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Afternoon Market Recap for April 1, 2020

Wall St. woes hammer grain prices.

Corn, soybeans and wheat all faced substantial cuts Wednesday

Spillover weakness from financial and energy markets weighed heavily on grain prices today, trimming some of the hard-fought gains over the past two weeks. Corn dropped around 2%, with soybeans losing 2.5% and some wheat contracts down more than 3.5% Wednesday. Uncertainty over everything from planted acres to export trends later this spring triggered some additional technical selling.

The latest 72-hour cumulative precipitation map from NOAA shows mostly dry conditions probable for the eastern Corn Belt through Saturday, with some rain and snow likely in the Northern Plains during that time. Further out, the agency expects the central U.S. to see some seasonally wet and warm conditions between April 8 and 14, per its 8-to-14-day outlook.

On Wall St., the Dow was firmly back in the red Wednesday, trending more than 800 points down this afternoon to 21,072, as investors remain skittish over the ongoing coronavirus pandemic. Even conservative estimates put the U.S. death toll at 100,000 or more. President Trump warned in a press conference yesterday that the next two weeks are going to be “very painful.”

Energy futures continued to buckle today, although losses in crude oil were only moderate. Gasoline and diesel were down another 6% to 8%, however, on sharply lower demand. Ethanol lost a similar amount this afternoon. The U.S. Dollar firmed moderately.

On Tuesday, commodity funds were net sellers of corn (-9,000) and soymeal (-3,500) contracts but were net buyers of soybean (+3,000), soyoil (+2,500) and CBOT wheat (+1,500).

Corn prices fell around 2% Wednesday as traders continue to worry about the combination of 97 million potential U.S. acres getting planted this spring paired with a significant reduction in short-term ethanol demand. May futures dropped 6 cents to $3.3475, with July futures down 7.25 cents to $3.3875.

Corn basis bids were mostly steady to firm Wednesday amid sluggish farmer sales this week, rising 4 to 5 cents across a handful of Midwestern locations today. An Iowa ethanol plant bucked the overall trend after dropping 5 cents.

Ahead of Thursday morning’s weekly export report from USDA, analysts are expecting another solid round of corn sales for the week ending March 26, with estimates ranging between 27.6 million and 51.2 million bushels.

The U.S. Energy Information Administration reported that ethanol production fell to a more than 6-year low for the week ending March 27, with a daily average of just 840,000 barrels. Some experts have estimated that gasoline demand will fall 50% or more, which means additional cuts in ethanol production are almost certain.

South Korea purchased 4.3 million bushels of non-GMO corn, likely sourced from the U.S., in a tender this week. The grain is for arrival in July.

The European Commission held steady its outlook for EU corn imports in 2019/20, at 787.4 million bushels.

Preliminary volume estimates were for 366,186 contracts, down moderately from Tuesday’s final count of 458,259.

Soybean prices followed financial, energy and other grain prices significantly lower Wednesday in a broad-based selloff, closing about 2.5% lower today. May futures tumbled 23.25 cents lower to $8.6275, with July futures losing 22.25 cents to $8.6725.

Soybean basis bids firmed by 1 to 3 cents across several interior river terminals Wednesday, while holding steady elsewhere across the central U.S. today.

Ahead of tomorrow morning’s weekly export report from USDA, analysts show some uncertainty over potential soybean sales for the week ending March 26, with individual guesses ranging between 13.8 million and 36.7 million bushels. Actuals will need to land on the high end of those estimates to top the prior week’s haul of 33.2 million bushels.

Analysts also expect USDA to report another 100,000 to 350,000 metric tons of soymeal sales last week, plus 8,000 to 45,000 MT of soyoil sales.

Overly dry conditions in southern Brazil has the country’s Agroconsult consultancy lowering its soybean yield estimates by 0.6% to 4.538 billion bushels. If realized, that harvest haul would still top last year’s output by 3.9%.

USDA’s monthly oilseed report is released later this afternoon. Analysts expect the agency to show a total soybean crush of 176.9 million bushels in February. If realized, that tally would be the largest February crush on record, but still lower than a record-setting 188.8 million bushels in January.

Brazil’s soybean exports in February more than doubled January’s tally and steadily outpaced year-over-year results, with 427.7 million bushels. Brazil also exported 102,400 metric tons of soyoil and 1,560,000 MT of soymeal in February.

Wonder why the grain markets had such a tepid response to yesterday’s USDA prospective plantings report, which is typically very highly anticipated? Duane Lowry has some thoughts in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 186,090 contracts, tracking slightly below Tuesday’s final count of 209,631.

Wheat prices dropped sharply Wednesday after weak financial and energy futures triggered some major technical selling. A strengthening dollar supplied additional headwinds. May Chicago SRW futures lost 18.5 cents to $5.5025, May Kansas City HRW futures fell 17.5 cents to $4.7550, and May MGEX spring wheat futures dropped 14.75 cents to $5.2450.

Ahead of Thursday morning’s weekly export report from USDA, analyst expect the agency to show wheat sales totaling between 9.2 million and 34.9 million bushels for the week ending March 26. That’s a broad range of guesses, but even the high end won’t match the prior week’s tally of 40.7 million bushels.

India’s wheat harvest this year could reach a record-breaking 3.903 billion bushels, but some farmers are worried about disruptions stemming from the nation’s 21-day lockdown to stop the spread of coronavirus. “We’ve never seen anything like this,” wheat farmer Ramandeep Singh Mann told Reuters. “We’ve no-one at all for harvest.” Even if farmers are able to get crops out of the fields in coming weeks, they still face significant logistical hurdles due to the lockdown.

The European Commission raised its forecast for EU soft wheat exports in 2019/20 by 73.5 million bushels a month ago to reach 1.102 billion bushels.

Jordan issued another international tender to purchase 4.4 million bushels of milling wheat from optional origins. Offers can be made until April 6, and the grain is for shipment between June and August.

Algeria purchased 9.2 million bushels of milling wheat from optional origins in an international tender that closed yesterday. The grain is for shipment in May or June, depending on origin.

Tunisia purchased 2.8 million bushels of durum wheat from optional origins in an international tender comprised of three consignments. The grain is for shipment in April and May.

Japan hopes to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction next week. The grain would be for arrival in Japan by late September.

Preliminary volume estimates were for 142,296 CBOT contracts, moving slightly ahead of Tuesday’s final count of 131,557.


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