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Morning Market Review for Feb. 14, 2020

Reduced coronavirus fears send grains higher overnight. (Comments are updated by 7:30 a.m. Central Time.)

Technical buying ensues after coronavirus concerns led markets lower this week

  • Corn up 1 cent
  • Soybeans up 1-2 cents, soyoil up $0.23, soybean meal down $0.7
  • Wheat up 1-3 cents

*Prices as of 6:50am CST.

Please note: Markets will be closed on Monday for the Presidents’ Day holiday. Our regular market reports will resume as usual on Tuesday.

Corn: March futures were slightly higher to unchanged in early morning trading. At last glance, March futures were $0.0025 higher to $3.7975. May futures were unchanged at $3.8475 as slower export pace in yesterday’s weekly export report capped any significant upward price movement.

Basis at river locations weakened across the Midwest yesterday as export demand seemed to ease. A Mississippi River location in Davenport, Iowa shed $0.02 to $0.07 below March futures. An Illinois River terminal weakened basis a cent to a cent over March futures. Elsewhere in the Midwest, a Chicago-area processing facility strengthened basis $0.03 to $0.19. Farmer sales slowed as futures prices moved lower yesterday.

Second crop corn planting progress in Brazil is well underway. About 39% of Mato Grosso’s corn had been planted as of a week ago, tracking comfortably within the five-year average. In the Parana region the south where the second corn crop is four times the size as the first crop, planting was only at 14% complete as of Monday, significantly behind the five-year average of 30%. Warm and dry weather will likely help South Brazilian farmers pick up the pace this week. A staggering 64% of 2019/20 of corn has already been sold, surpassing the 47% mark the same time last year. Strong feed and ethanol demand led to Brazilian corn prices hitting four-year highs this week as a weaker currency also increased the value of Brazilian corn on the international market.

Corn exports were the clear winner in yesterday’s weekly exports report. While corn volumes led all grains in yesterday’s report at 38.1 million bushels, sales continued to lag behind last year’s pace, falling to 9% below the prior four-week average. Will potential Chinese purchases impact corn prices? Analyst Naomi Blohm tackles the great China demand debate in the Ag Marketing IQ column.

A 1.4 million-bushel tender issued by Algeria earlier this week resulted in a sale from the European Union or Ukraine. The shipment, due for loading in late March, was believed to have been priced out at $4.95-$5.11/bushel.

CFTC releases their weekly Commitment of Traders report later this afternoon. Sideways corn movement through the report week of February 5-11 may continue to send speculators in a more bearish direction on the report.

Soybeans: March futures grabbed $0.0175 in gains this morning, edging close to the $9 mark at $8.98. March soybean futures traded in the opposite direction, losing $0.7 overnight to $291.2.

Renewed coronavirus fears and lower palm oil exports sent the vegetable oil complex lower this week. Palm oil followed competing soybean oil higher overnight in a role reversal that is uncharacteristic of vegetable oil prices as Malaysia’s diplomatic disputes and reduced Chinese demand continue to send the commodity prices lower. March soybean oil traded $0.23 higher to $30.95 this morning.

Cash soybean prices continued to strengthen at river terminals on Thursday, offering a glimmer of hope for export demand at the Gulf. A Mississippi River location in Davenport, Iowa added $0.02 to trade at $0.24 below May futures. An Illinois River terminal basis surged up $0.08 to $0.06 over March futures. Basis at a Des Moines, Iowa processing facility strengthened $0.05 but remained $0.35 below the nearby March contract. However, the cash rally this week is likely still about $0.10-$0.15 below generating an increase in country soybean movement.

Soybean export shipments dropped 58% from the previous week to 22.5 million bushels according to yesterday’s weekly export report from USDA. Export sales were also 8% lower at 23.7 million bushels. Chinese demand continues to lag in the wake of the economic fallout from the coronavirus.

After receiving 1-4 more inches of rainfall in key growing areas, Brazil will see warmer and drier weather through the next week, favoring soybean harvesting and second crop corn planting progress.

A weakening Brazilian real continued setting record lows yesterday, trading at 4.38 reals per dollar at market close. Brazilian farmers welcomed the news as harvest progressed within the five-year average rate in most areas, following delays due to rainfall. The falling currency will make the increasingly large soybean crop very attractive on the international market and more valuable to Brazilian producers. The real has dropped 9% this year.

A nearly $0.05 uptick in March futures prices could result in speculators trending bullish on soybeans in this week’s Commitment of Traders report to be released today. Falling Malaysian palm oil prices dragging soybean oil futures lower could cause a trimming of money managers’ net long position on soybean oil. Soybean meal found strength over the February 5-11 week as well, incentivizing speculators to potentially trim their net short position on today’s report.


Wheat contracts price changes

Wheat futures recovered strength overnight as technical buying following coronavirus fears gave the grain a nice boost. The ICE Dollar index provided a cap on gains, trading 0.04% higher this morning.

Cash prices for soft wheat were unchanged yesterday. A Texas rail facility shipping hard red winter wheat to the Gulf saw a $0.05 basis drop yesterday to end at $1.55 above March Kansas City futures prices following price drops in three of the last four days. Cash prices on HRW were unchanged elsewhere in the Southern Plains. Farmer sales were light as cash reserves are plentiful enough to wait for a price rally.

Protein premiums on hard red winter cash wheat delivered to or through Kansas City by rail rose $0.10 and $0.05 for protein contents of the 11.6% and 11.8% grades, respectively, as shown below:

wheat protein content, basis range, change

Cool temperatures in Eurasia will come to an end over the next two weeks as warmer weather creeps in. While rainfall will be below average, snowmelt due to the warmth should benefit the winter wheat crops. Continued warmth and wet weather in Europe will benefit winter crops, although there are concerns that France and Spain are combatting low soil moisture as the crops near dormancy.

After USDA raised export expectations in Tuesday’s WASDE report, wheat exports found strength again this week as futures prices traded lower for three out of the four trading days this week. Export shipments gained 25% from the previous week to 18.6 million bushels. For more analysis on yesterday’s weekly export report from USDA, click here.

Today’s Commitment of Traders report will likely see speculators slashing long positions on Chicago and Kansas City wheat following a week of falling futures prices in Chicago and lackluster sideways trading in Kansas City. Money managers will likely remain short on Minneapolis wheat after a week of minimal price movement.

Weather: Warmer temperatures will thaw the Midwest this afternoon, leading to a mostly clear weekend across the Corn Belt according to NOAA's short-range forecast. There is a slight chance of snow in the Upper Mississippi Valley on Saturday afternoon, but the system will move east by late Saturday night.

Financials: Global stocks recovered from news of a higher death toll in China due to the coronavirus outbreak on Thursday. Dow futures traded 0.14% higher to 29,474 points this morning. The benchmark Brent crude oil March future price led the energy complex higher overnight by $0.69 to $57.07.

The White House proposed spending measures for the fiscal year 2021 budget earlier this week. President Trump’s proposed budget currently features cuts to agriculture funding at the expense of infrastructure and defense spending increases, though Congress will have the final say on budget appropriations. For a closer look at how the proposed budget impacts agriculture, check out Jacqui Fatka’s DC Dialogue column.

Happy Valentine’s Day! For those of you still looking for the perfect gift, the Bronx Zoo in New York is continuing their ninth year of their Valentine’s Day Name-A-Roach program. The V-Day special offers the public the opportunity to name members of its 50,000-plus intrusion of giant Madagascar hissing cockroaches for $15 an insect. Originally billed as a way to get revenge on an ex, the zoo has also begun including naming rights for loved ones, because what could be more symbolic of indestructible love? Matching candles are still available when naming certificates are purchased and proceeds benefit the Wildlife Conservation Society. Love is forever...and so are cockroaches.


2-14 - Graphic 1 - Corn.PNG

2-14 - Graphic 2 - SB.PNG

2-14 - Graphic 3 - SRW.PNG

2-14 - Graphic 4 - HRW.PNG

2-14 - Graphic 5 - MN Wheat.PNG

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