Morning Highlights


Highlights

  • For the moment it seems that major concern over the coronavirus has eased.The Chinese have a travel ban on over 35 million people and 12 cities with the Chinese Lunar New Year just around the corner.
  • President Trump is expected to sign the USMCA during a white house ceremony next week Wednesday.Canada still has to ratify the agreement.
  • South Africa is expected to produce 13.3 MMT of corn in 2019/20, this would be a 13% jump from last year’s growing season.
  • President Trump is working on a trade deal with the United Kingdom before the end of this year.
  • Cattle on feed report out today; estimates are on feed 102%, placements 103%, and marketing’s 105%.
  • Export sales report out at 7:30 am. Corn estimated at 500k-900k MT, Soybeans at 600k-1.0 mil MT, Wheat at 300k-700k MT, Soymeal at 200k-450k MT, and Soyoil at 5k-26k MT.

 Corn

  • The overnight trade is seeing weaker numbers as the corn market was unable to hold the new highs reached yesterday.
  • There is continued concern over the quality of the corn crop in the northern plains as west coast exporters struggle to remain competitive.Traders are skeptical China will come to the PNW for U.S. corn given the poor-quality issues.
  • Ethanol production decreased this week by 46k bpd to 1,049,000 bpd.Ethanol inventories increased by 1.0 million to 24.0 million barrels, the highest stocks level since July.Net ethanol margins were 1 cent lower this week and are 12 cents negative.
  • Yesterday the USDA announced a sale of 255,224 MT of corn to Guatemala and unknown destinations for the 2019/20 crop year.
  • Spreads: H/K 5 ¼ carry, K/N 5 carry, N/Z ¾ carry.

 

Outlook:  Technical trade led us higher yesterday and the overnight isn’t seeing carried over strength, expect us to stay in the same sideways ranges.

 

Oilseeds

  • Another weaker trading session as we simple have no supportive news to trade and every passing day makes the market anxious that China isn’t in the market for our soybeans.
  • The premium that was built into the market prior to the Phase 1 signing continues to slip away.Now that we are seeing more of the potential with the South American crop, the market is back on the defensive.
  • Malaysian palm oil prices are seeing their first major course of correction since October as that market was feeling overbought.
  • March is trading at its lowest point since about mid-December and we knock on the door of 9.00 futures.
  • Spreads: H/K 13 ¾ carry, H/N 27 ½ carry, N/X 10 ½ carry, X/F 4 ½ carry.

 

Outlook: The pressure is going to continue to be felt until the market sees something supportive to trade or we find a level of major support.

 

Wheat

  • Wheat is feeling the downward pressure this morning as well.The rallying continues to be fund driven as there isn’t much for fundamental news to trade.
  • Rumors yesterday that China bought 8 cargoes of Australian wheat had traders skeptical as Australian wheat is the most expensive on the world market and quality is of concern.
  • The southern plains have switched back to a dry pattern and some concern over moisture deficiency in parts, especially Kansas.
  • Spreads: Mpls H/K 13 ¾ carry, Kansas City H/K 7 ¾ carry, Chicago H/K 1 ½ inverse.

 

Outlook: Wheat is having an impressive rally but in a technically driven market it can make things hard to predict.  Forward direction will be fund driven.