Midday Comments: 4/28/2020

Corn extended Sunday night losses, wheat maintained its overnight setback, & soybeans reversed late morning to losses on Monday as continued losses in crude oil & worries about both domestic & export demand kept grain futures on the defensive.  Monday morning’s USDA Weekly Grain Export Inspections data for the week ended April 23 were an improvement from prior weeks, but shipments for corn (42.446 mb) barely reached the average needed (42.0 mb) to reach USDA’s export forecast, & soybeans (20.420 mb) & wheat (18.421 mb) shipments fell far short the of 27.5 mb & 28.7 mb average paces, respectively, needed to reach USDA’s 2019/20 export forecasts.  Grain sorghum exports (8.939 mb) were again robust—the highest since March 1, 2018--with China (8.128 mb) the dominant destination.  Japan (16.640 mb), South Korea (10.165 mb) & Mexico (8.351 mb) took most of last week’s corn, while Egypt (4.739 mb), Mexico (3.531 mb), Indonesia (2.792 mb), Japan (2.745 mb), China (2.679 mb) & Morocco (1.047 mb) were the only nations taking at least 1 mb of US beans last week.  Mexico (3.067 mb), Thailand (2.968 mb) & South Korea (2.400 mb) topped the list of 12 nations that shipped at least 0.402 mb of US wheat last week.  Cumulative corn inspections now stand at just 877.7 mb—down 486.6 mb from last year & the least exports at week #34 since 2012/13.  Soybean inspections have reached 1,230.1 mb--up 71.3 mb from last year, but the second-worst shipments since 2011/12 at week #34. Wheat inspections now total 826.8 mb—up 40.1 mb from last year’s rate & the highest for market week #47 in three years.  Wheat inspections have been below last year for seven of the most recent 10 weeks, suggesting exports are unlikely to exceed USDA’s 985 mb export projection. At Monday’s close, May corn futures plunged 10.25c, Dec. corn dropped 7.25c, May beans lost 3.25c, Nov. beans eased 1.25c lower, May soymeal declined $2.40/ton, May soyoil edged 0.06c/lb. lower, & May & July soft red winter wheat each tumbled down 5.75c.  The fact that June WTI crude oil futures plummeted $4.16 to just $12.78/barrel led traders to worry that it, too, was at risk of falling below zero like the now-expired May contract did last week.  Crude oil continues to be seen as a proxy for global economic health, so weakness in that commodity colors demand prospects for other assets, too. 
 
Grains attempted to rebound overnight even though Monday afternoon’s release of USDA’S Weekly Crop Progress report indicated that US farmers were ahead of the 5-year average for corn & planting progress. Corn planting surged 20% higher to 27% completed—7% above the 2015-19 average.  Soybean sowing jumped 6% to be 8% done—4% ahead of the 5-year average.  By contrast, wheat had reason to rally after USDA lowered winter wheat conditions by 3% to 54% good-excellent—3% below last year--& spring wheat planting advanced only 7% to be 14% completed—15% behind the 5-year average.  Corn stalled out with a 2.5c gain overnight & faded even though June WTI crude oil recovered from a retest of $10.  At the 7:45 am pause in electronic trading, May corn futures were up 1/2c, Dec. corn was 1c higher, May beans were up 2.75c, Nov. beans were 3.75c higher, May soymeal was up $0.30/ton, May soyoil was 0.23c/lb. higher, & May & July SRW were each up 4.25c.
 
Corn gave back its overnight strength & headed for a retest of last week’s $3.01 low, soybeans turned mixed & wheat maintained small gains by the noon hour.  Expectations that US farmers would plant 2020 crops in a timely manner & largely match or exceed their March 1 acreage intentions kept the bulls at bay in an otherwise slow news environment.  At 1:05 pm, May corn futures were down 3.75c, Dec. 2020 corn was 1/2c lower, May beans were down 2.25c, Nov. beans were 1.25c lower, May soymeal down $2.90/ton, May soyoil was 0.23c/lb. higher, May SRW wheat was up 2.25c, & July SRW wheat was down 1.5c.
 
In export news, USDA did not report any daily export sales on either Monday or Tuesday.  Grain merchants report that South Korean feed mills bought 5.236 mb of feed corn for October arrival, probably from South American sources.  The Brazilian real has firmed slightly against the USA dollar on Tuesday, but the collapse in that currency’s value has sent Brazilian farm real-based prices to record highs, encouraging aggressive selling of both this & next year’s crops. Brazil’s soybean harvest is said to be 94% completed & Argentina is making good progress, too.  The lowest water levels in 50 years on the Parana River—a key waterway for shipments of Argentine grains—are complicating shipments from that nation, causing grain firms to partially load cargoes upstream & finish topping off ships at different locations downstream.
 
Locally, corn basis declined 2c, but soybean & wheat basis levels were steady on Monday.  Cash corn prices set new lows for 2019/20 on Monday as forced pricing on May-based basis contracts added to selling pressure. 
 
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"Closing Comments" are written by David Marshall, First Choice Commodities LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@firstchoicecommodities.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness.  Commodity trading involves risks. You should fully understand those risks before trading.