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Afternoon Market Recap for March 30, 2020

Ethanol woes keep corn down.

Wheat ends Monday’s session mixed, as soybeans fight for small gains

Corn futures slid another 1% lower Monday as traders worried about the loss of demand from cratering ethanol production. Soybeans and some wheat contracts firmed slightly on expectations USDA will report much lower quarterly stocks tomorrow. But those gains were mostly hobbled amid fears that global trade will tighten up in the short-term in response to the ongoing coronavirus pandemic.

Drier weather is forecast for much of the Corn Belt from Tuesday through Friday, per the latest 72-hour cumulative precipitation map from NOAA. But parts of the Mid-South and Northern Plains could see moderate accumulations during this time. Later on, the agency predicts normal or slightly wetter-than-normal conditions across most of the U.S. between April 6 and 12 in its latest 8-to-14-day outlook, with seasonally cool weather likely in the Midwest and Plains during this time.

Wall St. breathed a sigh of relief after President Donald Trump indicated social distancing guidelines have been extended through the end of April, which helped the Dow strengthen 462 points by 1:30 p.m. to 22,099. Energy futures continue to face an uphill battle, however, with crude oil and diesel significantly down this afternoon (and crude oil back below $20 per barrel), with gasoline offering a mixed performance. The U.S. Dollar firmed moderately.

Last Friday, commodity funds were net sellers of corn (-9,000) and soymeal (-500) contracts but were net buyers of soybeans (+500), soyoil (+2,500) and CBOT wheat (+3,500).

Corn prices fell another 1% Monday, as ethanol production between March and May could freefall by more than 700 million gallons, according to some projections. Some bullish planting and quarterly stocks data from USDA, out tomorrow, could stem the bleeding – although the market appears to have a lot of that data already baked in. May corn futures dropped 4.75 cents to $3.4125, with July futures down 4.25 cents to $3.4750.

Ethanol’s struggle isn’t unique to other fuels, which have also been fighting through a demand crisis this past month. May futures tumbled another 1.75% lower Monday to $0.964. Since the beginning of the month, prices have dropped around 24%.

Corn basis bids were steady to firm to start the week, rising 2 to 3 cents higher at a handful of Midwestern locations Monday.

Corn export inspections nearly reached 50.0 million bushels last week, which was significantly higher than the prior week’s tally of 33.8 million bushels and above all analyst estimates, which ranged between 27.6 million and 39.4 million. Japan was the No. 1 destination last week, with 17.9 million bushels. Cumulative totals for 2019/20 are still 39% lower year-over-year, now at 711.1 million bushels.

Tomorrow morning, USDA releases its prospective plantings and quarterly grain stocks reports. Analyst expect the USDA to show corn stocks at 8.125 billion bushels, down moderately year-over-year. But U.S. corn acres are expected to rebound significantly this year, with an average trade guess of 94.328 million acres.

“While the USDA report is front and center looming Tuesday, the reality is that final acreage decisions seem much more fluid than normal,” argue Duane Lowry and Chris Barron in the latest Ag View Pitch podcast. “And, there may be many more items more important to the price discovery process during the next 90 days than Tuesday's USDA reports.” Click here to listen in and learn more.

European Union corn imports for 2019/20 are down 13% year-over-year after reaching 623.6 million bushels as of March 29.

Vietnam purchased 2.2 million bushels of corn from Ukraine amid questions about South American grain availability moving forward during the global coronavirus pandemic.

Worried about how waning ethanol production could negatively influence corn prices this spring? Today’s Ag Marketing IQ from Brian Splitt is a must-read. Click here to learn some strategies that could protect the downside.

Preliminary volume estimates were for 204,145 contracts, shifting slightly below Friday’s final count of 219,776.

Soybean prices shed some of their overnight gains but still closed in the green Monday on some light technical buying. May futures added 0.75 cents to $8.8225, with July futures up 1.25 cents to $8.8650.

Soybean basis bids were mostly steady across the central U.S. Monday but did tick 2 cents higher at an Illinois river terminal today.

Private exporters reported to USDA the sale of 10.5 million bushels of soybeans for delivery to Mexico during the 2020/21 marketing year, which begins September 1.

Soybean export inspections eroded 30% lower from a week ago to land at 15.2 million bushels. Analysts were generally expecting a more bullish tally, with guesses that ranged between 14.7 million and 25.7 million bushels. Cumulative totals for the 2019/20 marketing year are still holding a moderate lead from last year’s pace, with 1.161 billion bushels. Mexico was the No. 1 destination last week, with 4.1 million bushels.

Ahead of tomorrow’s highly anticipated prospective plantings and quarterly grain stocks reports from USDA, analysts expect the agency to show soybean stocks retreating to 2.241 billion bushels, with 2020 acreage estimates of 84.865 moving well ahead of 2019’s flooded out tally of 76.1 million acres.

European Union soybean imports for its 2019/20 marketing year reached 389.1 million bushels by March 29, which has tilted slightly lower year-over-year. EU palm oil imports are also down 15% from a year ago, while soymeal imports are up 3% from last year’s pace so far.

Preliminary volume estimates were for 142,894 contracts, drifting 13% below Friday’s final count of 163,849.

Wheat prices were narrowly mixed in an uneven round of technical maneuvering Monday as traders attempted to balance bullish expectations for domestic stock reductions with worries that global trade will tighten until the worst of the coronavirus pandemic passes. May Chicago SRW futures slipped 1.75 cents to $5.6950, May Kansas City edged 0.5 cents higher to $4.8725, and May MGEX spring wheat futures fell 2.25 cents to $5.35.

Wheat export inspections were relatively disappointing last week, inching 3% ahead of the prior week’s tally to 13.4 million bushels but staying on the low end of trade estimates that ranged between 11.0 million and 22.0 million bushels. Cumulative totals for the 2019/20 marketing year are staying modestly ahead of last year’s pace, now at 751.8 million bushels. Mexico (3.2 million) and Indonesia 3.1 million) were the top two destinations last week.

Ahead of tomorrow morning’s quarterly stocks and prospective plantings reports from USDA, analysts expect the agency to show a moderate decline in wheat stocks to 1.432 billion bushels. All-wheat acres are again expected to drop this year, from 2019’s tally of 45.158 million acres down to 44.982 million acres in 2020.

European Union soft wheat exports for 2019/20 reached 879.6 million bushels as of March 29, which is trending nearly 70% higher year-over-year. EU barley exports of 244.3 million bushels are also up 55% from a year ago so far.

Ukrainian grain traders are agreeing with an economy ministry proposal to cap wheat exports for the 2019/20 marketing year at 742.2 million bushels through June. The country has already exported nearly 90% of that total so far. The move is to protect domestic bread prices, although Ukraine typically exports much more grain than it consumes locally.

Ethiopia postponed an international tender to purchase 7.3 million bushels of milling wheat, which will now close on April 15. A separate tender for twice that amount is still set to close April 7. The country has struggled with domestic demand amid an ongoing drought that has depressed crop yields there.

Russia’s wheat exports in January reached 77.1 million bushels, spilling 13% lower year-over-year, according to official customs data.

Preliminary volume estimates were for 121,130 CBOT contracts, down moderately from Friday’s final count of 182,414.


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