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Morning Market Review for April 1, 2020

Grains follow global stocks lower this morning. (Comments are updated by 7:30 a.m. Central Time.)

Futures prices adjust after yesterday’s acreage intentions and updated COVID-19 reports

  • Corn down 1-2 cents
  • Soybeans down 10-11 cents, soyoil down $0.45, soybean meal down $3.3
  • Wheat down 3-8 cents

*Prices as of 6:55 am CDT.

Farmers scrambling for more profitable options other than corn or soybeans this spring need look no farther than oat fields and their, er, trendy neighborhood food market. A 50-lb bag of rolled oats is currently retailing for $53/bag at a Fort Collins, Colorado food store and goes for as much as $99/bag on eBay.

Regular rolled oats

Oat acreage only went up a quarter of a million acres in yesterday’s Prospective Plantings report, so there could still be time this spring for potential market movers looking to cash in on a grain crop! Also, Happy April Fool’s Day!

Disclosure: While the rolled oat prices are legitimate, suburban awareness – or lack thereof – of local feedstores is laughable to this farmgirl. Have a great day!

Corn: May corn futures shed $0.015 to $3.3925 this morning as lower energy prices and a potentially record-setting 2020/21 crop weighed heavy in traders’ minds. July futures traded $0.0225 lower to $3.4375 this morning.

Cash corn prices were relatively unchanged yesterday – a welcome reprieve to the past two weeks, which found basis moving steadily lower amid depressed ethanol demand. A Chicago-area processor weakened basis $0.02 to trade evenly with May futures but cash offerings were steady elsewhere in the Corn Belt.

Corn basis and change

A record 97 million acres of corn are expected to be planted in the U.S. this spring, according to USDA’s Prospective Plantings report released yesterday. Corn futures prices edged lower on the news, though losses were capped by a higher-than expected reduction in March 1, 2020 corn stocks.

Corn usage between December 1, 2019 and March 1, 2020 totaled 3.44 billion bushels. The March 1, 2020 estimated inventory level of 7.95 billion bushels was slightly lower than trade estimates, but any positive price impacts were offset by the increase in corn acreage.

The Energy Information Agency releases their weekly Petroleum Status Report today for the week ending March 27. Ethanol output is expected to decline as nearly 3 billion gallons of production came offline in late March due to lower energy demand amid global COVID-19 movement restrictions. The EIA reported 42.2 million gallons of ethanol output last week for the week ending March 20 – the lowest weekly ethanol output since October 2019.

Soybeans: May soybean futures prices dropped $0.1025 to $8.7575 overnight as Brazilian exports finished on pace for a record-setting March and Chinese demand limps along as supply chain backlogs are cleared. Soyoil futures prices fell $0.45/lb to $26.56 and soymeal futures shed $3.3/ton to $318.2 amid weakening in the soy complex.

Cash soybean prices were mostly unchanged yesterday. A Cincinnati, Ohio processor increased cash bids $0.01 to $0.19 ahead of May futures but cash offerings were relatively unchanged elsewhere in the Midwest. Cash markets remain optimistic that backlogs in the South American supply chain will present opportunities for U.S. soybeans.

Soybean Basis Change

The drought in Southern Brazil threatens to lower production forecasts for the record-setting Brazilian soybean crop. Recent estimates from Brazilian agricultural consultancy Agroconsult lowered 2019/20 production estimates 29.4 million bushels to 4.5 billion bushels as output in the drought-stricken southern state of Rio Grande do Sul fell 257.2 million bushels.

USDA releases soybean crush data this afternoon for the month of February. An analyst poll found an average estimate of 176.9 million bushels are expected to have been crushed in February. Analyst projections ranged from 175.0 million to 179.0 million bushels. Early estimates are on track to be the largest February figures on record due in large part to a boost from the extra leap day in the month as well as an uptick in soymeal demand. The National Oilseed Processors Association (NOPA) reported a February crush number of 166.3 million bushels, a record high for the trade group in the month of February.

2020 soybean acreage forecasted by USDA yesterday totaled 83.5 million acres in the annual Prospective Plantings report. The total was 1.4 million acres lower than the average industry analyst prediction as more acreage was allocated to corn planting. Higher soybean prices as of late have a chance to compete with corn acres this spring if Midwestern soils remain saturated in the early days of planting season.

Quarterly U.S. soybean stocks as of March 1, 2020 came in at 2.3 billion bushels, in line with the average trade projection of 2.2 billion bushels. Soybean disappearance held steady at 1 billion bushels since December 1, 2019. Usage statistics are expected to increase in next quarter’s report as soymeal demand rises amid the collapse of the ethanol and resulting DDG market.

Wheat:

Wheat contracts price changes

The wheat complex erased much of its gains from yesterday, following global markets lower on coronavirus fears. A rising dollar did no favors to wheat prices, strengthening 0.70% overnight as nervous investors sought safe haven in American currency.

Cash bids for soft and hard red winter wheat were unchanged yesterday. The uptick in futures prices spurred by USDA’s estimate of lower wheat acreage yesterday spurred a flurry of old crop sales, adding excess supplies to processor inventories.

Protein premiums for hard red winter cash wheat delivered to or through Kansas City by rail fell for ordinary to 12.20% protein contents yesterday, as shown below:

wheat protein content, basis range, change

Wheat prices enjoyed a nice rally after USDA released their Prospective Plantings report yesterday. 2020 wheat acreage fell 0.5 million acres from 2019 to 44.7 million acres – the lowest wheat planting on record in U.S. history. Early planting data from USDA released this winter indicated the acreage would fall around the 45-million-acre mark, but the markets were not expecting as much of a decline from 2019 acreage.

Quarterly wheat stock data released by USDA yesterday found wheat inventories at the 1.4-billion-bushel mark as of March 1, 2020. Usage from December 2019 inventories totaled 422 million bushels, a figure that will likely increase in next quarter’s report as a spike in consumer demand amid COVID-19-related consumer stockpiling of bread, flour, and pasta.

Weather: Clear weather will continue in the Corn Belt today, but a spring snowstorm is expected to hit the Northern Plains tomorrow. The same system will bring a chance of rainfall to the Mississippi River Valley by Friday morning, according to NOAA's short-term forecast, stifling any chances of advancing on fieldwork across much of the Midwest.

Financials: Coronavirus cases in the U.S. increased by 25,023 cases from yesterday to 189,633 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll rose by over 900 lives from yesterday morning to 4,081 deaths. New estimates released yesterday project nearly a quarter of a million deaths in the U.S. as the nation continues to battle the virus.

Global stocks fell overnight after President Trump announced the death toll from coronavirus could rise to 240,000 Americans in the coming days, inciting another round of fear into volatile markets. Dow futures traded 685 points or 3.15% lower to 21,066 points this morning. The 10-year Treasury note edged 0.061 points lower to 0.616% this morning as investors flocked back to the benchmark safe-haven asset amid renewed economic concerns about the pandemic.

Energy prices posted losses in early morning trading. Gasoline futures fell $0.0567/gallon to $0.536. Brent crude oil prices were $0.84/barrel lower to $25.51 this morning.

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