Midday Comments: 4/29/2020

With first notice day for May grain futures contracts looming on Thursday, May corn futures gave back its 3c Monday night rally peak, traded 4.25c lower to within 1/4c last week’s $3.01 low & eventually settled with modest losses on Tuesday.  Deferred corn contract months ended slightly higher as potential planting delays in the eastern Corn Belt & indications that yields in Brazil’s Safrinha corn crop were being hurt by dry weather.  Soybeans traded on both sides of unchanged, but weakened by the noon hour to also demonstrate weakness in old-crop & relative strength in new-crop months. With Brazil nearly bean harvest completion & their soybean prices at record-high levels when values in the Brazilian real currency, Brazilian farmers continue to aggressively provide near-term soybeans to the global market.  The corollary to that strategy is that US soybean demand should be better when they run out of supply by Oct. 2020-February 2021. Wheat maintained small gains thru the noon hour, & closed with mid-range gains.  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 all markets an otherwise slow news environment.  At Tuesday’s close, May corn futures declined 2.75c, Dec. corn edged 1/2c higher, May beans dropped 3c, Nov. beans lost 1.25c, May soymeal tumbled $3.50/ton, May soyoil rallied 0.31c/lb., May soft red winter wheat jumped 5.75c, & July SRW wheat rose 1.25c.
 
Corn & soybeans futures rallied along with crude oil on Tuesday night after data from the American Petroleum Institute suggested crude oil & gasoline inventories increased less than traders had expected.  The API releases its estimates on Tuesday afternoon to get ahead of the “official” report released by the US Energy Dept.’s Energy Information Administration on Wednesday’s at 9:30 am.  Grains got an additional boost shortly late in the overnight trading session on a report from drug company Gilead Sciences that indicated National Institutes of Health trials on 1,063 hospitalized patients for its anti-inflammatory drug, remdesivir, had shown significant evidence of reducing COVID-19 hospitalization length by an average of four days & lowered the death rate from 11% of severely ill patients to 8%.  The drug, which had previously shown only limited benefit to treat the Ebola virus, is administered intravenously in a hospital setting. It acts by suppressing an enzyme needed by the COVID-19 virus to replicate.  The main impact of today’s announcement is that drugs may ultimately become available—-not today or anytime within the next 90 days--that CAN cure the disease.  Wheat was unable to follow corn & beans higher overnight as weather forecasts turned wetter for European & Black Sea wheat regions.  At the 7:45 am pause in electronic trading, May corn futures were up 2.25c, Dec. corn was 1.75c higher, May beans were up 3.5c, Nov. beans were 4.25c higher, May soymeal was down $0.40/ton, May soyoil was 0.31c/lb. higher, May soft red winter wheat was down 6.5c, & July SRW wheat was 5.5c lower. Stock markets doubled their pre-report gains on the remdesivir news despite US data that showed US January-March gross domestic product plunged a more-than-expected 4.8%--the worst decline since Q1 2009.  
 
Corn & beans extended its gains at the 8:30 am regular session open, but each peaked within first 5 minutes.  Wednesday morning’s EIA Petroleum Status report was similar to Tuesday’s API oil data, showing that US oil output declined only 100,000 barrels per day, that net crude oil imports ticked only slightly lower, & that commercially-owned crude oil stocks jumped 8.991 million barrels (MB).  The EIA report also indicated that gasoline inventories declined 3.769 MB (-1.43%) from last week’s record level, that distillate stockpiles jumped 5.092 MB (+3.72%) & that total commercially-owned petroleum supplies rose 10.409 MB (+0.76%) to a record-high 1,377.5103 MB.  Today’s ethanol data was a mixed bag for the week ended April 24.  For the third consecutive week, corn processors produced a record-low amount of ethanol, down 7.644 mil.gal. (-4.62%) to just 157.878 mil.gal.  But ethanol stockpiles declined 57.204 mil.gal. (-4.92%) to a 4-week-low 1,105.734 mil.gal.  That suggested that fuel usage had finally bottomed & that better-than-average seasonal improvement could be seen as more states open for business. Corn & beans each failed to retest their opening highs, & that sent March corn to new contract lows of $3.0025—the lowest continuation price tick since Sept. 2009. Inability to penetrate $3.00 encouraged some short-covering during the noon hour that brought corn & beans off their mid-morning lows.  Wheat remained under pressure, but also above their midmorning trough.  At 12:58 pm, May corn futures were up 2.5c, Dec. 2020 corn was 2.75c higher, May beans were up 6.75c, Nov. beans were 6.5c higher, May soymeal was up $1.10/ton, May soyoil was 0.44c/lb. higher, May soft red winter wheat was down 10c, & July SRW wheat was 10.5c.  Today’s pre-first notice day price action is probably establishing a short-term low, but markets could be set up for renewed weakness if the May WASDE report proves bearish.
 
In export news, USDA announced on Wednesday morning that 2.400 mb of 2019/20 & 1.600 mb of 2020/21 US soybeans were sold to Mexico.  The farm agency did not report any daily export sales on either Monday or Tuesday. Grain merchants report that a Taiwan feed maker bought 2.559 mb of Brazilian corn. Ethiopia is seeking 14.697 mb of milling wheat with an estimated 9 firms participating in that tender that closed on Wednesday. No purchases have yet been reported.
 
In production news, heavy rainfall has stalled corn & soybean harvest in Argentina, but that extra moisture should help wheat planting when it begins in May.  Argentine farmers had harvested more than half their beans & a third of their corn crop prior to unusually harsh storms that hit over the weekend.  Weather forecasters see above normal rainfall delaying fieldwork in the US eastern Corn Belt, but drier weather should allow farmers in the western Corn Belt to get crops planted during the next week.  Improved rainfall prospects in the 3- to 5-day outlook are also on tap for eastern & northern Europe, Ukraine & western Russia.  Those regions have been persistently dry & more moisture would be timely for wheat yield development.  Dry weather continues to hurt second-crop corn yield potential in central Brazil. The top end of Brazil’s Safrinha corn crop has been lost, but worries about global demand destruction have more than offset lower yield potential.
 
Locally, corn basis was a penny lower, but soybean & wheat basis levels were steady on Tuesday. Regional cash corn bids sagged to new lows on Tuesday, with St. Louis cash corn prices reaching the lowest level since Sept. 19, 2018.  
 
Would you like CBOT futures prices reported to your phone? Top Ag can send you nearby & harvest futures prices for corn, soybeans & wheat at 9:45 am, 11:15 am & 1:45 pm each day.  We provide the service for free, but you may have to pay for text messages--depending upon your phone plan. Call Scott or Jacob at Okawville at 243-5293 or Mike at Trenton at 224-7332 & we'll get you set up! 
 
"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.