Market Commentary  03/30/20 1:54:51 PM Printer Friendly VersionPrinter Friendly Version

Monday March 30, 2020

Corn futures closed lower again today. One of the main storylines that continues to dominate the corn market is ethanol profitability as crude oil & gasoline futures are well beneath ethanol futures, causing many corn plants to alter/slow production; with some even suspending operations on negative margins. There is talk in the market today that U.S. ethanol producers may be on track to shut off closer to 4 bln. gallons of annualized output vs. the 2 – 3 bln. gallons that had previously been talked about. Crude oil futures hit an 18-year low today, after falling below $20. Reports are circulating that pump prices at gas stations in some states are now below $1 a gallon. On a positive note, corn export demand has been improving. Today’s weekly export inspections report exceeded last week’s corn total by 32%, at 49.96 mln. bu. This also surpassed the roughly 44.08 mln. bu. “needed” per week to reach USDA’s annual marketing year projection. Moving forward, Corn feed demand is also expected to improve as DDG production slows. Tomorrow will bring the updated U.S. stocks and acreage reports at 11am CST. The trade expects to see March 1st corn stocks near 8.125 bln. bu. (well below the past three years) while acres are expected at 94.3 mln. vs. 89.7 mln. acres last year. With spring planting season approaching, market partipants are monitoring the weather- though it’s taking a backseat to other storylines at the moment. The Midwest forecast currently calls for an active weather pattern at the end of this week and the beginning of next week. There are reports that some corn planting could take place in central Illinois later this week.

Soybeans started the day firmer but ended the session mixed. Spillover weakness from the energy markets along with position squaring in front tomorrow’s USDA reports weighed on prices. Traders continue to monitor global supply disruptions for soybeans and soymeal due to the coronavirus outbreak. Argentina appears to be struggling the most, as supplies of beans to their crushing plants are estimated to be down by half and falling. This is reportedly due to municipalities citing health concerns and defying a government order which would allow trucks to reach the plants. This is limiting meal exports out of the world’s top soymeal supplier and the timing of these delays is proving challenging for China, as their soymeal inventories are reportedly at their lowest level in 10 years. This morning’s weekly U.S. soybean export inspections were disappointing at just 15.21 mln. bu. This falls short of the approximate 28.89 mln. bu. “needed” per week to meet USDA’s annual export forecast. However, USDA did announce flash sales of 285,000 tons of beans for delivery to Mexico for the 20/21 marketing year. Harvest is progressing in S. America. As of March 26th, 76% of the Brazilian bean harvest was estimated to be complete, while early estimates peg Argentina’s bean crop near 6-7% harvested. Tomorrow’s upcoming USDA reports are expected to still show ample stocks of U.S. beans as of March 1st, near 2.241 bln. bu. and an acreage projection of 84.7 mln. vs. 76.1 mln. last year (remember USDA put numbers together on acres before the market rearranged itself on ethanol demand.)

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