Morning Highlights


Highlights

  • The coronavirus continues to dominate the headlines as the reported death toll is now at 908 people with 40,171 cases confirmed. President Xi said they will avoid large scale layoffs and that China will strive to meet its economic and social targets.
  • President Trump is going to release his $4.8 trillion budget proposal at 11:30 am CT today. It is expected to be objected by Congress due to large foreign aid cuts and cuts to social safety net programs.
  • The WASDE report for February will be released tomorrow, the 11th, at 11:00 am CT with expectations of a mundane report with no demand impacts having yet been made by the phase-one trade deal.
  • China’s consumer price index was 5.4% above last year vs. expectations of 4.9%.
  • As of 7:00 am CT: US Dow futures are down 19, WTI crude oil is down 6 cents, USD is down .056, and Brazilian real has weakened to 4.32 real to 1 USD.

Corn

  • Corn is weaker overnight, dropping back down from Friday’s bounce higher.
  • The WASDE report set for release tomorrow morning isn’t expected to bring much change to the fundamental scenario. CONAB out of Brazil will is set to release their latest estimates as well.
  • The funds increased their short in the latest commitment of trader’s report by 26,514 contracts to be net short 55,990 contracts.
  • Lack of farmer selling is being seen across the Corn Belt with futures at the low end of the price range. Safrinha corn planting is coming along in Brazil as the market watches weather down there and export business out of the US.
  • Spreads: H/K 5 carry, H/N 9 carry, H/Z 10 ¾ carry.

 Outlook:  Back and forth price action from last week continues into this week with prices back down close to support levels.

 Oilseeds

  • Soybeans are higher overnight, continuing to gradually climb higher.
  • The February WASDE report set for release tomorrow is not expected to show much change across the soy complex. CONAB is to release their latest estimates tomorrow as well with the expectations they will increase their soybean estimate to between 124-128 MMT vs. USDA’s latest estimate of 123 MMT.
  • Funds were sellers in the latest commitment of trader’s report with the net short position increasing by 31,403 contracts to 82,358 contracts short. The funds made a new record short position in soybean meal at 64,377 contracts.
  • China continues to reiterate they will meet the phase one trade deal requirements amid the coronavirus outbreak, time will tell. The US wasn’t expected to pick up much export business to China in the near term with South America coming to market with their crop.
  • Dalian soybeans were 4 ¾ cents higher, soymeal was 0.90 higher and corn 4 ¾ cents higher. Malaysian palm oil futures were down 59 ringgits to 2,754 ringgits.
  • Spreads: H/K 13 ¼ carry, H/N 26 ¼ carry, H/X 36 ¾ carry, N/X 10 ¾ carry.

 Outlook: The technical’s have turned favorable but with a big crop coming from South America and lack of Chinese buying, upside is to be limited.

 Wheat

  • Wheat is mixed overnight as EU Matif wheat futures are slightly higher.
  • Tomorrow’s WASDE report is not expected to show much changes from January’s report with ending stocks last estimated at 965 million bushels.
  • Commitment of trader’s report was quiet with funds in Chicago wheat still long at 52,161 contracts. KC wheat has a small net long position and Minneapolis wheat a small net short position.
  • Algeria announced a tender last week for today that will be for April shipment.
  • Spreads: Mpls H/K 9 ½ carry, Kansas City H/K 5 ¾ carry, Chicago H/K 1 ½ inverse.

 Outlook: Wheat has been trading sideways in the past week and expecting more of the same as the market is waiting for international business to pick up, keeping an eye of Chinese purchases.