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Did cold temperatures do much damage? 

Weather might not impact the market, but the USDA report could.

Rains in Brazil this week should start easing concerns about dry conditions, but at the same time that doesn't repair the yield drag that has already occurred. What the trade wants to know is how much damage second-crop production in Brazil actually sustained. In Argentina, the harvest should advance at a fairly fast clip with the forecast showing a good window of opportunity. 

Here at home, the trade thinks the USDA will show around 70% of the U.S. crop now planted, which is well ahead of schedule. The USDA's highly anticipated May supply and demand report be very big for the market so pay extremely close attention. Talk inside the trade is that the USDA could lower corn used for ethanol by another 100-300 million bushels. As for corn export demand, most think the USDA will leave its current estimate unchanged, to perhaps +50 million bushels larger.

As usual, feed and residual will be a wild card depending on how the USDA wants to interpret or forecast corn used for livestock in the wake of coronavirus-related meat processing plant closures. It wouldn't surprise me to see a 50-100-million-bushel reduction in corn used for feed demand. Let's also not forget, we could see an old-crop balance sheet adjustment based on the resurveyed production from the northern states (MI, MN, SD, WI). From what I understand, the North Dakota data is still being collected and will be incorporated in a future USDA report. 

Bottom line: With massive demand destruction, we are probably going to be forced to digest the highest stocks-to-use ratio in over 15-years and highest ending-stocks in 30 years. Keep in mind, the USDA will also be tossing out its new-crop 2020-21 balance sheet forecast in the report. Most inside the trade are looking for a massively burdensome +3.1-3.5-billion-bushel ending stocks estimate.

As a producer, I've purchased some cheap puts as a type of insurance policy on all remaining old-crop and new-crop unpriced bushels. After seeing what happened in crude oil, I guess I'm a bit spooked. I would like to believe we are at the bottom of the barrel and corn prices couldn't trade sub-$2.80 per bushel, but I never would have guessed I would have lived to see negative crude oil prices.

My fear is without big Chinese buying and or a major wide-spread weather worry rallies could be somewhat limited the next few months. Adjust accordingly.

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