March 20 Afternoon Comments

By Steve Freed | ADM Investor Services, Inc.

Soybeans, soymeal, soyoil and wheat traded higher. Corn was near unchanged. Talk of higher demand supported wheat and soymeal. US stocks were mixed. Crude was sharply lower.


Soybeans rallied this week in part on talk of lower South America supply and increase China demand. May soybeans was near 9.73 in Jan. Prices dropped to a recent low near 8.21 on talk of reduced China demand for US soybeans and talk of record South America supply. Spread of coronavirus also weighed on prices. Since the low, May soybean rallied to near today high near 8.64. This in part due to talk of increase China demand and confusion over pace of South America exports due to the spread of the virus. This week, private analyst estimated US farmers will increase 2020 soybean acres from last year. Lower US 2019/20 soybean exports could increase US 2019/20 carryout. Higher 2020 supply could also increase US 2020/21 carryout. Both could limit the upside in prices.


This week corn futures got some good news in the buying of US corn by China. The bad news is that overall demand for US corn exports continue to run behind the pace to reach USDA goal. The other bad news was the talk that because of poor margins US ethanol producers may have to take downtime. The threat of the virus reducing fuel demand, the global Crude Oil price war sinking Crude oil below $20 and the small refinery exemptions and reduced margins. This drop in total demand could increase US 2019/20 corn carryout. US farmers are also expected to increase 2020 planted acres. This without equal increase in demand could also increase US 2020/21 corn carryout. NOAA released their 3 month US weather forecast. It calls for warm and wet weather. This could delay early plantings especially in the south. Some feel though without a weather scare it may be difficult for May corn futures to trade much above 3.60.


Wheat futures traded higher. Talk of lower EU supplies and the unexpected China buying of US wheat helped futures trade higher. US millers are also expected to increase production as domestic demand increase. This week concentrated effort by World Banks to infuse capital and lower interest rates raised hope that any decline in World/US economy may be short lived. Key will be if the spread of the virus can be controlled. Russia announced they are expecting to produce a 2020 all grain crop near 138 mmt versus 130 last year. The wheat crop is estimated near 84 mmt versus 74 last year. This week USDA increase US winter wheat crop rating in OK and TX but dropped KS. Most look for US 2020 wheat planted acres to be near last year and the crop also near last years level. May Chicago wheat started to year near 5.90, dropped to near 4.91 in early March on talk of normal World 2020 supplies. Wheat has now rallied to near 5.40 on talk of new demand.

The information conveyed by ADMIS or its affiliates to the audience is intended to be instructional and is not intended to direct marketing, hedging or pricing strategy or to guaranty or predict future events, including the pricing and pricing movements of commodities and commodity futures contracts.

2020-03-20T20:02:18+00:00 March 20th, 2020|