3/25/2020 6:58:58 AM
- The financials were higher but have turned lower and energy markets are mixed as the US Congress and the White House reached an agreement on a $2 Trillion economic stimulus package.
- DOW futures are down 160 points after being modestly higher and crude oil is lightly mixed.
- The US$ index is down nearly a ½ point at 101.166.
- The USDA’s planting intentions and March 1 grain stocks reports are still scheduled for release on March 31st at 11 AM CDT.
- The corn market has traded both sides overnight, firming on an economic stimulus package but corn still has the underlying issue of poor ethanol demand. The ethanol industry continues to struggle with low crude and unleaded gasoline as ethanol futures remain at a modest premium to RBOB. Ethanol production stats will be released this morning.
- Acreage polls for 2020 circulate, with estimates ranging from about 92 to 95 million. A struggling ethanol industry and the fertilizer supply are two influences.
- Large spec and managed money funds have trimmed their net short position in the past few days, as managed money is thought to be net short at 69,000.
- Overall global shipments of corn have seen an uptick from the US, South America and Ukraine.
- For now, futures seem to be consolidating ahead of next week’s acres and March 1 stocks report.
- Slow ethanol use because of COVID 19 is causing some plants to announce a slowdown or closure. Nearly every day there is an announcement from a plant.
- Spreads are firm in overnight trading as exports influence, despite domestic demand issues. K/N 4 carry, N/U 4 carry, N/Z 12 ¾ carry, Z/H 9 ¼ carry.
Outlook: Trading slightly better but ethanol problems loom quite large.
- Soybeans trade slightly better, boosted by overnight news that Congress has agreed with the White House on an economic stimulus package to battle the coronavirus impact on the economy.
- Continuing optimism that China will begin to fulfill Phase 1 obligations buy buying more US soybeans. There has been light interest in nearby timeframes on headlines that China’s nearby supply has tightened. The US becomes more competitive in the latter part of 2020 when the US will be coming off the new crop harvest.
- The soymeal situation around the globe also offers support with threats of slowing movement of beans and meal into and out of towns, ports and plants in an effort to slow COVID 19’s spread.
- The US crush industry runs strong with a very positive board crush margin.
- Brazil’s currency weakness keeps the Brazil farmer selling this crop and next year’s crop at the highest prices in six years. If they are selling it, they plan on growing it.
- Technically SK filled the chart gap at $8.88 ½ from March 9th in overnight trade.
- Malaysia palm oil is up 30 ringgit and China’s Dalian soybeans and Dalian soymeal are sharply higher.
- Spreads are weaker: K/N 1 ½ carry, N/Q even $, N/X 10 ½ inverse, X/H 20 ¼ inverse.
Outlook: Trading better on beans but fading as nearby soymeal sees a downdraft.
- Wheat is quiet overnight without any major fresh news to influence.
- Strong domestic and global flour demand remain the story as mills and bakers try to refill grocery store shelves stressed by the world’s consumer.
- In other overnight news, South Korea passed on its feed wheat tender, Algeria bought 240tmt of optional origin (France likely) milling wheat and Iraq says it needs to buy 1.0 mmt of wheat for its food rationing program and to build strategic stocks.
- Overall the US winter wheat crop appears in improving condition as overall temperatures and precip are above normal.
- Black Sea and French FOB export remain well below FOB US offers.
- Paris milling wheat futures are weaker.
- Spreads: Mpls K/N 8 ¾ carry, U/Z 10 ¼ carry, Kansas City K/N 4 ¾ carry, Chicago K/N 10 ¼ inverse.
Outlook: Fractionally mixed trading as wheat may need some fresh news