Today was pretty mundane for having a USDA monthly supply and demand report out in the morning. There were cuts to the soybean and wheat ending stocks, but the cuts did not appear to impress the trade. Trade has been slow since the trade war began and does not seem to have picked up since the Phase One Trade Agreement was signed. China has said they plan to honor their commitments to increase purchases of US ag products. There is hope that the corona virus is coming to a peak and thoughts are that the warmer weather in couple of months may curtail the spread of the virus.
· The energy markets are mostly higher with crude oil up 41 cents at $49.98/barrel.
· The US$ turned lower, down 86 at 98.74, the gold market is down 8-9 bucks at $1,568/ounce and the CD$ is stronger, up 0.00145 at 0.75235.
· DJIA down 20 at 29256, S&P up 4-5 at 3357 and NASDAQ up 8-9 at 9636.
· Implementation of the Phase One Trade Agreement and the reduced tariffs for US goods expected to take place this weekend.
· There will be no grain markets Sunday evening or Monday, in observance of the President’s Day Holiday. Trade will resume Monday evening at 7 PM CT.
· The USDA annual Ag Forum is scheduled for next Thursday and Friday.
Corn prices fell on weakness in the wheat market and a reduction in exports from the USDA supply and demand report out this morning. The South American crop is expected to be of decent size, allowing for ample amount of supplies for exports.
· Closes: March at $3.79 ¾, down 2 cents, July at $3.88 ¼, down 2 ½ cents, September at $3.87 ½, down 1 ½ cents, and December at $3.92, down 1 ½ cents.
· The USDA raised ethanol by 50.0 mb and lowered corn exports by a like amount, resulting in a net zero change in ending stocks.
· The drop in exports added insult to injury with the weekly corn inspections/exports well below where we need to be to meet the USDA target for the year.
· There are concerns about a significant increase in ending stocks for 20/21 with ideas of a sizable increase in planted and harvested acres this spring.
· Spreads: H/K 4 ½ carry, H/N 8 ¼ carry, N/Z 3 ½ carry.
Soybean prices garnered support after the release of the USDA’s monthly supply and demand report. Gains were limited from ideas of a record bean harvest in Brazil and a decent crop expected out of Argentina. Prices drew additional support from talk that the number of corona virus cases has begun to slow down.
· Closes: March at $8.84 ¾, up ½ cent, July at $9.10 ¼, unchanged, August at $9.14 ¾, unchanged and November at $9.19 ¼, also unchanged. The products were mixed with meal down 60 cents and oil up 1 point.
· The USDA lowered the 2019/20 US ending stocks 50 mb from a like amount increase in exports.
· The Brazilian soybean crop was estimated at 125.0 mmt, up 2.0 mmt from their January estimate. Argentina’s crop was left unchanged at 53.0 mmt.
· The USDA raised their Chinese import forecast 3.0 mmt to 88.0 mmt for the 2019/20 marketing year.
· Mostly favorable weather conditions continue for much of South America.
· Spreads: H/K 12 ¼ carry, H/N 25 ¼ carry, N/X 8 ¾ carry, X/F 4 ½ carry.
Wheat prices were on the defensive, despite a reduction in ending stocks and a hike in exports for most all classes of wheat. Egypt bought another slug of wheat from the Black Sea Region. The Chicago March dipped down to December lows on fund liquidation of long positions. We may have seen a haircut to the ending stocks, but the world is not hurting for supplies of wheat.
· March closes: Mpls at $5.31 ¼, down 2 ½ cents, KC at $4.67 ¾, down 4 ¾ cents and Chicago at $5.42, down 10 cents.
· Egypt’s GASC bought 360k tonnes of Russian and Romanian wheat (180k each) for LH March shipment.
· The USDA raised exports 25.0 mb and lowered ending stocks by a like amount for 2019/20.
· By class, the USDA raised HRW exports 5.0 mb, HRS exports 15.0 mb and White Wheat exports 5.0 mb.
· By class stocks to use ratios sit at: 56% for HRW, 43% for HRW, 36% for SRW, 28% for White and 16% for HAD.
· Spreads: Mpls H/K 9 ¾ carry (I would still like to wait for the dime), Kansas City H/K 6 ¼ carry, Chicago H/K 1 ¾ carry. Mpls March sits at a 62 ¾ cent premium to the KC March. The Chicago March sits at a 73 ¼ cent premium to the KC March.