Grains closed mixed on Wednesday:
Corn + 1 ¼ cents/bu (May @ 3.48 ½ )
Soybeans – 5 ¼ cents/bu (May @ 8.81 ½ )
Chi Wheat + 18 ½ cents/bu (May @ 5.80)
Cdn $ +0.01445 (70.475 cents)
WTI Crude Oil +0.48/barrel (24.49)
Markets were generally upbeat today, as Coronavirus stimulus packages dominated the airwaves, and gave some level of comfort that governments are at least trying to ensure that their citizens are equipped to weather some of the economic storm that is brewing as a result of quarantines and travel restrictions. With stock markets rallying, grains were able to spend the better part of the day in positive territory, although beans and corn did sell off into the close of trading, as did USA equities, with Dow futures only closing up 418 points (21,026) after being up almost 1300 points earlier in the day.
Early strength in corn was attributed to a USDA flash sale announcement of 138,000 tonnes to an unknown destination (assumed to be China). Optimism about potential further Chinese sales allowed corn to rally as much as 5 ½ cents/bu today, but unfortunately there were no more sales announcements. Of course, the ethanol story continues to be the overriding negative feature to the corn market, and today, despite gasoline futures rallying 9 and 10 cents per gallon, ethanol futures could only muster a penny per gallon gain. Analysts continue to try to predict how much ethanol capacity will be shuttered, with many arriving at a reduction in overall corn consumption for fuel of up to 400 million bushels from current USDA projections. The corn market NEEDS big Chinese purchases………
Soybeans struggled for the last half of the trading session as no Chinese business announcements led to sellers coming forward late in the day. Export sales for soybeans have been woefully under the pace needed to meet current USDA Supply and Demand analysis, but the market continues to hope for a Chinese miracle. Those hopes had been stoked earlier in the week by talk of port shutdowns in Argentina and Brazil due to the Coronavirus. Today, South American governments deemed port facilities to be essential services, and promised to do everything in their power to keep grains moving through them. Those announcements lessened the perceived need for China to come to the USA for beans as a result. ON the positive side of things, USA domestic crush margins for soybeans have rallied again this week, and now sit at 6 month highs, so the domestic crush totals for the year could be raised, but likely only by 30 to 40 million bushels at most.
Wheat values continue to scream higher, fuelled by speculators betting that wheat will continue to be the cheap carbohydrate of choice by consumers that are locked down by COVID-19. That seems to be the case as consumers attempt to hoard bread and crackers at their local supermarkets. European wheat values rallied today, but with the stronger USA futures, American wheat exporters are almost 50 cents per bushel above Russian indicated values. Russian news was a big factor in today’s wheat rally, as despite claims that Russia will not impose export quotas on wheat, Russian exporters complained today that they could not get new phytosanitary documents for wheat shipping. How this feature plays out in the next couple of days will speak volumes about the direction of wheat pricing.
On the day today, funds were thought to have bought 5,000 corn contracts (short 97,000), while selling 6,000 soybean contracts (long 4,000), and buying an estimated 10,000 Chicago wheat (now long 49,000).
Tomorrow morning, the USDA will release it’s Weekly Export Sales Report, for the period ended Thursday, March 19th. Expectations are for good corn sales totals, with soybeans and wheat sales expected to be modest. Trade guesses are listed below, in thousands of tonnes:
Estimates Last Week Last Year
2019/20 Corn 900 to 1800 904.5 904.5
2020/21 Corn 0 to 100 56.1 85.4
2019/20 Soybeans 400 to 800 631.6 181.6
2020/21 Soybeans 0 to 100 69.6 17.1
2019/20 Wheat 200 to 500 338.3 475.7
2020/21 Wheat 150 to 400 143.8 35.4
With our dollar up almost a cent and a half today, one would expect basis levels to be under pressure first thing tomorrow morning.