Feb 14 Afternoon Ag Commentary

by Steve Freed,

SOYBEANS

Soybean futures edged lower before the long US holiday weekend. Today’s big unknowns is will China buy any US Ag goods over the long holiday weekend and on Tuesday will the news concerning the coronavirus be negative or positive. There are also rumor that China import priority could be pork and medicine not soybeans. Malaysian palmoil futures had turned higher on hopes that once the China virus is contained, China will be a buyer of palmoil. US Jan NOPA soybean crush is estimated near 174 mil bu. This is equal to Dec but above last year. NOPA soyoil stocks could increase due to drop in biodiesel demand. Jan World soybean and soymeal trade dropped to 9.0 mmt vs 11.9 in Dec and 9.5 last year. World Oct-Jan trade is a record 51.4 mmt vs 45.5 last year. USDA est Oct-Sep trade to be a record 165.4 mmt vs 161.1 last  year. Will be interesting if USDA drops this estimate on concern virus could slow demand. USDA 2020 baseline est for US 2020/21 cash soybean price is 8.85 vs 8.75 this year.

CORN

Corn futures traded lower. Today’s big unknowns are will China buy any US Ag goods over the long holiday weekend and on Tuesday will the news concerning the coronavirus be negative or positive. There is talk that China may have bought this week Ukraine corn. At the same time there are also rumor that China import priority could be pork and medicine. Fact corn open interest increased on Thursday despite the concern spread of the virus could slow demand. Some speculated that this could be China hedging for future US buying. We estimate managed funds to be net short 67,000 corn contracts. Seasonally grain futures tend to make bottoms in February but this is a different year with the virus and potential for record South America 2020 crops. USDA baseline projection suggest US 2020/21 average farm corn price to be near 3.40 vs 3.85 this year. Next Friday, USDA will have their annual Outlook Forum. They will release new US 2020/21 corn supply and demand estimates. We could see US 2020 corn crop near 15,440 mil bu vs 13,691 in 2019.

WHEAT

Wheat futures traded mixed. Battle between lower World 2019 Wheat supply and talk of higher 2020 supply continues. Today’s big unknowns is will China buy any US Ag goods over the long holiday weekend and on Tuesday will the news concerning the coronavirus be negative or positive. There are rumors that China import priority could be pork and medicine. Fact Chicago wheat open interest increased on Thursday despite the concern spread of the virus could slow demand offered support. Some speculated that this could be China hedging for future US buying. Next Friday, USDA will have their annual Outlook Forum. They will release new US 2020/21 corn wheat supply and demand estimates. We could see US 2020 wheat crop near 1,920 mil bu vs 1,920 this year. Today, USDA baseline projection suggest average US wheat farm prices near 4.80 vs 4.55 this year.

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2020-02-14T20:02:10+00:00 February 14th, 2020|