Afternoon Market Highlights 4.14.20

Ami Heesh

Apr 14, 2020

Highlights

The grain markets got off to a rough start and stayed there throughout the session today.  Prices were under pressure from weakness in the energy markets, fallout of the ethanol and livestock markets, plant closures (ethanol and meat) or temporary shutdowns from the CoronaVirus situation.  The market is in need of some fresh supportive news and lots of it. That just not seem to be in the cards right now. 

  • The energy markets are struggling with crude oil down 1.87 at 20.54/barrel.
  • The US$ has a softer tone, down 425 at 98.92, the gold market is up 4-5 bucks at 1754 and the CD$ a freckle lower, down 0.0022 at 0.7193.
  • DJIA up 523 at 23914, S&P up 74 at 2833, NASDAQ up 322 at 8514.
  • StatsCan delayed their 2020 acreage estimates until early May.
  • May options expire at the close on April 24th. First Notice Day for May futures is April 30th with all long positions being reported after the close on the 29th.
  • The next USDA report is scheduled for May 12th. Any necessary changes to the harvest ed acres (from the USDA ‘s re-survey of unharvested corn and beans) are expected to show up in the May report.  I believe this will also be the first assessment of the 2020 winter wheat production. 

Corn

The corn market traded on the defensive from lack of fresh supportive news. US corn planting has begun in parts of Indiana and Illinois. Sharp reductions in demand for ethanol from travel restrictions domestically and internationally. There are concerns about possible reductions in feedstuffs for livestock with sharp weakness in the cattle and hog markets, along with meat plant closures. The May contract sits a half cent above its contract low ($3.25 ½). 

  • Closes: May at $3.26, down 5 ½ cents, July at $3.32 ¼, down 4 cents, September at $3.37, down 3 ¾ cents, December at $3.46 ½, down 3 ¼ cents.
  • Gulf premiums were 1-22 cents weaker for April and 1 cent weaker for May.
  • Hearing more and more talk of farmers looking to take prevent plant this year, given the ongoing cool weather conditions.
  • Spreads: K/N 6 ¼ carry, N/U 4 ¾ carry, N/Z 14 ¼ carry, Z/N1 24 ½ carry. Consider rolling short May hedges to the July at current levels.

Oilseeds

Soybean price traded lower, with the May contract closing below it $8.50 support level. Prices slumped from reports of Chinese bean imports for March were at 4.28 mmt, the lowest since February 2015. Prices also suffer from another record crop form Brazil and active farmer selling.   

  • Closes: May at $8.47, down 7 ¼ cents, July at $8.55 ½, down 6 ¾ cents, August at $8.58 ½, down 6 ¾ cents, November at $8.65 ½, down 5 cents. The products were weaker with meal down 1-2 bucks and oil down 16 points.
  • Gulf premiums were weaker early in the session but have since returned to unchanged for April and May.
  • March NOPA Crush report: average trade estimate at 175.163 million bushels of soybeans crushed and soyoil stocks at 2.067 billion pounds.
  • Private analyst Cordonnier estimates the Brazilian soybean crop at 121 mmt, from extended dryness over central and south central Brazil.
  • Spreads: K/N 8 ½ carry, N/Q 3 ¼ carry, Q/X 6 ½ carry, X/F 3 carry, X/F 8 ¼ inverse, X/N1 1 ¼ carry. 

Wheat

Wheat prices were on the defensive from plentiful global wheat supplies, despite frost concerns for the US winter wheat crop.  Ukraine wheat exports were up 20% over the past week, Russia continues to export wheat regardless of dry weather concerns and the implementation of export quotas and strength in their currency. There just seems to be adequate supplies of wheat to satisfy the world’s needs. 

  • May closes: Mpls at $5.21, down 6 ½ cents, KC at $4.82 ¼, down 11 ¾ cents, Chicago at $5.48 ¾, down 6 ¼ cents.
  • EU wheat prices traded lower on spillover weakness in the US wheat market and smaller than expected Egyptian wheat purchase.  Thoughts are that we will see then return to the market again soon.
  • Egypt’s GASC bought 120k tonnes of Russian wheat for LH May /FH June at $249.50 - $252.50 /tonne C&F.
  • Wheat prices eased on rain events moving through Europe and the Black Sea Region (Russia and Ukraine).
  • Domestic mills seem to be fairly flush with supplies for the time being. Spot floor bids had no quotes for 13 and 14 pro wheat and 15s were up 10-15 cents on 31 receipts.
  • Spreads: Mpls K/N 12 ½ carry, U/Z 11 ¼ carry, Kansas City K/N 7 ¼ carry, N/U 8 carry, U/Z 11 carry.