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Afternoon Market Recap for March 27, 2020

Could Russian quota lift U.S. wheat sales?

Wheat and soybean sales both move higher Friday, as corn settles moderately lower

Grain futures were narrowly mixed Friday amid some uneven technical maneuvering. Wheat prices trended higher on Russia’s call for export quotas, while some news out of Argentina kept soybean prices slightly firm today. Corn, meantime, continues to battle worries over large expected U.S. acres this season and lower ethanol demand, which triggered more technical selling.

The central U.S. could see plenty of wet weather in the next three days, per the latest 72-hour cumulative precipitation map from NOAA. Broad portions of the Corn Belt could see another 1” to 2” of additional rainfall through Monday. Further out, the agency expects to see cooler-than-normal conditions developing east of the Mississippi River between April 3 and 9, with mostly drier-than-normal weather likely during this time.

On Wall St., stocks cooled after seeing the biggest three-day rally in almost 90 years this past Tuesday to Thursday. The Dow spilled 550 points lower this afternoon to 22,001. Embattled energy futures were mixed Friday, with oil dropping 5% to just above $21 per barrel, while diesel firmed by 2% and gasoline rose nearly 4% today. The U.S. Dollar softened moderately.

Yesterday, commodity funds were net sellers of all major grain contracts, including corn (-1,500), soybeans (-3,500), soymeal (-500), soyoil (-3,000) and CBOT wheat (-6,500).

Corn prices pushed moderately lower on another round of technical selling Friday as traders fret over the prospects of another massive U.S. crop this year, coupled with waning ethanol demand. May futures dropped 2.75 cents to $3.46, with July futures down 2.5 cents to $3.5175.

Corn basis bids fell 2 to 6 cents across multiple Midwestern locations today.

Private exporters reported to USDA the sale of 4.5 million bushels of corn for delivery to unknown destinations during the 2019/20 marketing year, which began September 1.

Brazil’s Safras & Mercado projects the country’s total 2019/20 corn production will reach, 4.165 billion bushels, rising moderately above the group’s prior estimates of 4.122 billion bushels.

South Korea issued an international tender to purchase 2.2 million bushels of corn from optional origins that closes later today. The grain is for arrival in July.

Kyle Stackhouse is one of many farmers considering and implementing different measures on his operation to guard against the spread of coronavirus, including setting up remote work with his bookkeeper, visiting retailers on a call-in basis and more. Click here for some best-practice ideas on your own farm.

Jobless claims have risen sharply over the past week, meantime. AgCareers.com recently conducted a survey to see how ag employers have been affected recently. Respondents indicated that a small percentage have seen some level of change, from reduction in hours (8%), to layoffs (7%), while 1% were dismissed from employment. Click here for more trendspotting analysis.

The EPA announced moves to help struggling oil refineries today, including a waiver for anti-smog requirements and extending the deadline to show compliance over biofuels laws. The agency also said it will not revisit or rescind any of its past exemptions, stating in a press release that “investigating and initiating enforcement actions against small refineries that were previously subject to an exemption is a low priority for the agency.” Ethanol futures were down again today, with May futures sliding another 0.5% lower to $0.986.

Through March 24, corn speculators had a net short position totaling 157,151 contracts.

Preliminary volume estimates were for 220,132 contracts, down slightly from Thursday’s final count of 23,290.

Soybean prices firmed slightly Friday on some technical buying partly spurred by soy crush news from one of the biggest U.S. competitors, Argentina. (Read below for details). May futures added 1.25 cents to $8.81, while July futures inched half a penny higher to $8.8525.

Soybean basis bids fell 2 to 5 cents at multiple Midwestern processors while holding mostly steady elsewhere across the central U.S. today.

Private exporters reported to USDA the sale of 6.0 million bushels of soybeans for delivery to Mexico during the 2019/20 marketing year, which began September 1.

Brazil’s Safras & Mercado slightly lowered its production estimates for the country’s 2019/20 crop to 4.564 billion bushels.

Argentina’s soybean supply for the country’s crushing plants is thought to be down by 50% or more and trending lower still, amid logistical tie-ups related to the coronavirus pandemic. Argentina is the world’s No. 1 exporter of soymeal and No. 3 exporter of soybeans.

Through March 24, soybean speculators had a net short position of 10,391 contracts.

Preliminary volume estimates were for 163,922 contracts, edging fractionally above Thursday’s final count of 162,853.

Wheat prices firmed Friday on news that Russia may enact export quotas starting next month. May Chicago SRW futures gained 2.5 cents to $5.7125, May Kansas City HRW futures picked up 1.5 cents to $4.8875, and May MGEX spring wheat futures added 5.75 cents to $5.39.

Russia’s agriculture ministry is supporting a move to limit wheat, corn and other grain exports to 7 million metric tons between April and June to guarantee its domestic demand needs are met over the next three months. Russia is the world’s No. 1 wheat exporter.

Ukraine’s economy ministry is signaling to grain traders to limit wheat exports during the 2019/20 marketing year to 742.2 million bushels. The country’s current wheat export tally has already reached 87% of that target.

Turkey has made provisional purchases of 6.4 million bushels of wheat from optional origins in a series of tenders that closed earlier today. Much of the total is expected to be sourced from the Black Sea region. The grain is for shipment in April.

Through March 24, CBOT wheat speculators had a net short position of just 5,745 contracts.

Preliminary volume estimates were for 182,414 CBOT contracts, tracking above Thursday’s final count of 163,529.

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