Market Commentary > Weekly Crop Commentary

Weekly Crop Commentary

Apr 03, 2020

Ed Nienaber
Vice President, Grain Division

The past two weeks the commodity markets have come to the realization that the normal ebb and flow of supply/demand chain has changed. The ongoing oil trade war between Saudi and Russia has pushed prices to the lowest levels in twenty years. This has greatly hindered the production of ethanol as it stands at about 50 cents a gallon above oil futures. With the reduced demand due to stay at home or-ders, this has taken a large portion of our demand base out of the market for gasoline. We have seen an increase in export sales of corn due to the drop in our price, making it attractive for foreign buyers to purchase US corn. For the first time in a very long time we are seeing our corn export values as the price leader. However, we have lost 20 cents in the basis along with a drop in the futures price of about 20 cents per bushel due largely to ethanol grind coming to a halt. The soybean market on the other hand has prospered as crush margins, along with continued export demand, has kept the basis firm and futures have bounced back 30 cents from recent lows. The USDA will be releasing the grain stocks report along with prospective planting intentions on Tuesday. It will be interesting to see if there are any changes in this year’s carry-over stocks on this report. We are anticipating that corn planting to be around 94.0 and beans 85.0 million acres. Once the market digests all the information, we will begin to focus on the weather and how it impacts field work and crop plantings. Please continue to be safe and follow all the ex-pert’s advice on social distancing. We will continue to do the very best job we can to service your ongoing needs.

Wes Bahan
Director of Grain Purchasing

Happy Friday once again. We managed to have a couple of beautiful days this week and I hope you were able to get out and enjoy them. The corn market seems to have stabilized a bit this week. We have mainly seen consolidation style trading as the destruction of the ethanol market last week is continuing to evolve. On a bright spot yesterday’s export sales report had corn sales at a marketing year high. US origin corn is the cheapest in the world market right now, and the USDA did report some daily sales this week. We did see the quarterly hog report yesterday, and it showed that hog inventory is 4% higher than last year. We are seeing some demand for corn, but with the big player in town down and out, any rallies need to be sold. On the soybean side of things we continue to see massive loadings in Brazil. March is going to be just short of a staggering 14MMT smashing the previous monthly rec-ord by 2.5MMT, and so far there is 8MMT already planned for April. Most of these look to be headed to China as crushing margins are good and their pig herd looks to be growing. Wheat continues to gain fundamental strength as this week we are hearing of export quotas from Russia and Ukraine. This will make for an interesting dynamic in the coming weeks. Once again we will get quarterly grain stocks and prospective planting reports next week. As always have a great weekend and be safe again next week.


Lou Baughman
Region 1 Grain Merchandiser

Beautiful day yesterday until the rain set in. At the Kenton Elevator, the gage showed 1.2 inches, north of town didn’t appear to have that much. Grain movement picked up that last couple of weeks with the rally in the grain markets and March contracts coming in. New crop Wheat contracting picked up also, because of the “stay at home” order around the world, wheat demand continues to increase as consumption of grain tends to climb when people eat at home. Exports were strong as China is starting to implement the Phase 1 Deal.

A two-sided trade today for corn and beans, traders are waiting for the USDA report on Tuesday. Planting intentions are being estimated at 94-95 million acres of corn and 84-85 million acres of beans. The Quar-terly Stocks numbers will also be in that report, we will see if there will be any change in the feed and re-sidual category to change to bottom line. Be Safe.

Lisa Warne
Region 3 Grain Merchandiser

Good afternoon. There’s little glitters of hope scattered throughout the grain market if you look hard enough. Cash soybean bids are up about 20 cents since last Friday. Export sales were strong as China took advantage of some lower freight rates and cheaper prices. There are also some concerns whether South America will be able to continue with export demand due to efforts trying to slow COVID-19 spread. Ports are currently open, but transport of beans to the ports have slowed in some areas and port-worker labor unions in Argentina are asking to shut down.

Wheat bids for new crop have also seen a 20+ cent rally. We are near $5.50 for July wheat delivered to Heritage’s west-ern elevators. We haven’t seen these levels for a couple months and I’ve had a few farmers lock in these prices this week.

Corn is struggling the most, despite strong export sales numbers. With gasoline demand down 65-75% in most states, the price of gas has dropped significantly (64 cents in Ohio) which has destroyed ethanol margins, causing processors to pull bids and halt production. This continues putting pressure on local corn basis.

As farmers, I know you have important jobs to do this spring. We’ve always known you are “essential” and it is because you are essential that I hope you are taking measures to be safe, using disinfectant, and limiting your contact with others as much as possible. We need you to stay healthy!

Ralph Wince
Region 5 Grain Merchandiser

Good Afternoon, the soybean market has moved well off its lows this week. I might consider pricing some of the old crop if you have any left. This week, we saw the US get a little more competitive in the world market. With fuel prices dropping off and some concerns in the ship line up in South America it has helped drive some business back to the US. We are about .55 cents off the lows in the bean market. The United States now has the most cases of the coronavirus in the world as of this morning and the VIX index was at 68. It is not at its high but it’s also high enough that there is still plenty of concerns in the markets right now. The corn market is having a very difficult time right now. It has not been pulled higher this week along with the beans & wheat. With crude oil continuing to lose ground it has a huge impact on the ethanol market and basis has continued to work lower in the corn market. Wheat is the real bright spot in the markets. Nearby May CBOT wheat is .78 cents of it’s lows in less than 2 weeks. We have seen the wheat market go to an inverted market, wheat is higher now than in the future. People are buying flour and wheat related products like we are going to run out of flour and now the flour mills are having to ramp up milling of wheat like crazy. If you planted wheat, this is a chance for you to get some NC wheat priced at some good values. From a historical perspective over the last 5 years, wheat has only been above 5.50 a bushel 7% of the time. As I write this, July soft red wheat is trading at 5.60 per bushel. During these cra-zy times look for a bright spot and here is one of them. So if you have some wheat planted and not much contracted yet this might be a chance to get some done. Give us a call to discuss it and all the markets further in depth. Have a great weekend and stay safe out there.

Steve Bricher
Region 3 Grain Merchandiser

The grain and stock markets have recovered some this week. Soybeans are trying to work their way back toward 9.00. Corn futures have gained a few cents this week. Old crop corn basis is in a free fall. As I wrote last week and if you have driven by a gas station, you can see the problem. With gas prices south of 1.50, a gallon of ethanol is very expensive. The plants would need to buy corn below 2.70 a bushel to break even with .90 cent a gallon ethanol. We are seeing and hearing plants shutting down or taking extended maintenance breaks. This problem is going to take time to work out as Saudi Arabia and Russia are still pushing oil into the market that has reduced demand.

We need to be mindful that if we see prices rally that we need to get old and new crop sold. If the slowdown in corn grind continues we could see ending stock rise and if we have a good growing season our carryout numbers could get large.

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