Weekly Market Recap


Grains

The Chief Executive of the CN Railway Co stated that the CN lost capacity equivalent to 1 million tonnes of grain exports in February due to blockages caused by pipeline protesters. Bayer’s seeds will face new competition this year with Corteva’s soybean seeds, Corteva expects its Enlist E3 seed to make up about 20% of the 2020 crop and Bayer’s Xtend soybean demand is expected to flatline after three years of strong growth.

Corn

Corn exports for Brazil quiet, with the shipments in February down 78% from last year at an 8 year low for the month. The 6-10 day forecast for Brazil expects that dryness will increase in the west central areas, causing stress on the safrinha corn to increase. The 11-15 day forecast expects rains to help ease these stresses and improve soil moisture. Safrinha corn plantings are now set at 72% complete, vs 61% complete last week, the forecasted dry weather should allow for planting to finish up with no issues. It is expected that China’s corn demand for animal feed will fall by 3 million tonnes in 2019-20 due to the coronavirus effect the country’s restocking of chicken.

Corn export inspections hit the biggest total of the year at 896,000 tons. Ethanol production increased by 25,000 bpd this week to 1,079,000 bpd. This is the 4th best weekly production total of the year. Ethanol inventories increased by 0.3 million to 25.0 million barrels. This is the largest inventory total ever recorded. Margins declined and are now at negative 9 cents.  Corn export sales were poor, coming in right on the low end of expectations. This is the lowest sales total of the past 8 weeks. Sorghum sales were good as China was back buying a cargo. China + unknown account for 71% of this year’s sales.

 

Wheat

Paris wheat futures fell to the lowest price seen since December due to the expectation that Russia could harvest their second largest crop in history this coming season. Ukraine’s 2020 grain harvest could possibly fall to a low of 65 million tonnes due to a decrease in wheat planting this year.

Estimates for next week’s March supply and demand report peg U.S wheat ending stocks at 0.944 bb, compared to 0.940 in February. World ending stocks are estimated at 288.47 million tonnes, vs 288.03 million in February. Wheat export sales were decent, near the high end of expectations. Durum sales are really struggling with zero new sales this week. 4 of the past 6 weeks have seen zero new sales.

 

 

Soybeans

China has granted tariff exemptions for U.S soybeans to some of its crushers, the government has also asked these crushers that applied for exemptions for their monthly purchase plans. Argentina’s agriculture ministry stated that they will be raising soybean export taxes from 30% to 33%.  Argentina’s farmer groups are planning on holding a four-day sales strike next week due to the recent announcement that Argentina would be raising the export taxes on soybeans and products. The new tax hike in Argentina is expected to have an impact on farm investment and the amount of soybeans harvested in Argentina going forward. USDA attaché in Buenos Aires projects that Argentina’s 19/20 soybean crop will be 54.1 million tonnes, vs the USDA’s estimate of 53.0 million. Brazilian soybean exports remain strong, as they are set to see massive exports in March due to their record crop. A private industry analyst expects Brazil to harvest a record crop of 124.2 million tonnes despite the fact that RGDS has seen some crop failure due to drought.

U.S. Agriculture Secretary Perdue predicted yesterday that Chinese purchases of U.S soybeans would materialize in late spring to early summer. Soybean sales were really weak, missing the low end of expectations this week. This is the 3rd lowest sales of the year. Sales were below the 1 million ton mark for the 11th straight week. U.S. soybean sales to China for the week ended Feb 27th were the lowest seen in almost six months, coming in at just 6,012 tonnes of soybeans.

 

Livestock

Cash cattle have traded at $113-$114 this week which is down $2-3 from last week.  This has caused packer margins to jump sharply higher.  Margins were $55 last week but are at $116 to close this week.

Energies

The energy complex has sold off on the news that OPEC+ has failed to reach an agreement. Russia has resisted pressure from other OPEC members to make deeper production cuts and has reportedly pushed for extending the current production quota agreement. Front month crude has fallen over 8% in response. The average price for a gallon of gasoline at the pump is $2.408.  A month ago, prices averaged $2.458 and last year during the same period were $2.430.