Weekly Market Recap


Grains

China will launch @ $200 million-dollar fund to combat an increasing infestation of armyworms along with a possible invasion of locusts across their agricultural sector this year. China’s Hubei, the center of the coronavirus outbreak has now asked firms to not resume work before March 11. This extends the previous no work edict that was to expire today.  In early trading, Deere & CO shares are up 8 ½ % after higher Q1 profits were reported.  The CFTC will reportedly propose rules changes today on how swap trades are reported to data repositories. The CFTC will propose a two-day delay for end users, including companies that use swaps to hedge their business, from the current 15-minute reporting requirement. In addition, the CFTC will propose a one-day delay for dealers and other large institutions to report block trades      

Corn

Destructive armyworms are expected to affect 6.67 million hectares of corn in China this year, hence the aggressive prevention and control measures being taken as mentioned earlier in this wire. Grain trade lobby Coceral is estimating EU 2020 corn production @ 65.0 million tons, up from 61.0 million tons in 2019.         

The weekly Ethanol report showed production was up by 7,000 barrels per day to 1,040,000 barrels per day. Stocks rose by 423,000 barrels to 24.78 million barrels. Ethanol margins were a penny higher this week and are now at break-even levels.  Export sales for 19/20 were 1,249,300 MT vs trade estimates of 700-1.0 MT. Sales for 20/21 came in at 1,000 MT vs estimates of 1-100 MT. Export sales for Sorghum were 49,600 MT for 19/20 and 33,000 MT for 20/21. The USDA Outlook Forum estimated 2020 corn plantings @ 94.0 million acres, up slightly from the average estimate of 93.6 million acres. This compares to 89.7 million acres in 2019. This morning, the forum has projected corn production for the 20/21 crop @ 15.460 billion bushels vs 13.692 billion bushels in 19/20. Yield is estimated @ 178.5 bpa vs 168.0 bpa in 19/20. Ending stocks for 20/21 corn are estimated @ 2.637 billion bushels compared to 1.892 billion in 19/20.          

Wheat

China is bracing for an increasing problem with armyworm pests this year. Wire story this morning states that already at least 170 hectares of wheat have been hit by the pest in china’s southwestern Sichuan province since December of 2019.                          

Export sales for 19/20 were 346,300 MT vs trade estimates of 400-650 MT. Sales for 20/21 were 60,100 MT vs estimates of 0-50 MT. USDA’s Outlook Forum estimated wheat plantings for 2020 @ 45.0 million acres vs the average estimate of 44.9 million vs 45.2 million acres a year ago. Early this morning the forum estimated 20/21 wheat production @ 1.836 billion bushels vs 1.920 billion bushels in 19/20. Wheat ending stocks for 20/21 were pegged @ 777 million bushels vs 940 million bushels in 19/20.       

 

 

Soybeans

Brazil’s national crop agency Companhia Nacional de Abastecimento estimates that country could export 9 million tons of soybeans in February. This would be an 80 % increase from February 2019.           

Soybean export sales for 19/20 were 434,900 MT vs trade estimates of 600-1.2 MT. Sales for 20/21 came in @ 3,400 MT. Soymeal sales for 19/20 came in @ 169,400 MT     vs trade estimates of 200-400 MT. Soybean oil sales were 42,000 MT for 19/20 vs estimates of 15-45 MT. The USDA Outlook Forum estimated 2020 soybean plantings @ 85.0 million acres vs the average estimate of 84.6 million acres. This compares to 76.1 million acres in 2019. Early this morning the forum estimated the 20/21 soybean crop @ 4.195 billion bushels vs 3.558 billion bushels in 19/20. Soybean yield was pegged @ 49.8 bpa vs 47.4 bpa in 19/20. Soybean ending stocks for 20/21 were estimated 2 320 million bushels vs 425 million bushels in 19/20.

Livestock

The cattle of feed report was friendly due to lower than expected placements.  The market was looking for 101.4% but the actual was only 99%.  Packer margins continue to slip and are now only $27 positive. 

Energy

Coronavirus cases have increased in China’s capital Beijing and in other parts of the world, reinvigorating concern about its impact to global economy and in turn demand for energy. A WTI price of $53 may not aggressively force US production to the sidelines quickly enough, OPEC+ may need to decide on added cuts or prices have to go lower.