Afternoon Market Highlights
4/9/2020 7:03:24 PM
Mostly positive day in the grain markets from strong export sales numbers and technical buying. Prices were able to shrug off much of the drop in ethanol use, with a sizable cut expected after seeing the sharp drop in the past two weeks ethanol production reports. The OPEC meeting today was success with reports of a 10.0 million barrel per day cut to world production now through June.
- The energy markets were mostly weaker with crude oil down 1.90 at 22.76/barrel.
- The US$ was weaker at 99.57, the gold market was up 50-51 bucks at 1724 and the CD$ was up 0.00345 at 0.7164.
- DJIA up 285.80 at 23719, S&P up 52 at 2779 and NASDAQ up 62 at 8153.
- StatsCan is scheduled to release their 2020 acreage estimates on April 24th.
- May options expire at the close on April 24th. First Notice Day for May futures is April 30th with all long positions being reported after the close on the 29th.
The corn market opened stronger on technical buying. Prices drew additional support from solid export sales numbers (even with taking out the already known 500 tmt Chinese purchase). Corn retreated somewhat after the release of the USDA data. Corn planting has begun in parts of the ECB (Indiana and Illinois) while delays are expected in the WCB form recent snow and chilly temperatures.
- Closes: May at $3.31 ¾, up 1 ¾ cents, July at $3.36 ¾, up 1 ¼ cents, September at $3.41 ¾, up 1 ¼ cents, December at $3.50 ¾, up 1 ½ cents.
- Weekly export sales were solid at 1.84 mmt, above what the trade was looking for. Japan was this week’s top destination.
- The USDA whacked 375 million bushels from the 2019/20 ethanol, imports were reduced 5 million bushels and feed usage was up 150 million bushels.
- 2019/20 ending stocks were raised 200 million bushels to 2.092 billion bushels. This compares to the average trade estimate at 2.004 bb and was in-line with the range of estimates (1792-2150).
- CONAB pegged the Brazilian corn crop at 101.868 mmt versus 100.083 mmt previously. The USDA left their projection unchanged at 101.0 mmt.
- Spreads: K/N 4 ¾ carry, N/U 4 ½ carry, N/Z 13 ¾ carry, Z/N1 22 ¾ carry.
Soybean prices were higher on strong meal demand for livestock. Tight supplies of soymeal continue as the need for alternative feedstuffs increased from the lack of available DDG’s. Brazil soybean exports are expected to be strong through April as they continue to be the market for Chinese soybean purchases.
- Closes: May at $8.63 ½, up 9 cents, July at $8.71, up 9 ¼ cents, August at $8.73 ½, up 9 cents, November at $8.75 ¾, up 7 ¾ cents. The products were mixed with meal down 30 cents and oil up 23 points.
- Weekly export sales were reported at 877 tmt, near the low end of what the trade was looking for.
- The USDA made no changes to the 2018/19 balance sheet. For 2019/20 crush was raised 20 million bushels, exports were lowered 50 million bushels. Total use was down 56 million bushels and ending stocks were raised 55 million bushels to 480 mb, above trade range of 385-475 mb).
- The Brazilian soybean crop was reduced to 124.5 mmt versus 126.0 previously and the Argentine bean crop was reduced to 52.0 mmt, down from 54.0 mmt in March.
- Spreads: K/N 7 ½ carry, N/Q 2 ¾ carry, Q/X 2 ¼ carry, X/F 3 carry, X/H 8 ½ inverse, X/N1 ¾ cent inverse. Keep a watch on the X/H1 spread as it works itself back towards even money.
The wheat market was having fun trading higher on adverse weather in Europe and the Black and tightening world supplies as countries begin to curb their wheat exports to help against rising domestic prices. Prices drew additional support from chilly temperatures forecast to move into the Southern Plains this week and into the weekend.
- May closes: Mpls at $5.32 ½, up 2 ½ cents, KC at $4.92, up 14 cents, Chicago at $5.56 1/2, up 8 ¼ cents.
- Weekly export sales were light at 376 tmt, near the low end of what the trade was hoping for.
- The 2018/19 balance sheet was left unchanged. The 2019/20 balance sheet saw a 15 million bushel decrease in domestic use and exports, resulting in a 30.0 million bushel increase in ending stocks.
- The change rise in ending stocks was primarily from a 10.0 mb reduction in HRW domestic use and exports and a 5.0 million bushel reduction in SRW domestic use and exports. Spring wheat ending stocks were basically steady going from 249 mb carryout to 250 mb carryout.White winter wheat and durum balance sheets were left unchanged this time around.
- Spreads: Mpls K/N 11 ¼ carry (I’m shooting for 12 cents with a few weeks to go yet), Kansas City K/N 6 ¾ carry, Chicago K/N ¾ carry.