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February 28th - Midday Market Commentary

02/28/2020
February 28th - Midday Market Commentary

Grain prices are lower at midday:

Corn – ½  cent/bu (May @ 3.67 ½  )

Soybeans – 4 cents/bu (May @ 8.91)

Chi Wheat – 9 ¾ cents/bu (May @ 5.17 ¾ )

Cdn $ -0.00235 (74.58 cents)

WTI Crude Oil -2.29/barrel (44.80)

Stock markets continue to get pummelled on Friday, as panic selling from portfolio owners takes place, leading the market to it’s 7th straight day of losses.  Today’s trade is a little different from that of earlier in the week, as we are seeing massive gyrations in the index values over the course of the morning.  Dow futures currently sit down 450 points (25,102), but  Dow futures have been down as much as 900 points today, and at one point an hour ago, came within a whisker of being unchanged.  The point of this is that there are value buyers emerging in the market this afternoon.  Why wouldn’t someone who short sold stocks or equities earlier in the week take back some profits by buying before the weekend?

Having said that, the market is not poised for any significant rallies, as concerns over the COVID-19 virus become bigger, not smaller.  News services are dominated by stories of growing infection levels around the world, and the impact of those infections on economic activity is what is fuelling the downward pressure on prices.  One wire reported that a positive test on a single employee on a production line in a Hyundai in South Korea led to the assembly plant being closed, for fear of further infections.  Fears of this becoming commonplace will continue to create wild market swings.  I have personally spoken with some former colleagues that operate crushing and mill facilities in China that report that their plants are back up and running this week, following a month long shut down – and those people speak confidently of the worst being behind them from this Coronavirus.

From a grain perspective, there is very little news to trade.  Grains will continue to follow the overall market, although the significant weakness in wheat futures today is a reflection of wheat futures breaking through technical support.  Today, Chicago wheat broke through it’s 200 day moving average, which triggered further fund long liquidation.

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