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Morning Market Review for Feb. 26, 2020

Global spread of coronavirus leads grains slightly lower. (Comments are updated by 7:30 a.m. Central Time.)

Grains post small losses overnight due to international virus containment

  • Corn down 1 cent
  • Soybeans down 1 cent, soyoil down $0.11, soybean meal up $0.2
  • Chicago and Kansas City wheat down 0-2 cents, Minneapolis wheat up 1 cent

*Prices as of 6:45am CST.

Corn: March and May corn futures were down $0.005 this morning to $3.72 and $3.76, respectively. Fears over the coronavirus spread capped any gains that may have been realized over the past couple days as international demand, particularly from South Korea, has strengthened.

Cash corn prices were mixed across the Corn Belt yesterday as new sales were scarce. Basis strengthened at rail terminals in Ohio and Indiana, rising $0.03-$0.04 to $0.37 and $0.28 above March futures, respectively. A Nebraska corn processor posted a $0.01 increase in basis to trade $0.08 ahead of March prices. But basis weakened $0.01 on the Illinois River and $0.02 at a Chicago-area processor.

As President Trump continues his tour of India in search of a potential trade deal for U.S. farmers, Farm Futures Senior Editor Ben Potter breaks down trade prospects with other developing countries as well as long-standing trading partners Mexico and Canada. Click here to read his export analysis.

South Korea continued their buying spree for corn overnight, completing a private deal to purchase 2.6 million bushels of corn for feed from South America overnight. The sale was priced at $7.97/bushel c&f, including unloading fees. The private deal was the seventh corn purchase by South Korea this week, totaling bringing their weekly purchase total to nearly 20.4 million bushels.

Soybeans: March soybean futures sought price increases earlier this morning, but coronavirus concerns led the contract $0.01 lower to $8.78 prior to the market opening. March soybean meal futures provided some bullish news to the soybean complex this morning, rising $0.2 to $286.7.

The vegetable oil complex was weighed down overnight after political turmoil ensued in Malaysia following the sudden exit of Malaysian Prime Minister Mahathir Mohamad. The chaos sent palm oil futures prices sinking to four-month lows amid decreased exports to China and India and the sudden uncertainty of an economic stimulus package. March soybean oil futures traded $0.11 change lower to $29.12 amount this morning on the sentiment.

Soybean basis on the Mississippi River at Davenport, IA strengthened $0.03 yesterday as the cash prices rolled over to trade $0.19 lower than May futures prices. Farmer sales of soybeans were slow across the Midwest yesterday despite a $0.035 rise in the nearby March futures contract.

Wheat:

wheat prices

Wheat markets were mixed this morning as a higher dollar and increased international wheat movement competed for price attention. Similar to yesterday morning, Chicago and Kansas City futures dipped slightly while Minneapolis futures posted small gains. The ICE Dollar Index was up 0.07% this morning as coronavirus fears continued to weigh on the dollar.

Cash prices for both soft and hard winter wheat were unchanged yesterday as falling futures prices due weakened export demand and coronavirus fears discouraged farmers from booking any new sales.  Protein premiums on hard red winter cash wheat delivered to or through Kansas City by rail moderated $0.05 for protein grades between 12.0-12.4% a day after rising $0.10, as shown below:

wheat protein content

International wheat activity was almost as hot as South Korean corn purchases yesterday. The following countries reported issuing tenders yesterday:

  • South Korea purchased 2.2 million bushels of feed wheat yesterday as futures prices tumbled lower. The shipment will be from optional sources, with delivery times dependent upon the selected source.
  • Tunisia purchased 2.2 million bushels of soft milling wheat in five separate consignments at $6.34/bushel c&f. The grain will be sourced from multiple origins.
  • Jordan purchased 4.4 million bushels of hard milling wheat on Tuesday. The shipment, which is contingent on sourcing from optional origins, was priced at $6.02/bushel c&f by Swiss trading house Ameropa. Delivery is expected in early September.
  • South Korea bought 3.1 million bushels of milling wheat from the U.S. to be shipped in August. The shipment to be sourced from the United Grain Corporation was priced between $6.33 - $6.41/bushel fob.
  • Syria issued a tender to purchase 7.3 million bushels of wheat from Russia. The tender for soft wheat for bread making is due March 23.

Weather: Snow will cover much of the Eastern Corn Belt today dropping 1-3 inches before moving into the Northeast by tomorrow morning. The Midwest should enjoy mostly clear weather tomorrow and Friday as well as warming temperatures on the heels of the latest winter storm system according to NOAA's graphical forecast.

Financials: U.S. Trade Representative Robert Lighthizer is in Britain this week to discuss trade opportunities following Brexit. The United Kingdom’s exit from the European Union may provide a strong opportunity to expand trade with the western European country. Top U.S. officials are hoping the threat of tariffs on many British luxury vehicles may sway the U.K. to relax its standards on genetically modified crops and hormone-treated meat from the U.S. British Prime Minister Boris Johnson is expected to release final details of the Brexit settlement on Thursday. It is Washington’s hope Prime Minister Johnson’s cabinet outlines trade objectives in the Thursday’s report.

Following his visit to India this week, President Trump announced a bilateral trade deal with the fastest growing nation on earth by population would not take place until later this year. “If the deal happens with India it will be at the end of this year and if it doesn’t happen then we will do something else,” the President said yesterday. India’s high tariffs have made export opportunities difficult for the U.S. Trump and Indian Prime Minister Narendra Modi concluded trade talks yesterday they hope will eventually lead to a first phase of a U.S. – India trade agreement.

Dow futures made a slight recovery overnight from their downward spiral yesterday, up 12 points or 0.04% to 27,129 points before the markets open, though analysts widely expect another day of losses as the coronavirus outbreak reaches pandemic levels. Yields on the U.S. 10-year Treasury bond closed at an all-time low of 1.328% yesterday as demand for safe assets strengthened amid investor fears over the economic fallout of the outbreak.

The falling T-bond yield suggests the Federal Reserve Bank may be moved to ease short-term interest rates later this year to steady markets, though Dallas Fed President Robert Kaplan believed it was too soon for the Fed to make a decision regarding rates and the coronavirus.

Energy futures prices slid lower on coronavirus fears, led by diesel. March ultra-low sulfur diesel futures prices were down 2.85% overnight to $1.5238/gallon.

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