Morning Highlights


Highlights

  • The financial and energy markets are mostly weaker as the US Senate passes the $2 Trillion coronavirus relief bill.
  • DOW futures are down 110 points higher after being modestly higher and crude oil is 50 cents lower.
  • The US$ index is down 670 ticks at 100.383.
  • The USDA’s planting intentions and March 1 grain stocks reports are still scheduled for release on March 31st at 11 AM CDT. 

Corn

  • The corn market is trading lower this morning as more ethanol plants slow or stop their grind. The ethanol industry struggles with low crude and unleaded gasoline prices as many state governments issue “stay at home” orders for non-essential workers due to COVID 19. Yesterday’s ethanol production report showed a weekly decline with a larger drop expected in the upcoming weeks.
  • As a result of the recent event, US corn carryout is growing with some guesses now pushing 2.2bb vs the current USDA estimate of 1.892bb
  • Reuters releases its survey of planted acres: Average trade estimate is 94.328 million with a range of 92.5 to 96.4 million. The 2019 acres were 89.7 million. March 1 stocks estimate is 8.125bb down from a year ago 8.613bb.
  • The market continues to hear daily rumors of China buying some US corn.
  • Rain falls across parts of the US as we head to planting season, though some farmers struggle to harvest the remaining 2019 crop.
  • Broiler egg-sets are up 3% and chick placements were up 4% from last year as poultry remains in a modest expansion.
  • Spreads are weaker in overnight trading on the unprecedented slowdown of ethanol demand: K/N 6 carry, N/U 5 ½ carry, N/Z 14 ¼ carry, Z/H 10 carry. 

Outlook:  Trading 1 to 3 lower, ethanol problems loom quite large. 

Oilseeds

  • Soybeans are trading lower as the overall economic tone is glum.
  • South America continues to struggle with logistical issues as soybean and soymeal movement has slowed in Argentina and Brazil due to coronavirus concerns.
  • US domestic soymeal demand is seeing a small updraft as a result of the ethanol slowdown and DDGs supply. Many traders feel the USDA will raise its crush estimate in the next few reports.
  • A Reuters survey on 2020 acres: the average trade guess is 84.865 million, with a range of 82.7 to 87.1 million. This compares to last year’s 76.1 million. The March 1 stocks estimate is 2.241bb, down from last year’s 2.727bb.
  • Malaysian palm oil was down 26 ringgit while China’s Dalian soybeans were higher.
  • Spreads are weaker: K/N 3 ½ carry, N/Q 1 ½ carry, N/X 4 inverse, X/H 16 ¼ inverse, which is in from a 30 cent inverse to begin the week. 

Outlook:  SK are 25 cents off yesterday’s high and the economic outlook still looks pretty rough. 

Wheat

  • Wheat is quietly lower overnight though the overall fundamental picture can be viewed as positive. Pressure comes from a negative tone to the corn market.
  • Continuing talk that Russia is going to restrict issuance of Phyto-sanitary export certificates and may meet to discuss the export situation provides underlying support.
  • Domestic and global flour demand remain strong as the consumer stays home to battle COVID 19. Mills and bakers try to refill depleted grocery store shelves.
  • The US winter wheat crop continues to improve in condition as temperatures and precip are favorable.
  • Paris milling wheat futures are weaker in overnight trading.
  • Spreads: Mpls K/N 8 ¾ carry, U/Z 10 ¼ carry, Kansas City K/N 4 ¼ carry, N/U 6 ¼ carry. Chicago K/N 12 inverse, N/U 1 ¼ inverse. 

Outlook: Trading lower as wheat may need some fresh news