Afternoon Market Highlights
3/3/2020 9:01:52 PM
Higher prices were seen across the grain markets on hopes of Chinese buying and Central Banks stimulus measures to help the global economy. There was talk that China was in the market for corn and wheat ....no confirmation as of yet.
- The Federal Reserve cut interest rates as an emergency measure to protect the economy from the effects of the spread of the coronavirus.
- The energy markets were stronger with Crude oil nearing $48/barrel (resistance at $50/barrel).
- The US$ traded lower after the fed rate announcement.
- DJIA dropped785 points after the fed announcement.
Corn prices traded higher on technical buying. Prices drew support form plans of stimulus infusion to help protect ideas of a weakening economy from the spread of the coronavirus and transportation restrictions.
- Closes: May at $3.81 ½, July at $3.83 ¾, September at $3.80 ¾, December at $3.84 ½. July 2021 closed at $4.01 ¾.
- ECB premiums remains strong, WCB not so much.
- There was chatter that China may be in the market for US corn.
- There were zero deliveries posted against the March contract.
- Spreads: K/N 2 ½ carry, N/Z ½ carry...staying pretty firm on quality concerns and lack of country movement.
Soybeans were supported by waning reports of cases and deaths in China and global stimulus efforts by the Central Bank. Prices garnered additional support form tax implications in Argentina and ongoing dryness. Gains were limited from and expected huge harvest out of Brazil.
- Closes: May at $9.03 ½, July at $9.13 ½, August at $9.16, November at $9.19 ¼.
- There are ideas/hopes that the US could get some additional bean business from export tax hikes and export restrictions in Argentina.
- Spreads: K/N 10 carry, N/X 5 ¾ inverse, X/F 2 ½ carry......interesting X/N1 ¾ inverse.
Wheat prices were stronger on chatter that China may be in the market for US wheat. Mpls took the lead as the trade was thinking they may actually be looking for spring wheat. I believe there is still the issue of zero tolerance for ergot in the wheat for China.
- May closes: Mpls at $5.34, KC at $4.58 ¼, Chicago at $5.27 ¼.
- There were 12 new deliveries posted against the Mpls March contract, zero deliveries in Chicago and 9 redeliveries in KC.
- There seems to be a bit of demand for wheat but am not sure how much the US will get their hands on.
- Japan is in the market for their routine food tender (24k tonnes of US spring wheat made the cut).
- More rains for EU wheat country, adverse weather conditions continue for Russia and Ukraine wheat areas.
- Australian farmers make plans for sowing more area to wheat because of the heavy rains prior to their planting season, which begins April/May.Production is expected to increase nearly 40% in 2020/21 versus 2019/20 where their production totaled just over 15.0 mmt from extremely dry soils.
- Spreads: Mpls K/N 9 ¼ carry, Kansas City K/N 6 ¾ carry, Chicago K/N ½ carry. Mpls gained on KC and Chicago.