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Afternoon Market Recap for Feb. 27, 2020

Soybeans bounce back, capture moderate gains.

Corn and wheat continue to crumble amid coronavirus concerns

China’s coronavirus is spreading to other countries and rattling a broad range of commodities in its wake. That included corn and wheat futures, which faced another round of cuts today totaling about 2%. Soybeans bucked the trend, fighting past moderate overnight losses to move into the green on a technical bounce after falling to multi-month lows earlier in the week, with March futures tracking 0.6% higher Thursday.

NOAA’s latest 72-hour cumulative precipitation map calls for very little additional rain or snow to arrive in the central U.S. through this weekend, with the agency’s latest 8-to-14-day outlook calling for a round of drier, warmer weather from March 5 to 11. And the latest updates to the U.S. Drought Monitor, out this morning, show most of the Midwest and Plains seeing drought-free conditions, with the exception of western Kansas and portions of Colorado.

This week’s financial selloff marches forward on Wall St. today, with the Dow tumbling another 650 points lower in afternoon trading to 26,303 on fears about the spread of the coronavirus and whether it could evolve into a full-blown pandemic. Reports from California earlier today indicate the state is monitoring more than 8,000 people for the illness. Those worries also continue to hammer energy prices, with crude oil down nearly 4% this afternoon to fall below $47 per barrel. Gasoline was down 3.5% this afternoon, with diesel sliding 1.7% lower. The U.S. Dollar softened moderately.

Corn prices continue to show sensitivity to tumbling financial and energy commodity prices, dropping another 1.8% Thursday on a round of technical selling. March futures fell 6 cents to $3.6450, with May futures down 6.5 cents to $3.68.

Corn basis bids were mixed at Midwestern processors Thursday, holding steady across most other central U.S. locations today. This week’s drop in futures prices has kept famer sales mostly in check for the past several days.

Corn old crop export sales spilled 31% lower from the prior week and 26% below the prior four-week average, with 34.0 million bushels. New crop sales added another 4.5 million bushels for a total tally of 38.5 million bushels for the week ending February 20. That was in the range of trade guesses between 31.5 million and 51.2 million bushels. Cumulative totals for the 2019/20 marketing year are now at 531.3 million bushels, still significantly behind last year’s pace of 1.005 billion bushels.

Corn export shipments fared much better, jumping to a marketing-year high of 33.3 million bushels last week and besting the prior four-week average by 20%. Mexico (11.0 million) and Colombia (8.8 million) were the top two destinations.

And anchored by some fresh Chinese purchases, U.S. sorghum export sales landed the largest weekly total in more than five years, reaching 17.5 million bushels for the week ending February 20. Chinese purchases of other commodities have been thin over the past several weeks, but the country appears to be agreeable to some bargain hunting when prices are low enough.

The International Grains Council expects a 1% uptick in harvested corn acres for 2020/21, based on an estimated upswing in U.S. acres this coming season. IGC’s forecast for 2019/20 world corn production was significantly lower year-over-year, at 1.112 billion metric tons.

In Argentina, the Buenos Aires Grains Exchange is projecting the country’s 2019/20 corn production at 1.968 billion bushels, moving 2% higher than the group’s prior estimates.

Preliminary volume estimates were for 613,621 contracts, sliding 11% below Wednesday’s substantive final count of 691,318.

Soybean prices dug out of an overnight hole to close Thursday’s session moderately higher, partly on spillover strength from soymeal after major competitor Argentina may soon be faced with higher export taxes, which could boost U.S. sales later this spring. March futures added 5.25 cents to $8.8625, with May futures up 3 cents to $8.95.

Soybean basis bids inched a penny higher at an Ohio elevator and moved 3 cents higher at an Iowa river terminal Thursday, holding steady across other Midwestern locations today.

Soybean exports showed the most downside this past week, with old crop sales sinking 31% lower week-over-week and 38% below the prior four-week average to 12.5 million bushels. New crop sales tacked on an additional 800,000 bushels for total sales of nearly 13.3 million bushels, versus trade guesses that ranged between 22.0 million and 33.1 million bushels. Cumulative totals for the 2019/20 marketing year are now at 1.063 billion bushels.

Soybean export shipments also tumbled 42% below the prior four-week average, with just under 22.0 million bushels. Mexico was the No. 1 destination, with 3.8 million bushels.

The International Grains Council says world soybean production could drop 5% in 2019/20 to 12.677 billion bushels, citing lower production from the U.S. this past season as a primary driver for the change. IGC thinks 2020/21 global harvested acres could rebound 4%, meantime.

The Buenos Aires Grains Exchange boosted its estimates for Argentina’s 2019/20 soybean crop by 2.6% from earlier projections to reach 2.003 billion bushels, citing favorable weather conditions. Harvest will commence late this spring into early summer.

Why do grain markets have a short-term bearish mentality, and what are the prospects for a rally later this spring or summer? Naomi Blohm, senior market adviser with Stewart Peterson digs into these questions and more in our latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 340,069 contracts, moving slightly ahead of Wednesday’s final count of 310,530.

Wheat prices followed a broad range of other commodities lower Thursday on a round of technical selling, with some contracts shedding more than 2% today. March Chicago SRW futures spilled 11 cents lower to $5.2925, March Kansas City HRW futures lost 10.25 cents to $4.42, and March MGEX spring wheat futures dropped 7.5 cents to $5.07.

Wheat saw old crop sales reach 14.0 million bushels, which was 10% better than the prior week but still 23% below the prior four-week average. Another 2.5 million bushels in new crop sales brought total exports to 16.5 million bushels last week. That was on the low end of trade estimates that ranged between 15.6 million and 25.7 million bushels. Cumulative totals of 647.3 million bushels this marketing year remain ahead of last year’s pace of 575.1 million bushels.

Wheat export shipments also trended lower last week, falling 32% to just below 15.0 million bushels. Mexico (3.24 million) and Japan (3.23 million) were the top two destinations.

Recently updated data for Russia’s 2019 grain production has the country’s total wheat harvest last year at 2.734 billion bushels. The country’s total grain harvest is up 0.4% from prior estimates to 121.2 million metric tons. Russia is the world’s No. 1 wheat exporter.

Worldwide, the International Grains Council is expecting 2% more acres across the globe, which could fuel production to a record 28.256 billion bushels for 2020/21.

Ethiopia issued a new international tender to purchase 7.3 million bushels of milling wheat, with a deadline of April 1.

Preliminary volume estimates were for 140,560 CBOT contracts, moving moderately ahead of Wednesday’s final count of 113,011.

grainstable

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