Morning Comments; Monday, March 30th, 2020

Commodities are currently being driven more by the global market than the domestic side. While this has been a trend that has been developing, the Coronavirus outbreak has made commodities even more sensitive to world developments. This is not just from a production factor, but from a demand side. Global commodity demand is unknown at the present time and concerns are we will see disruptions develop. Even where commodities are needed, we may see a hesitation for shippers to make deliveries. This will eventually subside, if it does take place, but the immediate reaction will be negative. We may also see buyers shift away from their traditional sources for commodities and take them from suppliers they normally do not do business with. This is making it more difficult to predict yearly export potential. To see interior disruptions to commodity movement is also likely in both the US and global market. The most watched when it comes to global demand right now is China. China was the first to announce a widespread outbreak of Coronavirus and is also the first to see trade start to get back to normal. Port congestion has started to clear, and importers are again looking for coverage. This has been a great benefit for exporters as Chinese stocks of commodities have been drawn to historically low levels, especially on soybeans. China is also seeing demand build on feed grains as the country’s hog herd starts to rebuild following the African Swine Fever outbreak. These numbers could make for some surprises in future WASDE reports, especially from the global side. Much of today’s session will be spent positioning for tomorrow’s acreage and quarterly stocks reports. We will also start to see final positions placed ahead of month end, which may cause an elevation in market volatility.

Highlights

* Market positioning for USDA reports to increase

* Reports to be released tomorrow at 11:00 AM CT

* US extends travel restrictions

* Argentine crops hurt from drought

* China shows more interest in US offerings

* Confusion over Russian export policy

* USDA to relax federal loan process requirements

* USDA to also extend loan repayment deadlines

* Gasoline/ethanol spread at 40 cents

* World grain demand to keep outpacing production

Corn

* Ethanol market struggles continue

* Domestic corn demand may recede 400 mbu

* Old crop carryout could reach 2.2 bbu

* New crop carryout could top 3 bbu

* Rumors of more Chinese buying

Soybeans

* Crush margins continue to rise

* Heavy sales out of Brazil

* Brazil farmers selling next year’s crop

* Argentine farmers hold stocks as a hedge

* Lower production forecast for Argentina

Wheat

* Global demand remains high

* US winter wheat rating remains high

* Russia to limit exports

* US may see elevated spring acres

* Weaker dollar benefits interest

Livestock

* Cash cattle $15-$20 above futures

* Slaughter numbers remain stable

* Consumer demand is slowing

* Pork producers may start scaling back

* Food safety becomes major concern

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

Market Commentary provided by:

Karl Setzer Grain Commentary