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Afternoon Market Recap for Feb. 20, 2020

Acreage expectations trigger grain losses.

Corn, soybeans and wheat all face moderate declines Thursday

Corn and soybean prices posted moderate losses today on a round of technical selling after initial USDA acreage estimates this morning came in higher than analysts had expected. Wheat prices also took another hit today, with some contracts down more than 1% as technical selling continued for a second consecutive session after prices surged more than 4% higher Tuesday.

With some rain and snow moving through the central U.S. earlier this week, expect much drier conditions in the Midwest and Plains through the weekend, per the latest 72-hour cumulative precipitation map from NOAA. Heading into March, look for seasonally cool weather to prevail across much of the country from February 27 to March 4, with drier-than-normal conditions building during this time. The latest updates to the U.S. Drought Monitor, out this morning, show drought’s foothold in the Midwest is mostly nonexistent, although some lingering problems persist in western Kansas and eastern Colorado.

On Wall St., jittery investors triggered a midday selloff that sent the Dow spilling 175 points lower in afternoon trading to 19,173. That move also helped safe-haven gold climb 0.6% higher this afternoon. Energy prices were mixed but mostly higher, with crude oil tracking gains of around 0.8% to inch closer to $54 per barrel. Gasoline saw much more modest gains, while diesel dropped more than 0.5%. The U.S. Dollar firmed slightly.

Corn prices dropped about 0.5% Thursday after USDA says U.S. farmers will plant the most corn acres this year since 2016, which triggered some technical selling. March futures fell 2 cents to $3.7850, with May futures down 2.5 cents to $3.8275.

Corn basis bids were mostly unchanged across the central U.S. but moved as much as 3 cents higher at an Illinois ethanol plant and as much as 5 cents lower at an Ohio river terminal today.

USDA is predicting U.S. farmers will plant 94.0 million acres of corn later this spring, which is a big higher than analyst estimates of 93.6 million acres. It would be the largest corn acreage tally since 2016, if realized. USDA’s latest 2020 corn price projection is for $3.60 this year, which is a 25-cent drop from 2019, nearly level with 2018, and moderately above 2016-17. Farm Futures grain market analyst Jacquie Holland has more – click here to get caught up.

U.S. Secretary of Agriculture Sonny Perdue also announced this morning that USDA is launching an initiative with some lofty goals that include a 40% increase in farm production and reducing fertilizer runoff by 30% by the year 2050 in a program called the Agriculture Innovation Agenda. “We’re going to have a scoreboard that keeps track of these,” he told attendees. “We’re not going to wait until the buzzer sounds … because you know it’s progressive and we’re going to have annual types of indications of trends of where we are, and providing data to the industry and to the world to know that we’re serious about making these goals.”

And tomorrow morning, USDA releases its next round of export data, which covers the week ending February 13. Ahead of that report, analysts expect the agency to show corn sales totaling between 27.6 million and 47.2 million bushels last week, giving about a 50/50 chance to see a higher tally than the prior week’s total of 38.1 million bushels.

Ethanol production for the week ending February 14 moved slightly higher, reaching a daily average of 1.040 million barrels, according to the latest data from the U.S. Energy Information Administration, out earlier today. April futures were down nearly 1.4% this afternoon, to $1.35.

In Europe, grain trade lobby Coceral is forecasting 2020 EU corn production at 2.559 billion bushels, which would be 6.6% higher than last year’s total, if realized.

Preliminary volume estimates were for 367,074 contracts, moving moderately higher than Wednesday’s final count of 296,420.

Soybean prices followed corn prices lower on a round of technical selling after USDA predicted slightly larger-than-expected acreage estimates this morning. Traders are also still anxiously awaiting news of fresh Chinese purchases as well as the next round of USDA export data, out first thing Friday. Today, March and May futures each lost 4.5 cents to close at $8.9275 and $9.01, respectively.

Soybean basis bids rose 2 cents across multiple interior river terminals Thursday, holding steady at most other Midwestern locations today.

USDA’s latest 2020 soybean planting projection is for 85.0 million acres this spring, up substantially from last year’s tally of 76.1 million acres and slightly ahead of analyst estimates of 84.6 million acres. USDA chief economist Robert Johansson said at the agency’s Ag Outlook Forum this morning that it’s reasonable to expect that a “good portion” of unplanted acres due to flooding in 2019 will be planted to either corn or soybeans this year.

USDA is also predicting total U.S. agricultural exports to China this year will reach $139.5 billion, eclipsing 2019’s total by $4 billion. Exports could stumble out of the block this year due to China’s coronavirus, but most experts are predicting a rebound between the second and fourth quarters of this year, Johansson said.

Soybean prices could ultimately move about 1% higher this year, according to USDA – moving from $8.75 in 2019 to $8.80. That’s even better than 2018’s average of $8.48 but still moderately behind 2016-17.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 22.0 million and 44.1 million bushels for the week ending February 13. Unless actuals fall on the very low end of analyst estimates, they will surpass the prior week’s total of 23.9 million bushels.

Analysts also expect USDA to report another 200,000 to 400,000 metric tons of soymeal sales last week, plus another 15,000 to 45,000 MT of soyoil sales.

Egypt purchased 60,000 metric tons of soyoil and another 60,000 MT of sunflower oil in a tender that closed earlier today – both shipments are sought for arrival in April.

Preliminary volume estimates were for 226,419 contracts, dropping moderately below Wednesday’s final count of 318,972.

Wheat prices fell victim to a second consecutive session of technical selling and profit-taking, paring another portion of Tuesday’s big gains. A strengthening dollar continues to apply additional headwinds for now. March Chicago SRW futures dropped 5.25 cents to $5.60, March Kansas City HRW futures fell 6.5 cents to $4.7325, and March MGEX spring wheat futures lost 6.75 cents to $5.2950.

USDA’s latest 2020 wheat planting projection, out earlier today, calls for 45.0 million acres, which is slightly below last year’s tally of 45.2 million acres and would land at the lowest levels since USDA began keeping records in 1919. USDA chief economist Robert Johansson speculated this morning that saturated soils in the Northern Plains could delay or prevent some spring wheat acres this year.

USDA’s latest 2020 wheat price forecast, also out this morning, predicts an average price of $4.90, climbing above 2018’s tally of $4.55, if realized. It’s also higher than 2016-17 levels but still behind 2018’s high water mark of $5.16.

Ahead of tomorrow morning’s weekly USDA export data dump, analysts expect another decent round of wheat sales for the week ending February 13, with trade estimates that ranged between 14.7 million and 25.7 million bushels.

European grain lobby Coceral is forecasting EU soft wheat production in 2020 will fall 5.4% to 5.429 billion bushels. The group also estimates slightly lower EU barley production this year.

Saudi Arabia issued an international tender to purchase 26.3 million bushels of wheat that closes tomorrow. The grain is for delivery between April and June.

Preliminary volume estimates were for 143,117 CBOT contracts, cooling below Wednesday’s final count of 177,028.

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