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Morning Market Review for April 3, 2020

Wheat regains yesterday’s losses. (Comments are updated by 7:30 a.m. Central Time.)

Corn continues higher on optimism over a potential energy deal

  • Corn up 3-4 cents
  • Soybeans up 1-2 cents, soyoil up $0.14, soybean meal down $1.1
  • Wheat up 5-13 cents
  • *Prices as of 6:55 am CDT.

Corn: Corn prices followed energy futures higher again this morning on optimism over potential global production cuts. May futures and July futures rose $0.045 to $3.38 and $3.43, respectively, on hopes for a truce between Russia and Saudi Arabia.

Cash prices strengthened at river locations, weakened further at ethanol plants, and were mixed elsewhere in the Corn Belt yesterday. New cash sales were few and far between yesterday, as low futures prices discouraged famers from booking sales.

Corn basis and change

International demand for 2019/20 U.S. corn eased from the previous week, according to USDA’s weekly export sales report released yesterday. A weekly decrease of 27.0 million bushels left old crop export sales for corn at 45.8 million bushels for the week ending March 26. 2020/21 crop export sales also dropped 2.8 million bushels to 3.6 million bushels. It wasn’t all bad news, however, as export shipments rose 16.2 million bushels to 49.5 million bushels on the week.

Soybeans: Soybean prices were mixed overnight as coronavirus fears competed with strengthening grain prices. At last glance, May soybean futures traded $0.0075 higher to $8.595. Soymeal prices fell prey to technical selling, down $1.1/ton to $308 this morning. Soyoil inched $0.14/lb higher to $26.38.

Spot offer bids for soybeans were mostly steady yesterday but showed signs of strength at a river location in Ohio and an elevator near Chicago, IL. Farmers continued to wait for higher futures prices before booking any new cash soybean sales.

Soybean Basis Change

Health inspections slowed export progress in Argentine ports yesterday as dry weather continues to deteriorate soybean yields. Harvest estimates for the 2019/20 soybean crop were trimmed lower yesterday on unfavorable weather forecasts. Argentina is world’s largest exporter of soymeal and the third largest supplier of corn and soybeans, behind the U.S. and Brazil.

Soybean export sales were slightly bullish in yesterday’s weekly export sales report from USDA. Old crop export sales rose 5.13% to 36.0 million bushels and new crop export sales jumped up from a meager 18,372 bushels to 4.2 million bushels for the week ending March 26.

Export shipments, however, took a slightly bearish tone, falling 5.1 million bushels from the previous week to 17.2 million bushels. China maintained a second straight week of new sales but continues to remain a quiet player in the market as the nation recovers from the COVID-19 pandemic and South American soybeans remain more attractive globally.


Wheat contracts price changes

Wheat prices rebounded overnight on a technical buying spree. The wheat complex is still on track to post weekly losses as coronavirus fears accounted for price losses for the past four trading sessions. The ICE Dollar Index rose 0.59% overnight as those fears continue to weigh heavily on the rest of the market.

Cash bids for soft and hard red winter wheat strengthened across the country yesterday. Basis for SRW rose $0.10 to $0.15 above May Chicago wheat futures prices at a Chicagoland processor. Cash prices in Decatur, Indiana were up $0.15 to $0.05 below May futures prices as well.

Cash wheat prices for HRW gained $0.05 to $1.50 over May Kansas City wheat futures prices at a rail facility near the Gulf Ports in Galveston, Texas. Prices were relatively unchanged elsewhere in the Southern Plains. Lower futures prices in the wheat complex led farmers to completely lose interest in booking any new cash sales, according to one merchandiser.

Protein premiums for hard red winter cash wheat delivered to or through Kansas City by rail ticked $0.17 higher for 11.4% protein content, as shown below:

wheat protein content, basis range, change

Wheat exports and international shipments weakened in yesterday’s weekly export report from USDA, despite an uptick in global wheat demand due to the COVID-19 pandemic. 2019/20 wheat export sales dropped 19.9 million bushels from the previous week to 10.2 million bushels. New crop sales dropped week-over-week as well, down by almost half to 6.8 million bushels. Export shipments were 34% lower at 10.1 million bushels.

Dryness in much of Europe is expected in the coming week. Dry weather should not cause many issues for spring wheat planting, but the winter wheat crop faces yield damage if the dryness persists, particularly in Ukraine. Heavy rainfall in Russia will benefit the winter wheat crop despite lower than average temperatures.

Kazakhstan authorized an export quota on international wheat and flour shipments overnight to secure its domestic food supply in the face of COVID-19 restrictions. Wheat exports for April will only total 7.3 million bushels while flour shipments will hit a ceiling at 70,000 tons. Kazakhstan is a member of the Black Sea grain export region.

France’s farm office, FranceAgriMer, reported the soft wheat crop condition declined to 62% from 63% good or excellent from the previous week. Dry weather could limit wheat yields in the European Union’s largest grain producing nation. French spring wheat condition ratings were 84% good to excellent the same time a year ago.

Weather: Rain will continue to plague the Corn Belt through the weekend according to NOAA's short-range forecast.

A long-term forecast for the Midwest and Plains from Reuters’ weather research team is predicting a warmer than normal April, particularly through the next week. Several rain systems are also predicted, which may slow early planting progress.

Financials: The momentous supply and demand shocks of the COVID-19 pandemic continues to wreak havoc on U.S. dairy farmers. Supply chain disruptions are leading to surplus milk supplies at the farm level. Naomi Blohm of Total Farm Marketing writes that the quick shift in consumer preferences away from restaurant dining and the short-term overproduction of milk have resulted created a trifecta of forces that are leading suppliers to ask farms to dump up to a week’s worth of production.

Coronavirus cases in the U.S. increased by 28,851 cases from yesterday to 245,573 cases as of this morning – the largest gain this week – as global cases surpassed one million, according to the Johns Hopkins Coronavirus Resource Center. The death toll rose to 6,058 deaths this morning. The CDC is likely to recommend Americans living in COVID-19 hot spots wear cloth masks in public today.

The monthly jobs report will be released by the U.S. Labor Department this morning and will likely paint a bleak picture of the current state of unemployment in the country. Weekly state unemployment claims rose by over 3 million yesterday to 6.6 million claims through the past week. The total surpasses last week’s record, which bested Great Depression-era unemployment records.

Global markets edged lower on the sentiment, with Dow futures down 181 points or 0.85% to 21,092 points. Energy prices rose on hopes that a Monday OPEC meeting will call for global production cuts. Brent crude oil prices traded $2.67/barrel higher to $32.61 on the sentiment.

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