimates. Overseas production moved lower, after Argentina estimates dropped moderately to 1.910 billion bushels and Brazil estimates stumbled down to 4.574 billion bushels.

Soybean export sales last week were relatively muted, sliding 45% lower week-over-week and down 25% from the prior four-week average, with 19.2 million bushels in old crop sales plus another 13.0 million bushels in new crop sales. The total was still in the middle of trade guesses, which ranged between 25.7 million and 51.4 million bushels. Mexico was the No. 1 buyer, with 14.2 million bushels.

Soybean export shipments found a new marketing-year low, falling to 13.3 million bushels. Egypt was the No. 1 destination, with 4.0 million bushels.

Some challenges with drought in Brazil had Conab cut its estimates for the country’s 2019/20 soybean production by 1.7% from March projections, falling to 4.485 billion bushels.

Preliminary volume estimates were for 235,423 contracts, rising moderately above Wednesday’s final count of 163,963.

Wheat prices posted solid gains Thursday as technical buying extended into a second consecutive session. Some contracts firmed by as much as 3% today. Frost and freeze damage concerns later this week gave winter wheat prices the advantage today. May Chicago SRW futures gained 8.25 cents to $5.5650, May Kansas City HRW futures added 14 cents to $4.92, and May MGEX spring wheat futures picked up 2.5 cents to $5.3275.

USDA cut its expectations for U.S. wheat exports for 2019/20 while increasing ending stocks by 30 million bushels to reach 970 million bushels. Analysts expected the agency to hold steady with its March projection of 940 million bushels. The season-average price moved 5 cents higher to $4.60 after panic buying fueled some respectable gains in recent weeks.

Globally, USDA sees wheat exports tightening as multiple countries look to protect their domestic stockpiles as they ride out the ongoing coronavirus pandemic. That scenario helped world ending stocks move from 10.549 billion bushels in March up to 10.757 billion bushels, which topped all analyst estimates. The agency notes global stocks are now at record levels.

Wheat export sales last week rebounded from a marketing-year low after finding 9.5 million bushels in old crop sales and 4.3 million bushels in new crop sales, but that was still 36% below the prior four-week average. Analysts were expecting the total to fall anywhere between 7.3 million and 20.5 million bushels. Taiwan was the top buyer, with 3.6 million bushels.

Wheat export shipments fared better last week, climbing 39% above the prior week’s tally and 1% above the prior four-week average to reach 14.0 million bushels. Nigeria was the No. 1 destination, with 2.8 million bushels.

Egypt plans to import almost 30 million bushels of wheat this season to bring its strategic reserves up to a seven- or eight-month supply. Egypt is the world’s No. 1 wheat importer.

Japan purchased 4.7 million bushels of food-quality wheat from the United States and Australia in a regular tender that closed earlier today. Of the total, 73% was sourced from the U.S.

Preliminary volume estimates were for 141,371 CBOT contracts, up slightly from Wednesday’s final count of 128,285.


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