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Veteran Advisor

Floor Talk, April 9, 2020 (Report Day)

At midsession:

At midsession, the May corn futures are 2 1/4¢ higher at $3.32 1/4. July corn futures are 1 3/4¢ higher at $3.37 1/2.

May soybean futures are 7 3/4¢ higher at $8.62 1/4. July soybean futures are 7 1/4¢ higher at $8.69 3/4.

May wheat futures are 7 1/2¢ higher at $5.55 3/4.


May soymeal futures are $1.10 per short ton higher at $293.90.

May soy oil futures are $0.27 cents higher at 27.45¢ per pound.



In the outside markets, the NYMEX crude oil market is $1.20 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 462 points higher.

 

Mike

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At 11:00am:

 

USDA SAYS:

NOTE: USDA dropped corn-use-for ethanol by 375 million bushels. 

U.S. Ending Stocks

In its April Supply/Demand, WASDE Reports Thursday, the USDA pegged the U.S. 2019/2020 corn ending stocks at 2.092 billion bushels vs. the trade’s expectations of 2.00 billion and the USDA’s March estimate of 1.89 billion.

For soybeans, the USDA estimates U.S. 2019/2020 ending stocks at 480 million bushels vs. its estimate of 425 million last month and the trade’s expectation of 430 million.

The USDA sees the U.S. wheat ending stocks at  970 million bushels vs. the trade’s expectation of 940 million and the USDA’s March estimate of 940 million.

 

World Ending Stocks

In its report, the USDA pegged the 2019/2020 world’s corn ending stocks at 303.2 million metric tons (mmt.) vs. the trade’s expectation of 298.5 mmt. and the USDA’s March estimate of 297.34 mmt.

For soybeans, the world’s soybean ending stocks were pegged at  100.5 mmt. vs. the trade’s expectation of 101.1 mmt. and the USDA’s March estimate of 102.44 mmt.

In its report, the USDA sees the world’s 2019/2020 wheat ending stocks at 292.8 mmt. vs. the trade’s expectation of 287.4 mmt. and the USDA’s March estimate of 287.14 mmt.

 

2019/2020 World Crop Production

 

On Thursday, the USDA pegged the 2019/2020 Brazilian soybean production at 124.5  mmt. vs. the trade’s expectation of 123.9 mmt. and the USDA’s estimate last month of 126.0 mmt.

For corn, Brazil’s output is seen at 101.0 mmt. vs. the trade’s expectation of 100.6 mmt. and the USDA’s March estimate of 101 mmt.

For Argentina’s soybean output, the USDA pegged its crop at 52.0 mmt. vs. the trade’s expectation of 52.5 mmt. and the USDA’s March estimate of 54.0 mmt.

Argentina’s 2019/2020 corn crop is pegged at 50.0 mmt. vs. the USDA’s previous estimate of 50.0 mmt. and the trade’s expectation of 49.6 mmt.

 

 

Trade Response

--Sal Gilbertie, Teucrium Trading, says that today’s April WASDE was true to its nature.

“It shed little light on the markets between the March planting report and the much anticipated May report that will give a glimpse into the coming 2020/2021 crop year. The COVID-19 related adjustments reflected in today’s report were largely anticipated and provide few incentives for market participants to change their current outlooks at this time,” Gilbertie says.

--Jason Roose, U.S. Commodities, says that the grains have reacted mixed after today's April USDA Supply/Demand and Crop Production Reports.

“There were many pieces to this puzzle for these reports, for the world to see. Both corn and soybean yields were left unchanged, ending stocks were increased on both corn and soybeans with loss of demand in some areas. Plus, ethanol demand was reduced in corn, increasing ending stocks. But, feed demand was increased by 150 million bushels, increasing ending stocks from 1.892 to 2.092 billion," Roose says.

For soybeans, the market is reacting positive, with an increase in ending stocks, a reduction on exports but an increase in crush numbers. Plus, a drop in South America bean production was a minor surprise. The focus will soon shift to weather in the U.S., as very little risk premium is priced into this market," Roose says.

 

---

Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that it was somewhat of a lackluster report.
"The most interesting category of this report to me moving forward will be exports and feed usage. The last few weeks have found really nice export numbers for US corn - this could be our saving grace. The rest of the world seems to be noticing that US corn is on clearance and as they say, the cure for low prices is low prices. Feed usage is one that we have been looking for revisions high in. Given the high placement numbers that we saw this winter. While the USDA would not make revisions to yield lower for 2019, they may make the needed adjustments on the demand side of the balance sheet," O'Connell says.

She added, "Soybeans surprisingly showed a growing balance sheet with a reduction in exports that was not fully offset by increased crushings. No surprise in crush numbers being higher. Crush has been one of the bright spots in U.S. ag as of late and that is reflected in the report. Exports were reduced, not necessarily a surprise given our pricing in the global market. We will continue to monitor this number however, should some of the turmoil in SA materialize - both word jousting with China and possible port slow downs due to COVID 19 - the U.S. may find buyers. Particularly if crush margins remain strong. China would not want to miss out on that with any slow down in shipments," O'Connell says.

 

What say you?

 

Mike

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At 8:45am:

In early trading, the May corn futures are 3¢ higher at $3.33. July corn futures are 2 3/4¢ higher at $3.38 1/2.

May soybean futures are 1 3/4¢ higher at $8.56 1/4. July soybean futures are 2 1/4¢ higher at $8.64.

May wheat futures are 6¢ higher at $5.54 3/4.

May soymeal futures are $0.50 per short ton lower at $292.30.

May soy oil futures are $0.12 cents higher at 27.30¢ per pound.



In the outside markets, the NYMEX crude oil market is $1.18 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 325 points higher.

On Thursday, the Federal Reserve announced another $2.3 trillion in funding for COVID-19 coronavirus economic relief.

Meanwhile, Americans are losing their jobs at a historic pace.

On Thursday, the U.S. Jobless Claims Report showed 6.6 million people filed for unemployment, in the last week. When combined with the last two week's reports, a total of 16.7 million Americans have filed for unemployment, since March.

Separately, the USDA’s Weekly Export Sales Report Thursday shows strong corn demand figures.

Corn= 2.45 million metric tons vs. the trade’s expectations of between 1.20-1.7 mmt.

Soybeans= 876,000 mt. vs. trade’s expectations of 400,000-1.4 mmt.

Wheat= 376,000 mt. the trade’s expectations of between 200,000-500,000 mt.

Soybean meal= 193,300 mt. the trade’s expectations of 150,000-275,000mt.

Al Kluis, Kluis Advisors, says that the grain markets face a number of issues that block any rally attempts.

"U.S. grain prices have settled in a very low volume and tight trading range. We are waiting to turn the corner on COVID-19: when will people be able to go back to work? Demand continues to be stagnant. Until we see that pick up, grain prices will be limited on the upside," Kluis told customers in a daily note.

Kluis added, "Demand destruction from ethanol scaling back will take several months to bounce back. Corn exports alone cannot pick up that lost demand."

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At 8:00am:

USDA Weekly Export Sales, Thursday, shows strong corn sales.

Corn=  2.45 million metric tons

Soybeans=  876 million metric tons

Wheat=  376,000 metric tons

Soymeal = 193,300 metric tons

For corn: Net sales of 1,848,900 MT for 2019/2020--a marketing-year high--were up 72 percent from the previous week and 41 percent from the prior 4-week average.  Increases primarily for Japan (702,600 MT, including 130,800 MT switched from unknown destinations and decreases of 6,500 MT), South Korea (331,900 MT, including 86,000 MT switched from unknown destinations and decreases of 4,300 MT), Mexico (179,600 MT, including decreases of 1,700 MT), Saudi Arabia (139,100 MT, including 135,000 MT switched from unknown destinations), and Israel (65,000 MT), were offset by reductions for Nicaragua (200 MT). 

For 2020/2021, net sales of 608,800 MT were for China (504,000 MT), Mexico (99,5000 MT), unknown destinations (4,000 MT), and Guatemala (1,300 MT).  Exports of 1,290,300 MT--a marketing-year high--were up 3 percent from the previous week and 31 percent from the prior 4-week average. 

Mike

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3 Replies
Highlighted
Veteran Advisor

Re: Brazil Precip bears watching.

Brazil appears to be getting a little short of precip. Pollination isn't for another few weeks but the situation bears watching.

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Highlighted
Veteran Contributor

Re: Floor Talk, April 9, 2020

Can't give US farmers more for our crops and livestock but you ***** can pay other countries to import.

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Highlighted
Honored Advisor

Re: Floor Talk, April 9, 2020

Flint hills resources is still producing E

Just put out e mail couple days ago wanting to sign us up on their average price contract .

Their basis sucks but are still disposing of corn.

Way better than "no bid"

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