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Afternoon Market Recap for March 31, 2020

How did prospective plantings move markets?

Corn, soybeans and wheat turn in mixed results Tuesday

Traders were eager to see USDA’s prospective plantings and quarterly stocks reports Tuesday morning but didn’t dial in any big grain price changes after the agency’s data arrived. Corn dropped around 1% late this morning but almost fully recovered by the session’s close. And soybeans and wheat contracts moved moderately higher in a somewhat choppy session today.

The eastern Corn Belt should remain mostly dry through Friday, per the latest 72-hour cumulative precipitation map from NOAA, with moderate accumulations probable in the Northern Plains through the end of the week. Further out, expect seasonally warm weather for the entire central U.S., plus mostly wetter-than-normal conditions from April 7 to 13, per the agency’s latest 8-to-14-day outlook.

Volatility still rules Wall St., with the Dow up more than 100 points this morning before settling more than 100 points lower this afternoon to 22,225. More volatility is likely to continue later this year, with Goldman Sachs predicting a Q2 plunge, followed by one of the fastest recoveries in the history of the country.

Energy futures were mixed Tuesday. Crude oil trended about 1.5% higher to make it back over $20 per barrel. Diesel and gasoline languished in the red over ongoing demand concerns. Ethanol continues to plummet, dropping another 6.5% as more plants are idling or shutting down business. Copper prices were more optimistic, with the bellwether metal up 4% this afternoon. The U.S. Dollar firmed fractionally.

Corn prices buckled this morning after USDA reported larger-than-expected corn acres in its prospective plantings report, but prices nearly recovered as the session drew to a close. Worries over waning ethanol demand still lurk in the background. May futures dipped 0.5 cents to $3.4075, with July futures down 1.5 cents to $3.46.

Corn basis bids held steady across the Midwest Tuesday morning, as farmers were thought to be awaiting USDA quarterly stocks and planting intentions data before pulling the trigger on more sales.

Private exporters reported to USDA the sale of 4.4 million bushels of corn for delivery to Japan during the 2019/20 marketing year, which began September 1.

USDA pegs 2020’s corn footprint at 96.990 million acres – the most since 2012 and the third-largest total on record, if realized. As expected, acreage should climb 8% above 2019’s 89.7 million acres, but the agency’s assessment also topped all analyst estimates, which ranged between 92.5 million and 96.4 million acres. Farm Futures was on the high end of those guesses after conducting an exclusive grower survey earlier this spring. Illinois is expected to be the No. 1 state, with 14.1 million acres.

The agency’s quarterly stocks report, also released this morning, has corn stocks at 7.952 billion bushels after a 3.45-billion-bushel disappearance since last December. Analysts were expecting an even larger drop in inventories. Click here to read our exclusive analysis of today’s reports.

Algeria issued an international tender to purchase 1.6 million bushels of corn from optional origins for shipment between late April and early May.

Conversations with lenders, landlords and other key stakeholders are still critical, even as society readjusts to social distancing guidelines. Darren Frye offers up some tips to keep communications running smoothly in his latest Finance First blog – click here to learn more.

Preliminary volume estimates were for 458,259 contracts, more than doubling Monday’s final count of 204,123.

Soybean prices stayed in the green Tuesday after USDA reported fewer-than-expected soybean acres in this morning’s prospective planting report, which triggered some technical buying. Stocks also fell by about 1 billion bushels, but analysts were already anticipating a similar drop. May futures added 3.75 cents to $8.86, while July futures gained 3 cents to $8.8950. With the current soybean-corn price ratio above 2.4, the market is signaling farmers to plant soybeans in favor of corn, according to Farm Futures grain market analyst Jacquie Holland.

Soybean basis bids were largely steady across the central U.S. Tuesday but did tick a penny higher at an Ohio elevator today.

USDA expects the total number of soybean acres to climb from 76.1 million acres a year ago up to 83.510 million acres this spring, a net gain of around 10%. Analysts expected a larger tally, with an average guess of 84.865 million acres, including a Farm Futures contribution of 82.7 million acres. Illinois (10.5 million) and Iowa (9.3 million) will be the top two soybean planting states, according to USDA.

In USDA’s quarterly stocks report, soybean inventories fell to 2.253 billion bushels. Disappearance of 1.000 billion bushels is 1% behind last year’s pace.

The new “Coronavirus Aid, Relief and Economic Security Act” (CARES) have several sections intended to directly benefit the agriculture industry – most notably, the $14 billion allocated to the Commodity Credit Corporation Fund, which many have speculated will lead to another round of Market Facilitation Program (MFP) payments later this year. But there are other allocations in CARES worth exploring. Gary Baise has the details in his latest Defending Agriculture blog – click here to learn more.

Preliminary volume estimates were for 209,638 contracts, moving moderately above Monday’s final count of 142,855.

Wheat prices moved mostly higher on a round of technical buying Tuesday after USDA reported lower-than-expected stocks and fewer-than-expected acres in two key reports this morning. May Kansas City HRW futures added 4.25 cents to $4.91, while May MGEX spring wheat futures gained 4.5 cents to $5.3750. May Chicago SRW futures bucked the overall trend, slipping 0.75 cents lower to $5.6875.

All-wheat acres are expected to reach an all-time low once again in 2020, at 44.655 million acres, slipping another 1% below last year’s tally of 45.158 million acres. Hard red winter wheat (21.7 million) and spring wheat (12.6 million) should account for the bulk of that total.

Wheat stocks moved lower, falling to 1.412 billion bushels. Disappearance of 428 million bushels tracked 3% higher from a year ago.

Russia’s agriculture ministry indicated it will sell around half (1 million metric tons) of its state grain stockpile locally to maintain low domestic prices and stable supplies as the coronavirus pandemic runs its course.

Kazakhstan is the latest country to announce it is restricting the export of wheat and flour during the ongoing coronavirus pandemic to ensure it has ample domestic supplies. The country is sitting on a total grain stockpile of around 9.2 million metric tons at the moment.

The United Nations has purchased 2.6 million bushels of wheat, likely sourced from Romania and Ukraine, as humanitarian aid for shipment to Ethiopia in June or July. Ethiopia continues to face food shortages amid severe drought.

Tunisia issued an international tender to purchase 2.8 million bushels of durum wheat from optional origins. The grain is for shipment between mid-April and early May.

Preliminary volume estimates were for 131,557 CBOT contracts, moving slightly ahead of Monday’s final count of 121,130.


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