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Morning Market Review for April 7, 2020

Corn, soybeans follow global stocks higher. (Comments are updated by 7:30 a.m. Central Time.)

Wheat prices fall prey to more technical selling this morning

  • Corn up 3-4 cents
  • Soybeans up 3-5 cents, soyoil up $0.30, soybean meal down $0.3
  • Wheat down 2-8 cents

*Prices as of 6:55 am CDT.

A note from the editors: Losses in the ethanol sector could swing more corn acreage into soybeans ahead of 2020 planting. Farm Futures is tracking the impacts of ethanol declines on corn planting and could use your help. Click here to share information about ethanol plants in your area to help fellow readers see how the recent ethanol collapse is affecting the entire farming community.

Thank you!

Corn: May futures followed energy stocks and a global stock market surge higher this morning, up $0.0425 to $3.32. July futures gained $0.04 to $3.375. Gains were capped by reduced ethanol demand.

Cash corn prices were mixed across the Corn Belt after May futures prices dropped $0.02 to nearly four-year lows yesterday. Most of the price action took place at river terminals shipping to the U.S. Gulf. Also of note – an Annawan, Illinois ethanol plant bucked recent downturn trends and strengthened basis $0.07. The cash price still traded $0.18 below May futures prices, but it was the most positive price activity seen at the following ethanol plants in several weeks.

Corn basis and change

Northern Brazil is expected to receive a surplus of 1 to 2 inches of rain over the next 9 days. The added moisture will benefit the second crop of corn recently planted following soybean harvest. Dryness will continue to plague the drought-stricken Rio Grande do Sul, though cooler temperatures should help to somewhat ease parched conditions in Southern Brazil.

Corn inspected for export for the week ending April 2 inched up 0.10% from the previous week to 50.1 million bushels. Corn bushels inspected to date for export are down 37.1% from the previous market year.

Soybeans: May soybeans rose $0.0375 to $8.5925 in early morning trading. May soyoil futures prices followed strength in the soy complex higher, up $0.30/lb to $27.13. A day after slipping under $300/ton, May soymeal futures prices remained suppressed below the benchmark, losing $0.3/ton overnight to start the new trading session at $296.7.

Cash offerings for soybeans were mixed at river terminals but relatively unchanged elsewhere yesterday. Farmer sales were slow despite a $0.02 recovery to May futures on Monday.

Soybean Basis Change

Argentina has begun their soybean harvest. Cooler than average temperatures will likely have little impact on harvest and dry weather will allow for a largely uninterrupted harvest pace across the next 9 days.

Soybean exports to China slowed for the week ending April 2, according to grains inspections data released by USDA yesterday. Weekly soybeans inspected for export decreased by 4.3 million bushels from the previous week to 11.0 million bushels. Shipments en route to Taiwan were a meager 858,329 bushels while no exports to mainland China were recorded last week.


Wheat contracts price changes

The wheat complex continued to tumble lower this morning on another round of profit-taking after staging a modest two-session rally late last week. A weakening dollar provided somewhat of a cap for losses, with the ICE Dollar Index trading 0.67% lower this morning.

Soft and hard red winter wheat cash prices were unchanged yesterday. Though commodities continued a two-day streak of price gains yesterday, farmer sales, particularly in the Southern Plains, remained slow as the initial spike in bread and flour demand following the COVID-19 pandemic has since eased.

Protein premiums for hard red winter cash wheat delivered to or through Kansas City by rail fell for higher levels of protein content, as shown below:

wheat protein content, basis range, change

About 62% of winter wheat was in good to excellent condition, according to USDA’s weekly Crop Progress report. Conditions are slightly better than the same period last year when they were 60% good to excellent.

France projects its total soft wheat acreage to total 11.4 million acres for 2020. The 2020 estimate is 7.5% lower than last year. 2020 barley acreage grew 2.8% to 4.9 million acres. France is the European Union’s largest grains producer.

Wheat inspected for export at U.S. facilities ticked 16.8% lower last week to 11.8 million bushels. At 757.2 million bushels to date, 2019/20 wheat exports remain 7.2% ahead of the previous marketing year.

Weather: Patches of rain across the Midwest today will continue to slow planting progress, according to NOAA's short-range forecast.

While NASS’s first weekly Crop Progress report of 2020 offered minimal information about planting progress around the country, it did provide a more accurate view of soil moisture contents and fieldwork opportunities. Corn Belt farmers continue to battle soggy weather in their effort to progress with the 2020 planting season.

Kansas was the only state in the Midwest that saw more than 4 days of fieldwork last week with the remaining states averaging a mere 2.4 days to advance in the field. Topsoil and subsoil moisture levels have payed no favors to planting progress, with an average of 35% of acres in the Corn Belt reporting surplus topsoil moisture and nearly 32% of acreages containing subsoil moisture surpluses.

Weekly Crop Progress Report Highlights

Financials: The U.S. COVID-19 caseload grew by 30,516 cases overnight to 368,449 cases this morning, according to the Johns Hopkins Coronavirus Resource Center. The death toll surpassed the ten thousand mark as of this morning, rising by 1,340 lives yesterday to 10,993 deaths as of this morning. British Prime Minister Boris Johnson was moved to intensive care earlier this morning after being admitted to the hospital on Monday. Johnson tested positive for COVID-19 11 days ago.

The coronavirus pandemic continues to plague the agricultural and food supply chain. Three separate meat processing companies announced separate facilities are to be temporarily shuttered as COVID-19 outbreaks swept through staffing.

  • A pork processing plant owned by Tyson in Columbus Junction, Iowa closed for the week after 24 employees tested positive for the virus. The plant accounts for 2% of U.S. pork slaughtering.
  • Beef processor, National Beef Packing Co., moved a cleaning date scheduled for later this week earlier, shutting down its Tama, Iowa facility for the week.
  • A JBS USA beef plant in Souderton, Pennsylvania will be down for production for the next 9 days after senior managers showed flu-like symptoms.

The virus does not discriminate between ag commodities, however. Four workers at an ADM corn processing facility in Clinton, Iowa tested positive for COVID-19, as announced by the company yesterday. Staffing adjustments will allow for continued operations, but affected parties are being quarantined and the facility is undergoing a deep clean.

News of slowing COVID-19 activity in Europe sent stocks soaring this morning, continuing yesterday’s gains. Dow futures were up 795 points or 3.54% to 23,389 points in pre-market trading this morning. Uncertainty continues to loom large over the markets however, despite the growing optimism as evidenced by strength in the hotel and airline industries.

Energy prices followed global stocks higher this morning, led by a $0.0248/gallon rise in gasoline futures to $0.7264. Brent crude oil futures rose $0.70/barrel to $33.05 on building anticipation over the Thursday meeting between Russia and Saudi Arabia, which could result in an end to the nations’ oil price war and reduce global production.

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