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Afternoon Market Recap for Feb. 26, 2020

Soybeans fight for small gains.

Corn and wheat trend mostly lower Wednesday

Grain prices were narrowly mixed but mostly lower Wednesday, with losses from other markets prompting some additional technical selling for corn and some wheat contracts today. Soybeans held onto small gains, meantime, primarily on news that Argentina may soon be ramping up its agricultural tariffs. 

Some light rain and snow is possible for parts of the central U.S. (particularly in the eastern Corn Belt) through Sunday, according to the latest 72-hour cumulative precipitation map from NOAA. Next week, the agency expects mostly warmer-than-normal temperatures probable for the Midwest and Plains, with wetter-than-normal weather likely for much of the central U.S. March 4 through 10, per its latest 8-to-14-day outlook.

Wall St. was still on its heels over concerns about the spread of China’s coronavirus and its possible global economic impact, with the Dow down another 56 points this afternoon to 27,024. Energy prices continued to take a beating Wednesday, with crude oil down more than 2.5% to fall below $49 per barrel and landing at the lowest levels in more than a year. Gasoline and diesel each shed another 5% today. The U.S. Dollar firmed slightly.

Corn prices followed some other commodities lower again on Wednesday amid ongoing concerns about the spread of China’s coronavirus, which triggered some technical selling. March and May futures each dipped 2 cents lower to close at $3.7050 and $3.7425, respectively.

Corn basis bids were largely steady across the central U.S. but did dip a penny lower at an Iowa river terminal today. Farmer sales have been light so far this week.

Private exporters reported to USDA the sale of 4.8 million bushels of corn for delivery to South Korea during the 2019/20 marketing year, which began September 1. This is an optional-origin contract that can be sourced from the U.S. or other countries.

Ahead of tomorrow morning’s weekly USDA export report, analysts expect the agency to show corn sales ranging between 31.5 million and 51.2 million bushels for the week ending February 20. Actuals will need to land on the high end of those estimates to top the prior week’s tally of 49.2 million bushels.

South Africa’s corn harvest is expected to rise 29% year-over-year, surpassing 573 million bushels, according to the country’s crop estimates committee. The uptick in production is attributed to higher planted acres and generally favorable weather conditions.

Ukrainian corn exports for the 2019/20 marketing season have reached 751.9 million bushels, per the country’s agriculture ministry.

South Korea continued its flurry of corn purchases, buying another 2.6 million bushels from South America yesterday. The grain is for shipmen in April or May.

China’s purchases of U.S. grain have been thin at best in recent weeks, although the country recently bid on some U.S. sorghum, which some see as confirmation that it is willing to ramp up purchases only when prices are cheap enough. Click here to learn more.

Ethanol production for the week ending February 21 made some momentum, reaching a daily average of 1.054 million barrels. April ethanol futures dropped 1.5% this afternoon to $1.296.

Grain traveling the nation’s railways continues its sluggish pace so far in 2020, with another 18,909 carloads last week, slipping 12.8% compared to the same time a year ago. Cumulative totals this year reached 156,295 carloads, trending 10.6% below last year’s pace.

Preliminary volume estimates boomed to 691,318 contracts, more than doubling Tuesday’s final count of 319,235.

Soybean prices held onto modest gains Wednesday on some technical buying prompted by news from a major South American competitor earlier today. March futures picked up 2 cents to $8.81, with May futures rising 3.75 cents to $8.92.

Soybean basis bids ticked a penny higher at an Illinois river terminal while holding steady elsewhere across the central U.S. today. The grain is for shipment between May and June.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 22.0 million and 33.1 million bushels for the week ending February 20, expressing confidence that actuals will top the prior week’s tally of 18.3 million bushels.

Analysts also expect USDA to report another 150,000 to 350,000 metric tons of soymeal sales, plus 8,000 to 45,000 MT of soyoil sales last week.

Argentina’s ministry of agriculture suspended the registration of agricultural exports until further notice, which some are seeing as a precursor to higher export tariffs under the country’s new government. Competition remains stiff with Brazil, meantime, which is expecting a record-breaking harvest later this year and is priced lower than U.S. grain for now.

Could USDA's latest 2020/21 soybean balance sheet be sending a signal to the market that we need more soybean acres in 2020 and less corn acres? Duane Lowry and Chris Barron tackle this and many other questions in the latest Ag View Pitch podcast – click here to listen.

Preliminary volume estimates were for 310,530 contracts, climbing moderately ahead of Tuesday’s final count of 197,423.

Wheat prices were mixed but mostly lower Wednesday on an uneven round of technical maneuvering. A bullish set of export data from USDA tomorrow morning could help tip prices back into the green. March Chicago SRW futures edged 1.25 cents higher to $5.4025, March Kansas City HRW futures dropped 3.25 cents to $4.5175, and March MGEX spring wheat futures slipped 0.75 cents to $5.1475.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 15.6 million and 25.7 million for the week ending February 20. The prior week’s tally was for 14.9 million bushels.

Ukraine’s grain exports are up 23% so far this marketing year, anchored by wheat exports that have surpassed 606 million bushels since July.

South Korean flour mills purchased 3.1 million bushels of milling wheat from the U.S. in a tender that closed earlier today.

Syria issued a new tender to purchase 7.3 million bushels of soft wheat, with a deadline of March 23. The country continues to see a grain deficit amid recent conflicts, although last year’s production increased due to more favorable weather conditions.

Preliminary volume estimates were for 113,011 CBOT contracts, falling moderately below Tuesday’s final tally of 156,477.

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