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Afternoon Market Recap for Feb. 24, 2020

Coronavirus worries infect grain prices.

Corn, soybeans and wheat follow a broad range of commodities lower Monday

News that the coronavirus outbreak is spreading beyond Asia gripped the financial markets Monday, kicking the Dow more than 3% lower today. Those fears cascaded across a broad range of commodities, including energy, livestock and grains. Wheat contracts were hit the hardest, with some contracts down more than 3%. Soybeans lost 1.7% today, meantime, with corn down around 1%.

Some wet weather is likely from Tuesday through Friday, especially in parts of the eastern Corn Belt, per the latest 72-hour cumulative precipitation map from NOAA. The agency predicts the beginning of March will track warmer than normal for much of the country, with wetter weather likely between March 2 and 9, per its latest 8-to-14-day outlook. The 2019/20 winter is also on track to become the warmest winter globally on record, with temperatures averaging 3 degrees Celsius warmer than the 20th century average.

On Wall St., the Dow was on pace for its third-biggest daily drop since 2018, as fresh fears about the spread of the coronavirus took hold. As of 2:30 p.m. EST, the Dow was down 909 points to 28,083. Energy futures were also severely depressed, with crude oil tumbling 4% to fall back below $52 per barrel. Diesel also saw losses of more than 4% this afternoon, with gasoline down around 3%. Safe-haven gold was one of the few “winners” on the day, tracking 1.5% higher. The U.S. Dollar softened fractionally.

Corn prices followed a broad range of other commodities lower Monday, but losses were tempered by another bullish round of export inspection data from USDA this morning. March future s dropped 4.75 cents to $3.7225, with May futures down 4.5 cents to $3.7625.

Corn basis bids remain steady to firm as farmers kick off another week of generally slow sales. Bids rose 2 to 3 cents across a handful of Midwestern locations today.

Corn export inspections reached 35.9 million bushels last week, landing on the high end of trade estimates that ranged between 23.6 million and 37.4 million bushels, while climbing nearly 15% above the prior week’s tally. Cumulative totals for the 2019/20 marketing year remain a dismal 520.5 million bushels, however, trending 47% below last year’s pace. Mexico was the No. 1 destination last week, with 13.1 million bushels.

South Africa, the continent’s biggest corn producer, is expected to increase its harvest by 29% this year after increased planted acres and favorable weather. Analysts expect the country’s crop estimates committee to project a total production of 571 million bushels for 2020 when it releases its first production forecast on Wednesday.

European Union corn imports are down 11% year-over-year, reaching 550.8 million bushels as of February 23.

South Korea purchased 2.6 million bushels of corn in a private deal last Friday from optional origins. The grain is for arrival in late June.

Preliminary volume estimates were for 451,594 contracts, moving ahead of Friday’s final count of 393,599.

Soybean prices took a significant spill lower to start the week after fresh coronavirus concerns triggered a selloff for a broad range of commodities, sending prices down double digits today. A sluggish round of export inspection data from USDA applied additional headwinds. March futures lost 16.25 cents to $8.7425, with May futures down 16.5 cents to $8.8250.

Soybean basis bids were narrowly mixed at interior river terminals Monday, holding steady across most other Midwestern locations today.

If the coronavirus causes enough disruptions to China’s economy and its hunger for soybean imports, President Donald Trump signaled late last week that another round of Market Facilitation Program (MFP) payments in 2020 are not out of the question. For now, it is far too early to speculate on the timing and amount of such aid, however.

Private exporters reported to USDA the sale of just under 6.0 million bushels of soybeans for delivery to Mexico during the 2019/20 marketing year, which began September 1. Today’s announcement was only the second large grain sale reported to USDA this month.

Soybean export inspections, by comparison, were disappointing last week, spilling 41% lower week-over-week to 21.8 million bushels and falling below the range of trade estimates of 22.0 million to 40.4 million bushels. Cumulative totals for the 2019/20 marketing year remain 15% ahead of last year’s pace for now, with 1.061 billion bushels. China was the No.1 destination last week but only accounted for 5.1 million bushels.

European Union soybean imports for the 2019/20 marketing year are pacing fairly even year-over-year after reaching 331.1 million bushels by February 23. EU canola imports have boomed 46% higher from a year ago, meantime, with EU soymeal imports edging 2% above last year’s pace so far.

Preliminary volume estimates were for 296,801 contracts, drifting slightly below Friday’s final count of 309,773.

Wheat prices were hammered by a big round of technical selling that was triggered by spillover weakness from a broad range of other commodities. A tepid round of export inspection data from USDA this morning did no additional favors. March Chicago SRW futures fell 14.75 cents to $5.3625, March Kansas City HRW futures dropped 15.75 cents to $4.5275, and March MGEX spring wheat futures lost 12 cents to $5.1375.

Wheat export inspections were also relatively disappointing, sliding 18% below the prior week’s tally to land at 15.1 million bushels. That amount was also on the low end of trade estimates, which ranged between 12.9 million and 22.0 million bushels. Cumulative totals for the 2019/20 marketing year, which is now roughly two-thirds complete, now stands at 666.7 million bushels, trending 10% above last year’s pace so far.

Destinations were fractured for U.S. wheat export inspections last week, but Japan (3.2 million), Sri Lanka (2.5 million) and the Philippines (2.4 million) occupied the top three spots.

After raking in a record harvest last fall, Ukraine’s 2020 total grain production could fall more than 13%, according to the country’s agriculture ministry. That’s a steeper decline than Ukraine’s ProAgro consultancy has estimated, but even they predict a 7.3% decline in wheat production this year, falling to 964 million bushels.

European Union soft wheat exports reached 687.8 million bushels as of February 23. That’s 64% ahead of exports last year through February 17. EU barley exports are also up 53% year-over-year.

Russia’s SovEcon estimates the country’s wheat exports will reach 58.8 million bushels in February, making it the lowest monthly tally since last June, if realized.

Saudi Arabia purchased 26.3 million bushels of wheat in an international tender that closed last Friday. Offers came from a variety of origins, including the U.S., South America, Australia, EU and the Black Sea region.

Tunisia issued an international tender to purchase 4.6 million bushels of soft milling wheat from optional origins. The deadline is tomorrow, and the grain is for shipment between mid-March and late May, depending on origin.

Preliminary volume estimates were for 209,403 CBOT contracts, tilting slightly above Friday’s final count of 206,939.


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