News Source: SETZ

Closing Comments; Thursday, April 9th, 2020

The early portion of today’s session was spent getting final positions in place for the monthly USDA balance sheet updates. Trade was also focused on the developing weather situation in the Corn Belt as much below normal temperatures are forecast to settle in for the next week to ten days. Attention was also placed on the OPEC meeting decision to reduce oil production, although the benefit this may provide the renewable fuel industry is questionable.

As expected, the USDA raised domestic carryout totals in the April WASDE report. This was most noted in corn where demand was cut 375 million bu due to the loss of ethanol manufacturing. A portion of this was negated by a 150 million bu increase in feed usage, but ending stocks still increased to 2.09 billion bu compared to 1.89 bbu in March. Global corn reserves were increased to 303.2 million metric tons from the 297.3 mmt projection in March, mainly from the increase in US carryout.

The US soybean carryover number also increased from March to April. The domestic crush number was raised 20 mbu from a projected decline in distiller grain competition, but this was negated by a 50 mbu decrease in exports and a 20 mbu decrease in residual usage. This caused ending stocks to increase 55 mbu from March to a 480 mbu total. The global soybean reserve forecast decreased from 102.4 mmt to 100.5 mmt though as reductions were made to South American production.

We also had some noticeable changes to wheat balance sheets. Both feed and exports were lowered 15 mbu on the domestic side to elevate ending stocks to 970 mbu. Several other countries lowered their wheat consumption forecasts, which pushed global wheat ending stocks to a record 292.8 mmt.

While the USDA left South American corn production unchanged, the group did decrease soybean production. The Brazilian crop was reduced 1.5 mmt for a 124.5 mmt total. The Argentine crop was lowered a full 2 mmt to 52 mmt. Given ongoing weather issues in these countries, future reductions are possible.

Ahead of the USDA data, the Brazilian firm CONAB released their production updates. CONAB now pegs the Brazilian soybean crop at 122.1 mmt, down from the 124.2 mmt that was projected in March. This would still be a record and above last year’s 115 mmt of production. The firm is now predicting a 101.9 mmt corn crop for Brazil which is a 1.5 mmt increase from March. This corn number is highly suspect though, as it hinges on a large Safrinha crop, and weather remains less than optimum in Brazil.

Export sales for the week ending April 2nd were above trade expectations across the board. Old crop sales were a marketing year high on corn with 72.8 million bu. Soybean bookings totaled 19.23 mbu and what came in at 9.5 mbu. New crop sales of 1.3 mbu on corn and 13 mbu of soybeans were also listed. While above expectations, only corn was above the volume needed to reach yearly USDA projections. Japan was listed as the primary buyer of corn, while nearly all soybeans were booked by China.

Data shows that Brazil loaded out a record 2.5 mmt of soybeans in the first three days of April. This was an 85% increase in volume of the same time from last year. It is doubtful this pace will continue though as a large volume of soybeans are expected to hit Chinese ports at the same time. There is little doubt this will cause unloading delays, especially with new testing requirements on all Chinese imports.

Even with production uncertainties, Ukraine grain exports are expected to be considerably higher this year than last. So far this marketing year Ukraine has exported 47 mmt of grain, a 21% increase from a year ago. This total includes 24 mmt of corn and 18.1 mmt of wheat. Ukraine may scale these sales back, however, as the country is becoming more concerned with domestic food security.

A reminder, trade will be closed tonight and tomorrow in observance of the Good Friday Holiday. Trade will resume at its normal time on Sunday evening. When trade resumes next week we will likely see more of an interest on weather and plantings, as well as the expected release of the initial crop progress report for corn on Monday afternoon.

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.

Morning Comments; Thursday, April 9th, 2020

The majority of today’s interest will center around the monthly WASDE updates. For the most part, trade is expecting numbers to be little changed from March, although a larger ending stocks bias is being given. These numbers are expected to include the updated stocks data from March 31st. What trade is more interested in is the May report as that will give us our first look at new crop balance sheets. A potential adjustment to harvested acres from last year may also take place at that time. Trade is very interested in how the USDA will handle the change in demand since the Coronavirus disrupted global logistics. The main one of these is ethanol where we have seen several plants halt operations in recent weeks, and more are likely to do so in the near future. Trade is also focused on South American production as several firms have reduced production estimates recently. The most of these have been to soybean production, with some cutting output by 8 million metric tons on a whole. If even a portion of this is taken out of current ending stocks it will affect balance sheets. Unless we see something out of the ordinary in this release, however, trade will likely be quick to shift its attention back to the outside markets for price discovery. We will also continue to see interest build on the spring planting season and weather outlooks. While some parts of the Corn Belt will see field work this week, the majority claim it will be another week and possibly two before they will complete much activity. We are also in front of a long weekend as trade will be closed tomorrow for the Good Friday Holiday. This will more than likely cause even more positioning than normal to take place in today’s session.

Highlights

* WASDE Report 11:00 AM CT

* Markets closed tomorrow for Good Friday

* OPEC meeting today

* More US ethanol plants off-line

* Ethanol production last week -33% from last year

* “Normal” driving may be months away

* Questions asked over Chinese Covid 19 knowledge

* US to resurvey some unharvested acres

* Trade hoping for economic recovery by May

* China continues to release govt reserves of grains

* Sharply colder temperatures for mid-US for next week

Corn

* US carryout est 2 bbu

* World carryout est 298.5 mmt

* Lower SAM production expected

* Brazil to import corn

* US corn most affordable in world market

Soybeans

* US carryout est 430 mbu

* World carryout est 101.1 mmt

* Smaller SAM crops expected

* Chinese crush margins decline

* Cost of exporting up in Brazil

Wheat

* US carryout est 940 mbu

* World carryout est 287.37 mmt

* French Ag Minister cuts crop 7.5%

* French crop smallest in 17 years

* Wheat stockpiling to increase demand

Livestock

* More processors closing

* Wholesale beef is mixed

* Lean hog index on the defensive

* Questionable consumer demand a worry

* US slaughter continues to slow

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.

Closing Comments; Wednesday, April 8th, 2020

Short covering supported trade to start today’s session, but this faded as the day progressed. There was minimal interest in establishing new long positions ahead of tomorrow’s WASDE report which weighed on futures. Volume was very thin today which made it easier to push the market lower. Support came from building concerns over South American production and the possibility of elevated export demand, especially on wheat and corn.

Ethanol manufacturing for the week ending April 3rd was down a huge 20% from the week before and the lowest level in the past ten years. A reported 4.7 million barrels of ethanol were manufactured each day of the week, down 1.176 million from the week before. This is also a huge 33% decrease from last year’s manufacturing level. Ethanol stocks continue to swell though, with inventory up 1.37 million barrels at a record 27.09 million.

Trade is becoming increasingly concerned with the slow down we have seen in soybean exports recently. Soybean sales and loadings started the marketing year strong and benefitted from the return of China as a buyer. This has changed in recent weeks as the Brazilian harvest took much of our business away. Last week the US loaded out 11 million bu of soybeans, while Brazil shipped a reported 123 million bu. While the US will likely see a return of some of this business, it may be too late to prevent a reduction to yearly demand forecasts.

The question now is how long this competition may last. Brazilian farmers have an estimated 15% of their soybean crop left to harvest. Typically, not long after the end of soybean harvest we see their exports slow as interest shifts to corn harvest. This may still mean a few more weeks of high Brazilian soybean exports, possibly into the end of May.

A big story in the market recently has been the lack of demand for corn, but these might be overdone. Export loadings on corn have gradually crept higher in recent weeks and indications are this trend will likely continue. US corn is currently the most affordable in the world market which has attracted buyers, even China. The reduction to the South American corn production forecast has also favored the potential for more US exports.

Price spreads between corn and alternative feed grains is also beneficial for future demand. At the present time Distiller Grains are trading at 160% of the value of corn and will likely climb higher given the slow down in US ethanol manufacturing. We have also seen the spread between corn and wheat widen to $2.20 cents which will favor corn as a feed grain, especially in the global market.

Brazilian officials have announced they will be upping the country’s corn imports for feed purposes. The domestic corn supply in Brazil has been mostly exhausted this year and harvest has yet to begin. Brazil will likely import what corn they need from Argentina or Paraguay as currency valuations will prevent US trade. Even so, this will decrease the volume of corn being exported to other buyers.

The question now is how much corn Brazil will produce for export this year. An estimated 30% of Brazil’s Safrinha was planted late and 20% was planted very late. This sets the crop up to be more likely impacted by the country’s dry season before it is fully mature. The majority of this crop is for export, but given the near depletion of domestic reserves, Brazil may elect to hold more back than usual. The combination of these factors could mean much less export competition for the US.

The USDA has announced they will be resurveying unharvested acres from last year’s crops in the sates of WI, MI, MN, and South Dakota in the next few weeks. If warranted, these will be incorporated into the May supply and demand report. The USDA has also stated they may contact North Dakota farmers for the same data at a later date. This is already generating a shadow of doubt over current crop estimates and future ending stocks projections.

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.

Morning Comments; Wednesday, April 8th, 2020

Trade is anxiously awaiting tomorrow’s WASDE report as demand outlooks have changed considerably in recent weeks. The most talked about is the ethanol demand on corn and how this has been greatly reduced. At the present time it is believed US corn demand has been cut 250 million bu by declining ethanol production. This may be on the light side before the marketing year is over however, as an estimated 33% of the US ethanol industry is currently idled. If this would continue, it would cut yearly corn demand by roughly 1.8 billion bu and drastically change our ending stocks outlook. This is the primary reason corn has been under pressure recently, as not only is corn demand being questioned, but the market is trying to deter corn plantings. Just as much uncertainty is taking place in the soy complex, but this is on exports. At the end of March, the US had exported nearly 16% fewer soybeans than it did a year ago. The USDA is projecting soybean exports to increase 4.4% though, which leaves a lot of ground to cover with the marketing year half over. China has been absent from the US soybean market for several weeks which is starting to become a concern. Trade was hopeful that the signing of the Phase 1 trade agreement would bring the US considerable export business, but this was quickly diminished by the Coronavirus outbreak. The trade agreement is now long forgotten by most and highly unlikely to be fulfilled this year and possibly not next either. One thing that may counter some of these worries is that for corn, exports have been on the rise in recent weeks as even China is booking needs from the US. We are also seeing elevated crush on US soybeans. While these are positive, it will be difficult for them to totally offset the losses in other areas of demand.

Highlights

* WASDE Report tomorrow

* Markets closed this Friday for Good Friday

* Trade already looking forward to May WASDE report

* Weather mixed for planting

* Brazil weather remains stressful, Argentine benign

* Farmers concerned with long-term financials

* Consumer confidence remains low

* Market starved for fresh news

* US gasoline down 40% in past week

* Brazil machinery sales +10% in March

* Stimulus checks expected to start arriving this week

Corn

* Open interest -15% from last year

* Planting ahead of normal in South

* Trade pricing indicates 93-93 million acres

* US corn cheapest in global market

* Corn is oversold

Soybeans

* No Chinese buying interest

* Brazil shipments high, Argentine depressed

* Brazil weekly loadings 10x US volume

* Ag Rural lowers Brazil crop est

* Total SAM production could be down 4-6 mmt

Wheat

* Countries starting to stockpile wheat

* Possible freeze in Plains

* US crop rating better than expected

* Black Sea remains dry

* Corn/wheat spread to limit feeding

Livestock

* US processors closing from virus concerns

* Talk of herd liquidation due to poor economics

* Cash cattle near $105

* Hog index near $58

* US slaughter continues to slow

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.

Closing Comments; Tuesday, April 7th, 2020

Corn was the defined leader in today’s market as short covering finally developed in the complex after setting new contract lows for most months yesterday. This ends an 8-day decline in corn values as the US is now the cheapest source for corn in the global market. Soybeans were also on the positive side throughout the day as light buying surfaced in that complex as well. Wheat values were on the defense all day as the initial spring rating on the winter crop was well above trade expectations.

Spring weather conditions are becoming more of a market influencer. While some regions of the Corn Belt will see scattered fieldwork and planting over the next few days, most regions believe it will be at least a week before they can get into fields. Some claim it will be closer to two weeks, and that is if no additional precipitation is received. Trade is also monitoring the cold temperatures being forecast for the central US as these will prevent soils from drying in a timely manner. These factors are all combining to add doubt in the high planting numbers being predicted, especially on corn.

There is a difference in attitude this year that could easily impact acres as well. The longer it takes field conditions to become satisfactory to plant, the closer we will get to the prevent plant insurance date. Last year farmers planted corn long past this date wit some still putting crops in the ground in July. Hardly any farmers claim they will attempt that again this year if current conditions persist and will instead take their insurance payment.

Corn exports remain strong and we have actually started to see a build in global demand in recent weeks. This has been brought on by US corn values dropping to the point where it is now the cheapest in the global market. Unfortunately, this is doing little to offset the losses we are seeing in the domestic market, especially for ethanol. More plants announced they would be idling operations today, and many that are still operational are running at a minimal level. The question in the market now is not if this will raise ending stocks, but rather how much greater it will be.

The big question surrounding this situation is when we may see a reversal in the trend of plant closures. While a quick end to the decrease in energy product demand is hoped for, that is unlikely. Even with signs that some regions of the world are recovering from the Coronavirus, travel remains limited. It could be months for this to fully recover, and in some cases, possibly years. Unfortunately, some ethanol plants will likely remain closed indefinitely as a result.

The market is seeing some signs of recovery from the Coronavirus on the global scale. This is especially in countries that have been fighting the virus for longer periods of time, mainly China. China has started to ramp up imports to replenish its domestic reserves. There are also signs that new cases in parts of the US have peaked, but that does not mean the worst is behind us. Hopes are this will start to bring back consumer demand though, which has been the greatest negative factor for commodities on a whole.

The initial US winter wheat crop rating has been released and came out much higher than expected. A reported 62% of the winter crop is rated Good/Excellent, the highest level since 2010. When ratings stopped being released last fall the crop was rated 52% G/E, and typically we see a decline in conditions over the winter months. As a result, most analysts were expecting a crop rating closer to 47% G/E. Trade is closely monitoring cold temperatures that are forecast for the Plains, but it is unlikely these will cause much crop damage.

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.

Morning Comments; Tuesday, April 7th, 2020

There has been a change in overall market attitude that may last for months or years to come. For the past several years global importers have developed a hand to mouth attitude when it has come to import coverage. The issues we have seen in the past several weeks with exports and imports is starting to change this opinion of the market. Countries such as Egypt and now rethinking their reserves, as that country alone wants to take its wheat inventory from a three-month supply to one of six months. This will likely bring the US additional export demand as most other countries have restricted their wheat exports to maintain adequate reserves of their own. It is thought this is why China has been a buyer of US corn in recent weeks as well. The real problem with the global market right now is not physical supply, it is the dislocation of the supply. Logistic issues in the global market have stalled movement into the supply line which is causing shortages. This is associated with the Coronavirus outbreak and how many countries locked down their borders as a result. The most notable of these has been in South America, particularly in Argentina. Brazil has continued to ship soybeans despite the virus potentially being spread as the president of the country is worried what halting sales would do to the country’s economy. The United States is seeing this in its dairy industry right now where bottle necks are causing some farmers to dump milk as the supply line is full, even though some retailers are struggling to receive product to sell. These logistic issues on a whole are generating major uncertainty in today’s markets, and one of the primary reason buyers are hesitant to extend coverage.

Highlights

* WASDE Report Thursday

* Markets closed this Friday for Good Friday

* Ethanol/gas spread narrows to 15c/gallon

* Bio-fuel industry asks for govt subsidies to stay afloat

* Some Us ethanol plants switch to hand sanitizer manufacturing

* US sees fruit rotting in fields from lack of labor

* High water a concern on US rivers

* Dry weather remains a concern in South America

* Global supply line disruptions a concern

* China shopping for US sorghum

* consumer demand to drive commodity markets

Corn

* Export demand remains strong

* China booking 2021 corn

* Japan is main buyer of Us corn

* Open interest climbs in weaker market

* Corn is heavily oversold

Soybeans

* Argentine exports remain stalled; Brazil normal

* South American production trimmed 5 mmt

* China continues to buy Brazil soy

* Last week US exported 11 mbu soybeans

* Brazil’s exports last week totaled 123 mbu

Wheat

* US winter crop 62% Good/Excellent

* French crop rating falls

* Ukraine exports drop

* World supply questioned

* Cold temps in US Plains this week

Livestock

* US processors closing from virus concerns

* Argentine beef exports stalled

* Cash cattle $25 over futures

* US beef slaughter -50,000 head last week

* US hog slaughter -189,000 last week

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.

Closing Comments; Monday, April 6th, 2020

Futures trade was mixed today as we started to see an increase in positioning ahead of the monthly WASDE report that will be released on Thursday. Few changes are expected from the March data, although most interest was placed on the global numbers rather than the domestic updates. Corn was again pressured today by renewed selling in the energy complex, which pressured corn for the 7th straight session. Soybeans rebounded today after three days of weakness as concerns over South American production are starting to rise. Wheat was the leader during the session, with thoughts demand will increase as more countries restrict their exports.

Export inspections for the week ending April 2nd favored corn over soybeans and wheat. A reported 50 million bu of corn was inspected for export, nearly the same as last week. This was more than enough to reach the yearly projected total from the USDA. Soybean inspections were on the light side at 11 million bu as were wheat loadings at 11.7 million bu. These both fell short of the volume needed to reach USDA expectations.

The current vessel line-up in Brazil indicates a record volume of soybeans will be exported in April. There is an estimates 13.6 million metric tons of shipping capacity lined up to be loaded outside of Brazilian ports. There is also another 1.1 mmt of shipping capacity that is getting ready to be loaded for May. This volume of loadings is weighing on US exports, and likely will until late summer.

These heavy loadings verify reports out of Brazil that logistics in the country are at near normal levels. We are also seeing limited congestion in Argentina, but unlike Brazil, Argentina is seeing less traffic to the ports. Data shows truck traffic in Argentina is down almost 75% from a year ago as concerns over the spread of Coronavirus limit movement. This is also impacting the Argentine crush industry and seen as a benefit for US export potential.

Chinese officials have stated that despite Coronavirus issues, their soybean imports will hold steady this year. Prior to the virus outbreak China’s soybean imports were actually up 14% from a year ago. While this is positive news, Brazil will likely get the largest share of the business. This is a trend that has been taking place for several years now. Chinese officials believe the country will import 88.5 million metric tons of soybeans this year. Of these, 65% are expected to come from Brazil, 19% from the US, and 10% from Argentina.

One commodity that has been impacted from the Coronavirus outbreak is Argentine beef. Argentine beef exports in 2019 increased 50% as both chin and the EU made sizable imports to try and make up for losses from the African Swine Fever outbreak. This generated $3 billion in trade for the Argentine beef industry. Since the outbreak of Coronavirus began, Argentina has seen its beef exports drop off considerably. There are hopes this will bring the US additional export demand on beef and hopefully pork as well.

The decrease in US grain and soybean stocks in last week’s USDA reports has received minimal market reaction. The same as for all other commodities, the concern right now is not on supply as much as it is on demand. Traders believe that we will see commodity demand on a whole decrease enough that the reduction in stocks will be absorbed. Trade may also be waiting to see what is published in the next WASDE report before adjusting current positions.

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.

Morning Comments; Monday, April 6th, 2020

Overnight trade was mixed as new week balancing took place. Now that the calendar has turned to April, we will start to see a shift in market attitude. For one, nearly all attention in the country turns to spring fieldwork and planting conditions. With this bring more of a focus on weather conditions. In another two weeks much of the Corn Belt will be at the point where insurance will cover their planted acreage. This is when more activity tends to take place. Typically, we see at least some fieldwork take place ahead of this date. Current soil conditions across the Corn Belt and forecasted weather do not lend much credit to planting by that date, however. Many regions claim they will need at least two weeks of dry weather to simply get into fields. The United States is stuck in a pattern of rain systems moving through every few days though which is preventing this. In many years this would cause the addition of at least some risk premium. This year may be different though as even with less than perfect conditions last year the US produced large crops. One factor that does come into question with current weather and soil conditions is the large planted acreage forecasts we are seeing. Last week’s prospective plantings report showed farmers intend to seed 97 million corn and 83.5 million soybean acres. Given current conditions, these projections seem a little robust to say the least. To see a reduction to planted acres in the June revisions would be expected unless weather conditions change quickly. The early portion of this week’s trade will be driven by positioning for the April WASDE report that will be released on Thursday morning. This will include the March stocks numbers, and likely start to include some of the demand changes that have been brought on by the Coronavirus. The one most watched will be ethanol, as plants continue to halt production due to poor margins.

Highlights

* WASDE Report Thursday

* Markets closed this Friday for Good Friday

* OPEC meeting pushed back to Thursday

* Commodity “demand destructions” is worrisome

* Global economy has record low indicators

* Job loss will climb higher

* Trade deals no longer expected to take place

* More countries enact export restrictions

* Active US hurricane season expected

* Ethanol remains 20c/gal above gasoline

* China continues to increase imports

Corn

* More ethanol plants off-line

* Some corn users pulling bids

* China buys more US corn

* South Korea remains perpetual buyer

* Feed demand likely to rise

Soybeans

* Weak Real pressures US sales

* Feb crush revised to 175 mbu from 182 mbu

* More reductions to South American crop

* China buying remains sparse

* China unlikely to buy until late summer

Wheat

* Russia export quota to help US

* Brazil mills ask govt to drop 10% import tariff

* Panic buying seems to have passed

* Egypt to expand govt reserves by 100%

* Black Sea weather cutting production

Livestock

* Exports on beef/pork record high

* China taking half of US pork exports

* Concerns build over future demand

* Poultry producers cutting production

* WI dairy farmers dumping milk due to logistic issues

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.

Closing Comments; Friday, April 3rd, 2020

Corn, soybeans, and wheat all started today’s session high, but struggled to gain upside momentum as fresh buying did not surface. This was most surprising in corn as a large flash sale of 567,000 metric tons to China was announced. While positive, this failed to ease worries over the decline that is taking place to domestic usage in the ethanol sector. The fact the 504,000 mt of this corn was for 2020/21 shipment also tempered market reaction. The exact difference is taking place in soybeans, where strong crush numbers are failing to compensate for sluggish exports, even though weekly sales are enough to satisfy yearly projections. Wheat was the leader today, taking support from news Russia will finalize its export quota and new Egypt is going to double its strategic reserve to a six-month supply, opening the door for additional US exports.

The greatest hindrance in the corn complex right now remains ethanol. Gasoline demand in the United States has fallen 25% from travel restrictions, which in turn is cutting into ethanol demand. Thoughts are from now until the end of May the US will lose 740 million gallons of ethanol demand. This correlates into 250 million bu of corn usage. While elevated corn exports and feed demand will consume some of this, it is highly likely we will see ending stocks increase from current projections.

Brazil’s President Bolosaro has released a statement that caught the world market by surprise. President Bolosaro is stating there will be no more quarantines issued in the country due to the Coronavirus as they are devastating Brazil’s workforce. The main concern is what the impact is on exports, especially at one of Brazil’s highest soybean loading periods of the year. The concern with this is that it may allow the virus to spread, not just around Brazil, but to other countries as well.

We are starting to see a shift in farmer attitude across the US. More farmers are now getting ready for the spring planting season, which will take attention away from marketing. Historically, this has created favorable basis opportunities for farmers who are willing to move inventory while planting is taking place. This year may be different though, as interior demand has taken a hit in recent weeks, especially from the ethanol industry. Soybean basis is likely to remain favorable though as crushers try to secure inventory and capture elevated margins.

The Buenos Aires Grain Exchange has updated its Argentine soybean crop estimate, lowering it from previous expectations. The exchange is now expecting to see a 49.5 million metric ton soybean crop in the country. This comes as Argentina’s soybean harvest gains momentum with 8% of the crop being collected, giving analysts better yield data. The previous soybean crop estimate in Argentina was for 52 mmt, and the USDA is projecting a 54 mmt crop for the country.

By next week the Mississippi River is expected to be fully open for barge travel. Not only is this good news for the export market, but for suppliers along the river that are waiting for spring inputs. While the river is open, there are some concerns over high water levels and the impact they may have on movement in both directions. The greatest impact of this opening will likely be felt in interior basis.

Heavy losses were made in the livestock industry this week and the immediate thought is this was from poor demand. In all reality, the US is seeing record monthly demand for both beef and pork. We are just 13 weeks into the year and US beef exports are up 29% from last year. In February alone the United States exports 257million pounds of beef, a record for the month. Pork exports in February were also a monthly record at 658.2 million pounds. February marks the 9th consecutive month of record pork exports.

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.

Morning Comments; Friday, April 3rd, 2020

Trade has now fully digested the early week USDA data and is focusing on more traditional fundamentals. One factor that is quickly moving to the front of the market is what we will see in next week’s updated WASDE report. On the domestic side trade will see how the USDA incorporates the quarterly stocks data into balance sheets. At the same time, we have seen a considerable change in domestic demand since the March data was released that will have an impact on ending stocks. To see a sizable shift in balance sheets would not come as a surprise. The same is true on the global side. Several private firms have updated their production estimates on South America, and these could easily surface in next week’s report. A combination of adjustments would indicate a 6 to 8 million metric ton reduction to South American soybean production. While this seems like a stretch and is unlikely to happen all at once, it is possible. Major adjustments to crops may come after harvest, which will be in the next few weeks on Brazilian soybeans. Reductions to the corn crop are just as likely in South America but will likely come at a later date. Trade will also focus on demand, with an emphasis on China. Chinese soybean stocks have been greatly reduced in recent weeks and buying has followed. China has even lifted restrictions on Canadian canola to try and satisfy demand for protein feeds. Trade on a whole continues to be driven by the outside markets, and likely will be even if we do see friendly numbers in next week’s WASDE update.

Highlights

* 6.6 million US jobs lost last week

* Economists expect another 20 million jobs lost in next 2 wks

* OPEC might cut oil production; demand is more of an issue

* China to start buying crude for reserves

* Some analysts predict sub $10 crude

* Markets struggling between supply and demand

* Winter storm to hit Upper Plains

* US record ethanol supply likely to rise

* US rail traffic down 11.4% last week

* Argentine port traffic -20%

* Country lock-downs impacting exports/imports

* Brazilian Real -5% in last week

Corn

* Gulf basis firming

* Ethanol demand continues to drop

* Exports remain high

* Domestic corn demand to slip 300 mbu

* Analysts believe US corn acres 2-3 million too high

Soybeans

* Gulf basis stronger

* Logistic issues hinder Brazil exports

* Chinese crush margins narrow

* US soy acres underestimated

* Argentine crop reductions

Wheat

* Wheat product demand is fading

* Paraguay crop a record

* Egypt cancels tender

* US rally hurt sales

* Buyers wash out of US bookings

Livestock

* Low restaurant a concern

* Demand destruction a worry

* Swine flu cases rise in China

* Beef sales last week at 18,231 mt

* Pork sales at 38,152 mt; 49% was to China

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.

Closing Comments; Thursday, April 2nd, 2020

For a change of pace, corn futures were actually the leader in early trade today. Corn took its support from solid weekly export sales and a rebound in the energy complex. Rumors circulated today that Russia and Saudi Arabia may scale back crude production which would hopefully ease pressure on the entire energy complex. Soybeans were also firm early in the session with support coming from crush data for the month of February. Wheat was on the negative side however as weekly sales were a marketing year low, and other countries have announced plans to up their wheat exports. Wheat also continues to correct from being overbought. All commodities were limited by low trader volume and limited fresh news.

Export sales for the week ending March 26th favored corn and soybeans over wheat. Corn sales for the week totaled 42.3 million bu on old crop and 800,000 bu on new crop. Soybean sales were split with 35.2 mbu old crop and 4.2 mbu new crop. As mentioned, old crop wheat sales were a marketing year low at 2.7 mbu due to heavy cancellations, but new crop totaled 6.8 mbu. Corn and soybean sales were above the volume needed to reach yearly projections, while wheat fell short.

Trade is starting to pay closer attention to the new crop bookings in weekly sales reports. So far, new crop marketings are running at historically low levels. At the present time the United States has sold 69.3 mbu of corn, 19.4 mbu of soybeans, and 42.3 mbu of new crop wheat. Unless these numbers improve soon, we could se bearish demand projections when the USDA releases its initial new crop balance sheets in May.

The Fats and Oilseed crush report for February was released after the close yesterday and showed higher than expected soybean usage during the month. A reported 182 mbu of soybeans were crushed in February, 5 mbu more than expected. This was also 19 mbu more than what was crushed in February 2019. It is likely we will see this number continue to edge high as the US sees less ethanol production and a reduced availability of distiller grains for feeding.

The economy received negative news today with the release of the weekly unemployment figures. Last week a reported 6.6 million US citizens filed for unemployment, a record weekly number. For the past two weeks a total of 10 million people have lost their jobs, and economists believe this could double in the next few weeks. It is not out of the question that it could take weeks, if not months, for the actual number of lost jobs to show up given the delays in reporting.

Global weather remains a prime topic in price discovery. Conditions in Brazil remains abnormally dry, with 64% of the country’s corn growing area seeing less than 50% of its normal precipitation in the past 30 days. It is also dry in Argentina, and while this will impact yield, it will allow for rapid harvest. In the US conditions remain wetter than normal ahead of the spring planting season, although some fieldwork is being reported. The real area of focus is on the Upper Plains where another winter storm is forecast. This could bring up to 10 inches of snow to North Dakota where a reported 25% of last year’s corn crop still needs to be harvested.

Not only has the Coronavirus impacted grains and soybeans, but livestock as well. We have seen several days of sharp losses in cattle and hogs recently as demand falls across the US. We did see a spike in consumer demand as the outbreak of the virus started, but this has subsided. We also continue to see US restaurants close which is lessening demand for meats as well as other products. The concern is this will only add to an already building US pork supply, especially with no end in sight to the virus outbreak.

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.

Morning Comments; Thursday, April 2nd, 2020

For the past several week’s much of the attention in the market has been on domestic supply and demand side of balance sheets. One region of the market that seems to be receiving insignificant attention is South America. While several analysts have released updated production reports the market has failed to react. This is especially the case on soybeans where production in both Argentina and Brazil has been reduced. It is not out of the question that total soybean production between these two countries could be down 8 million metric tons from initial estimates. It goes without saying this would cause a significant shift in the world balance sheets. This also comes at a time when soybean demand is expected to increase due to China ramping up its feed production and the US ethanol market slowing down. This will generate fewer DDGs to be used in feed that will need to be replaced with soy meal. We also need to keep an eye on corn production estimates out of South America as the same conditions that stressed soybeans in Brazil are now stressing the Safrinha crop. We are also seeing harvest advance in Argentina where weather has stressed crops as well. In fact, crop scouts in Argentina started to reduce crop expectations before harvest even started which is usually a sign of stress. This may end up being much more of a factor for the market as global grain demand is already expected to outpace of production. The wild card in global balance sheets right now, and what it will be for the next several weeks if not months, is the reaction to the Coronavirus and what it has for an impact on demand.

Highlights

* FSA interest rates lowered to 1.625%

* High water a concern on US rivers

* Gasoline under $1.00 in some regions

* Brazil gasoline demand down 50% in one day

* Force Majeure rejected by Brazilian ethanol plants

* Brazil will not enact further travel restrictions/quarantines

* 90-day tariff suspension not on Ag products

* Argentine port traffic -20%

* Analysts doubting US acreage estimates

* Trade now looking to April 9th WASDE

Corn

* US ethanol production lowest since Sep 2013

* US ethanol stocks record volume

* Ethanol dynamics a global concern

* Texas corn 56% G/E; +7% from last week

* North Dakota has 25% of crop left to harvest

Soybeans

* Brazil March exports record sized

* China buying Brazil soy for May/June

* Global oilseed processors shutting down

* US crush demand to build

* Analysts reduce Brazil crop size

Wheat

* More limitations on exports

* Ukraine to export 2.2 mmt through June

* US crop rating improves

* Russia to sell govt reserves

* Black Sea turning dry

Livestock

* China to auction more pork

* Consumer demand falls

* Pork bellies -36% in 5 days

* Concerns over start to grilling season

* China issues tariff waivers on US pork

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.

Morning Comments; Wednesday, April 1st, 2020

Overnight trade was pressured by a lack of buying interest and sharp losses in the equity markets. Trade will likely continue to react to the USDA data that was released yesterday during today’s session. Stocks numbers came out pretty much as expected with 7.95 billion bu on corn, 2.25 bbu on soybeans, and 1.41 bbu of wheat. These are all under what he had in storage a year ago, but not low enough any form of rationing would be needed. Acreage numbers were a little surprising, especially on corn, where plantings are forecast to increase 7.3 million acres for a 97-million-acre total. Soybean plantings are expected to rise 7.4 million to an 83.5 million total. Wheat acres are forecast to decrease 458,000 for 44.7 million. These are all from economics prior to the Coronavirus changing market dynamics though, which will be a factor in plantings. The question is now what will trade focus on for price discovery. The main factor that will move back to the forefront of the market is global weather. Current forecasts do not indicate favorable weather for an early start to the spring planting season. We are already at the 1st of April and fieldwork across much of the Corn Belt has been minimal so far. While this can change in a hurry, the longer it takes, the less likely we are to see the high acreage numbers that were released yesterday. This will likely put more emphasis on the June revisions than the current data. We will also start to see more interest in April WASDE report that will be released next week. Not only will we see yesterday’s numbers incorporated into them, but any changes to the global numbers as well. Most interest going into the April release will be on South America to see if reductions are made to crops from drought. Of course, we will continue to see trade monitor the outside markets, especially any action in the equity side from Coronavirus developments. Today marks the start of not just a new month but quarter as well, which will likely elevate trade activity.

Highlights

* USDA predicts high acreage; trade has doubts

* US grain inventory shrinking

* South Korea remains main buyer of corn

* Country movement slows

* Farmer interest on planting, not marketing

* Mississippi River fully open next week

* China may buy large volume of ethanol

* China lifts ban on Canadian canola

* Cleaning of ships delays exports/imports

* Farm labor becoming an issue

Corn

* March 1st stocks 7.95 bbu; -660 mbu from 2019

* 2020 acres at 97 million, up 7.3 million

* More ethanol plants off-line

* Analysts hesitant to reduce SAM crop

* Low DDG production may boost feed demand

Soybeans

* March 1st stocks 2.25 bbu; -474 mbu from 2019

* 2020 plantings at 83.5 million, +7.4 million

* Buyers continue to surface

* Crush demand rising

* Chinese soy meal lowest level in 10 years

Wheat

* March 1st stocks 1.41 bbu; -181 mbu from 2019

* Plantings 44.7 million, -458,000 from last year

* US basis values firm

* Ukraine to limit exports

* Russia wheat firms, supports global market

Livestock

* JBS to reduce production at one plant

* China has not approved Brazil plants

* Wholesale beef declines

* Lean hog index $12 above futures

* Weekly slaughter slows

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.

Closing Comments; Tuesday, March 31st, 2020

The early portion of today’s session was spent with traders getting final positions in place for the long-awaited quarterly stocks and prospective plantings reports. Traders were also positioning themselves for month and quarter end. A rebound in the energy complex offered commodities support, but an overall negative feel to the equity market limited buyer interest, even as another financial stimulus package is being planned. Corn did take light support from another flash sale of 113,000 metric tons to Japan.

Prospective acres for this year’s crops came in well above estimates on corn while soybeans and wheat predictions fell under the average trade guess. Corn acres for this coming season are projected at 97 million, 7.3 million more than last year’s plantings. Soybean acres are also forecast to rise to 83.5 million, a 7.4 million increase. Wheat plantings are forecast to decrease to 44.7 million acres, down 458,000 from a year ago.

Increases to plantings were the result of 11 million acres of prevent plant from last year coming back into production this year. To be correct, that will require near perfect planting conditions across the entire US, which is already causing some delays. The data used to generate these estimates was also collected prior to recent market reaction to the Coronavirus though, which will undoubtedly impact actual plantings.

The quarterly stocks data as of March 1st showed a draw in stocks from a year ago. As of March 1st, the US had a corn inventory of 7.95 billion bu, 660 million less than a year ago. Soybean inventory on March 1st was 2.25 billion bu, down 474 million bu from last year. Wheat stocks to start the month totaled 1.41 billion bu compared to 1.59 billion by last year. While these are some of the lowest inventory levels in recent years on this date, they are still adequate and will satisfy demand.

China is reportedly in talks with Canada on relaxing the canola ban that in place on trade. China placed a ban on Canadian canola in March of 2019 and claimed quality was the reason why. This was widely believed to be in retaliation to the Canadian arrest of a top Huawei employee as tensions over intellectual data increased around the world. China is now in need of all oilseeds to make up for its soybean shortage as demand is rising in the country at the same time global logistics are impeding shipments.

A news story that has flown under the radar this week is the possibility of the White House temporarily suspending import tariffs. Reports indicate import tariffs will be suspended for 90 days to help ease financial burdens on US retailers and manufacturers. This has been asked for for several months as the economics indicate it would be a great benefit for all involved, including the US economy. The White House has been hesitant to lift tariffs as they feel it is a bargaining tool they can use in trade negotiations.

The Russian government has announced it will be imposing export quotas on grains starting tomorrow. This was originally thought to be from low grain inventory, but that is not the case. In fact, March 1st grain stocks in Russia are actually up 15.5% from a year ago. Russian wheat stocks are 13.8% higher than a year ago, and corn inventory is 26.7% greater. Russia is limiting exports to help ensure there is an adequate grain supply to satisfy domestic needs, which is likely to start happening in more exporting countries.

Ukraine officials have followed suit and will reduce their grain exports to provide adequate domestic reserve as well. The Ukraine government is going to limit wheat exports to just 20.2 million metric tons this year to help domestic values maintain a reasonable level for consumers. To date Ukraine has already exported 18 mmt of wheat however. This leaves just 2.2 mmt of wheat to export through June and opens the door for additional US business.

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.

Morning Comments; Tuesday, March 31st, 2020

Final positioning ahead of today’s USDA reports will dominate early trade in today’s session. The most talked about going into this data has been on acres as trade is expecting to see a major portion of last year’s 17 million prevent plant acres find their way back into production this year. Thoughts are this will add 4.63 million acres to corn production and 8.77 million acres to soybean plantings. These numbers are highly suspect though as very little planting has taken place in the United States, with none in the Corn Belt. Weather over the next several weeks will dictate actual plantings, along with market economics. More producers are starting to question corn demand outlooks which may alter planting decisions. Quarterly stocks will also be released this morning, and in all reality, are more of a true figure for the market. Demand is more of a known number and will show us just how much actual usage we have seen this year. Trade is expecting to see declines to the inventory of corn, soybeans, and wheat from a year ago. The greatest drop is forecast for soybean stocks with a 17.8% decline from a year ago. Corn is pegged at 5.7% and wheat at 10.1%. Even with these declines, inventory of all three commodities is not at a point where trade will be worried with scaling back future demand. The data used to calculate these numbers was mostly from before the Coronavirus outbreak gained momentum though, which will impact future demand and be reflected in the June release. The June revisions to planted acres may also be more of a market factor as planting will be taking place by then, and hopefully be done in most of the Corn Belt. Today also marks month and quarter end which will increase trader activity.

Highlights

* USDA Reports at 11:00 AM CT

* Month/quarter end positioning

* China looks to increase feed grain imports

* US offerings competitive with global market

* US feed demand may rise for corn

* Argentine crush stocks down 50%

* Argentine soy harvest 7% complete, corn 18%

* Brazil soy harvest 75% complete

* Dry weather in SAM remains a concern

* Brazil ethanol distributors declare Force Majeure

Corn

* March 1st stocks est 8.125 bbu

* Stocks would be down 5.7% from year ago

* Stocks would be smallest since 2016

* Corn acres est 94.4 million

* Acres would be up 4.6 million from last year

Soybeans

* March 1st stocks est 2.24 bbu

* Stocks would be down 17.8% from year ago

* First year to year decrease in 6 years

* Soy acres est 84.86 million

* Soy acres up 8.76 million from last year

Wheat

* March 1st stocks est 1.43 bbu

* Stocks would be down 10.1% on the year

* March 1st stocks least in 4 years

* All wheat acres est 44.98 million

* Wheat acres down 178,000 from year ago

Livestock

* US beef production through March +4.8% last year

* Beef slaughter to rise 203,000 head this year

* Total red meat production up 10.9%

* Pork production through March +5.4% from year ago

* Pork slaughter up 5% from last year

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.

Closing Comments; Monday, March 30th, 2020

Trade was on the positive side to start the week, but following through buying did not surface, and advances eroded This was especially the case for corn where a drop in crude oil to an eighteen year low continues to pressure values. Soybeans managed to hold on to its gains, taking support from a flash sale announcement of 285,000 metric tons to Mexico. Ongoing uncertainty over global trade and final positioning ahead of tomorrow’s USDA reports also kept trade interest to a minimum today and weighed on futures.

We are seeing mixed data out of Brazil when it comes to soybean sales and movement. Farmers in Brazil have been heavy sellers of soybeans as the US dollar rallies to record highs and the Real drops to record lows, giving Brazilian soybean farmers the highest return on soybeans in years. This does not necessarily mean soybeans are making their way directly into the supply line though, and in fact, many are not being moved at all given worries over the spread of the Coronavirus. This continues to bring soybean buyers to the US such as we had announced this morning.

The country with the most limitations to movement right now is Argentina. Even though the Argentine government has declared commodity movement as an essential business, local governments are not allowing movement to take place. This is causing major disruptions at Argentine crushers with some only reporting 50% of their normal soybean inventory. This is obviously impacting the country’s crush ability, as well as its ability to satisfy global soy meal demand.

We are all aware of the economic issues the US ethanol industry is currently facing, but these could get even worse. More plants have announced they will be slowing operations this week as margins drop further into the red. With crude oil dropping to the lowest values in several years any improvement may be slow to come. There are now thoughts the US could have 4 billion gallons of capacity idled by the end of this week. This would reduce ethanol demand on corn by an estimated 400 million bu.

The issues with the energy market are not confined to the United States. Ethanol producers in Brazil are also reporting negative returns. This is because energy demand on a whole is dropping around the world. Many plants are also cutting into their capital accounts, which may make it hard to recover when energy values do rebound.

Demand for US corn is being questioned at the present time, but the US is seeing elevated demand for other commodities. The one being talked about the most is soybean crush. The global market is seeing its dried distiller grain inventory shrink with the reduction to ethanol manufacturing. As a result, more feeders are having to switch back to soy meal in rations. Given the export issues in South America, this favors US exports. We are also seeing elevated wheat demand as millers scramble to satisfy consumer demand.

One benefit for US corn and soybean exports is that offerings are more competitive in the global market. US corn is currently very competitive with the global market through June. US soybeans are also competitive and show a sizable advantage for late summer shipment. The US is higher on wheat than others, but we have more to ship which is beneficial to a buyer. The main benefit for the US right now is logistics, as even when other sources of commodities are lower than the US, timely shipping is an issue.

While mostly overlooked, the weekly export inspections report on corn was quite friendly. For the week ending March 26th the US loaded out 50 million bu of corn. This was just above the volume needed to reach the yearly USDA export projection. Soybean inspections totaled 15.2 mbu and wheat came in at 13.4 mbu, both of which were below the needed volume. For the marketing year, corn inspections are 39% behind last year while soybean loadings are up 8% and wheat is up 8.5%.

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.

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.

Closing Comments; Friday, March 27th, 2020

Much of today’s session was spent with traders simply shoring up positions ahead of both the weekend and next week’s USDA reports. Futures were pressured today from renewed concerns over the global economy and reports that the Coronavirus Stimulus Package will not be enough to make up for fiscal losses. Not even the announcement of export sales of 114,000 mt of corn and 63,000 mt of soybeans were enough to benefit those markets. Wheat held to the upside until late in the day, taking support from news Russia would restrict exports.

While domestic demand of corn is slipping lower, export demand may start to rise. China was listed as the primary buyer of US corn last week and sources claim they are still shopping for coverage. US corn is currently the most affordable in the global market, and likely will be through May. Increasing doubt on the actual size of the South American corn crop is also benefitting US sales.

Soybean harvest is starting to get underway in Argentina. As it does, analysts in the country have reduced their crop expectations. Firms in the country now claim the crop will be no more than 52 million metric tons compared to the latest USDA estimate for 54 mmt. While this is not a huge decrease, when added to the losses being forecast to the Brazilian crop, it will make a sizable shift in global stocks.

Soybean sales in Brazil has escalated considerably in the past week. Not only are Brazilian farmers selling large amounts of the crop that is just being harvested, but they are also making sales of next years crop as well. These sales are the result of soybean values rallying to the highest levels seen in the past six years. This activity also gives trade the indication that Brazilian farmers are already intending on producing another large soybean crop a year from now.

Russian wheat was in the news headlines all week as trade tried to estimate crop size as well as how much the country may export. Today, Russian officials announced they would be limiting some grain exports from April through the end of June. Grain exports will be limited to 7 mmt with most of this going to Russia’s customer union that are traditional buyers. The primary grain that will be restricted is wheat, which gave the US its support during today’s session.

A considerable amount of the week’s interest has been on what we will see for acres in next week’s USDA reports. Thoughts are acres will increase substantially as we see 17 million of those that were listed as prevent plant come back into production. While it is likely that many of these will, it is extremely difficult to predict planted acres when little fieldwork has been completed. This may cast a shadow of doubt over any number released until we get to the revisions that are released in June.

The Coronavirus continues to have a significant influence on wheat happens in the commodity market. The most talked about is the impact travel restrictions are having on energy demand and in turn, corn demand for ethanol. The virus is also continuing to apply pressure to the equity market, even though the stimulus package passed Congress this week. The unknown is if this will be enough to benefit the financial market, with many economists claiming stimulus will need to be closer to $6 or $7 trillion to really provide relief.

The March 1st US hog inventory report was released late yesterday with less than supportive data. The US hog herd increased 4% over the past year, with this all being in market hogs. Total US hogs now number 77.629 million with 71.254 of these being market hogs. One number that stood out to analysts was the size of the US pig litter increased 3% in the past year, and now averages 11 pigs per litter.

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.

Morning Comments; Friday, March 27th, 2020

One of the most debated topics in the market right now is demand. The US has seen an increase in corn demand in the export market over the past few weeks with most interest on China. China was a main buyer of US corn in the weekly export sales data and a main reason for the marketing year high on bookings. While this is positive news, it may simply negate the losses that are expected to take place in domestic corn demand, mainly ethanol. Ethanol plants continue to close across the United States and drop projected demand. Right now, it appears as though 300 million bu of corn demand will be lost from ethanol this year which would push ending stocks above 2 billion bu. This will have a trickle effect and impact new crop ending stocks on corn as well. If production estimates on corn are correct a new crop carryout of 3 billion bu is not out of the question. There are many moving parts in these prediction models though, with acres and yields being the main ones. The same scenarios are being made in soybeans where the US is seeing heavy competition from South America. This is not uncommon as Brazil is in the midst of its harvest when it normally is the origination point of choice. Demand typically increases once the harvest in that regions passes. Unlike corn, we may be underestimating domestic soybean usage though as crush has been on the rise. The world’s largest soy meal exporter, Argentina, is not exporting meal at the present time which may bring demand to the US. The US will also see more meal demand domestically as ethanol plants halt operations and distiller grains become scarce.

Highlights

* Economists claim stimulus package not enough

* Japan economy now taking hit

* Argentine dock workers ask for closure of facilities

* China continues to move forward with Phase 1

* Farmers selling remains low

* Export basis firming

* Trade starting to question fertilizer supply

* Analysts predict 17 million more acres this year

* Corn sales hit marketing year high

* Positioning for March 31st reports elevates

Corn

* US ethanol closures may hit 4 bil gallons

* South Africa corn production +31% from last year

* Planting advances in Southern States

* Drought continues to impact Safrinha

* US carryout likely to rise

Soybeans

* US crush margins improve

* Domestic demand needs to be adjusted high

* Crush plants idled in Argentina

* No movement in Argentina

* Brazil soybean values highest in 6 years

Wheat

* Market is technically overbought

* US overpriced in global market

* Consumer demand for products remains high

* Russia lifts export restrictions

* US acres under-estimated

Livestock

* Retail demand starting to ease

* China encourages stockpiling of poultry

* Brazil’s IBS quarterly income +332%

* US hog inventory +4%; above estimates at 77.629 million

* Increase all from market hogs

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.

Closing Comments; Thursday, March 26th, 2020

Even with an abundance of fresh fundamental news, commodities favored the negative side in today’s session. This was from profit taking following the recent recovery in the market, mainly on soybeans and wheat. We did see large export totals this morning, but for corn, these were just enough to compensate for the decline that is expected in domestic usage. The lack of disruptions to global trade also negated some of the friendly export news, although traders do expect disruptions to eventually take place.

Export sales for the week ending March 19th were all at the top end or above trade expectations. Corn sales for the week were a marketing year high at 71.4 million bu. Soybean bookings were solidly higher on the week at 33.23 mbu, as were wheat sales at 27.19 mbu. China was listed as a primary buyer of all three commodities which is not that surprising given last week’s flash sales. China is trying to rebuild reserves following its initial outbreak of Coronavirus which is a leading catalyst for the elevated buying.

Even with this renewed export demand on corn, trade is concerned with domestic usage, primarily ethanol manufacturing. It has been well publicized how US ethanol manufactures are struggling with poor margins and a lack of demand which is causing many to halt operations. As a result, we have already seen increases to corn carryout estimates with some analysts raising it from the current 1.89 billion bu estimate to 2.2 bbu. Given the ripple effect of this demand uncertainty and prospects for a large crop of corn this year, a 3 bbu new crop carryout is not out of the question.

Data shows that for the months of January and February China imported 6.1 million metric tons of soybeans from the US. This compares to just 1 mmt for the same months in 2019 when the two countries were at the height of the trade war. For the same period Brazil only sold China 5 mmt. These numbers shifted in March though when the combination of Brazil’s harvest and the Coronavirus limited Chinese demand.

Trade is looking at long range export potential on soybeans with some questions being asked. China, the world’s leading soybean importer, is estimating its soybean imports for this coming year at 86 mmt. Brazil is predicting soybean exports for the year at 73.5 mmt. While not all of these will go to China, a large portion likely will. This could leave very little Chinese business for the US, and futures will need to remain very competitive for our share of China’s market not to shrink even further. These numbers also make it more important than ever for the US to maintain sales to buyers other than China as well.

Soybean sales out of Argentina have been light in recent weeks, and the immediate response is this is from the Coronavirus. While that may be some of the reason, farmer holding of inventory is more of a factor. Farmers in Argentina believe soybean values will rally later in the year and are holding as much inventory as possible for better values. The only sales taking place right now are for cash generation, which is much the same as what is happening around the world.

The International Grains Council released its world balance sheets estimates today for the 2019/20 and 2020/21 crop years. The IGC raised its grain production forecast for this year to 2.175 billion metric tons, a 3 million metric ton increase. The firm cut its grain demand prediction by 1 mmt, but it will still be greater than production at 2.192 bmt. This scenario will be repeated in the 2020/21 marketing year with world grain production forecast at 2.223 bmt and demand at 2.226 bmt.

The United States has seen demand increase for several commodities recently, but one that is getting the least amount of attention is poultry. Poultry demand stated to increase in late winter when pork and beef values started rising. The elevated consumer buying we had when the Coronavirus hit elevated poultry demand that much more. Consumer tend to buy larger volume of poultry for frozen reserves. Poultry also tends to be cheaper than beef and pork and demand rises when economic market concerns arise.

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.

Morning Comments; Thursday, March 26th, 2020

Corn, soybeans, and wheat are taking a break from the recent strength we have seen. This is especially the case for soybeans and wheat where values have started to reach the top end of recent price ranges. Wheat is more so due for a correction as values are approaching recent highs and are over-extended on the charts. May wheat is above all moving averages as well as the upper Bollinger Band. These are indications that the contract is due for a correction. Trade on a whole is also starting to question the actual benefits of the stimulus package that passed Congress and if it is enough to benefit the economy. While it will be beneficial, there are indications total relief may need to total closer to $6 trillion to actually get the economy back on track. A topic that is quickly moving to the forefront of the market from the news side is acreage. Firms across the US are predicting corn plantings of 94 million acres this year and 85 million acres on soybeans. These are in line with what the USDA projected in both last year’s baseline data and the Ag Outlook Forum in February. These numbers are highly suspect though, as recent and forecasted weather conditions do not support high corn plantings. Many of the regions of the Corn Belt that suffered from excessive rainfall last year are still wet, with some even forecasting more precipitation. Historically, years with wet springs do not lead to high corn plantings. The analysts are basing their expectations on the return of prevent plant acres from last year though and feel they will be seeded mostly with corn. While this is possible, and weather forecasts can change quickly, it seems like a bit of a reach to see actual plantings as high as what are being estimated. The USDA will release its prospective plantings next Tuesday, March 31st. Given the lack of actual fieldwork across the US, these numbers may be cast aside until the revisions are released in June, when hopefully planting has concluded.

Highlights

* $2 trillion stimulus package passes

* Stimulus may need to total closer to $6 trillion to be beneficial

* Chinese GDP -10% from Coronavirus

* Soybean crush in Argentina slows

* Equipment dealers feeling impact of Coronavirus

* US ethanol production -2.9% last week; up 3.1% on the year

* More US ethanol plants going off-line

* Brazil ethanol also impacted by lack of demand

* US crude oil production remains record high

* Brazil lock downs may impact exports

Corn

* More US ethanol plants idled

* Gasoline futures nearly 40 cents under ethanol

* US becoming more competitive in global market

* Brazil crop lowered to 98 mmt

* US sees flash sales to unknown

Soybeans

* Chinese soy meal supply shrinking

* Chinese crush margin at 16-week high

* Crush plants may slow in Brazil, Argentina

* Brazilian Real weakens to US dollar

* Brazil expected to export 73.5 mmt soybeans

Wheat

* State crop ratings improve

* Texas jumps 13% in one week

* Chinese specifications may limit imports

* US rally pushes wheat above global market

* Global wheat demand on the rise

Livestock

* Wholesale beef continues to rally

* Slaughter numbers down on cattle

* Animal weights on the rise

* Hog inventory report after the close

* Futures continue to chase cash market

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.

Closing Comments; Wednesday, March 25th, 2020

Light buying surfaced in the market to start today with support spilling over from the financials. A resolution to the talks surrounding the economic stimulus package also supported today trade. Further strength came from the flash sales of 138,000 metric tons of corn to an unknown buyer and 28,000 mt of soy oil to South Korea. Less than ideal global weather was also favorable, while overbought indicators limited the day’s gains.

The long-awaited economic stimulus package was final approved by the Senate overnight. This will provide $2 trillion in relief for US consumers and industry to offset losses from the Coronavirus. There is also money in this for Ag, with $14 billion for the Commodity Credit Corporation. Another $9.5 billion is reportedly slated for the livestock industry.

To nobody’s surprise, ethanol manufacturing for the week ending March 20th slipped from the previous week. A reported 7.03 million barrels of ethanol were produced during the week, 210,000 fewer than the week before. This is still 3.1% more ethanol than what was manufactured this week a year ago. Ethanol stocks decreased a large 458,000 barrels to a total of 24.14 million. This is still a large volume of ethanol for this time of year.

The renewable fuel industry received supportive news today in that the timeline for President Trump to appeal the decision on blending fuel waivers has passed. Many of the waivers that have been granted over the past three years have been criticized for being given to refiners that were larger than what the plan was initially designed to help. Once these are revoked only a few refiners will be able to maintain their current exemptions. Several refiners have formed complaints on this decision, but it is doubtful they will change the rulings.

In spite of recent delays, Brazilian soybean loadings are not as far behind as thought. Brazil has already exported 7.2 million metric tons of soybeans this month compared to 5 mmt in February. In March of 2020 Brazil exported 8.5 mmt of soybeans and this month’s total could surpass that. The rains that have slowed loadings have eased up which is allowing port traffic to increase. The current wait time for a vessel to load in Brazil is 10 to 11 days which is equal to the five-year average.

Global importers are paying close attention to the crush industry in Argentina. Movement of soybeans to crush facilities have been slowed considerably as farmers are unwilling to make deliveries. This is coming from the worries associated with the Coronavirus. In turn, Argentine crushers are not running to capacity, and meal exports will likely be affected in the near future.

This news comes as China has shown indications of needing to rebuild its soybean and meal reserves. Sources claim China’s soybean reserves are at some of the lowest levels in recent history. This comes as China is staring to rebuild its hog herd following the African Swine Fever outbreak. While this is correct, the onset of the Coronavirus and what it has done to China’s commodity demand on a whole is raising some questions. There are thoughts China’s demand has been lowered enough that soybean stocks have not been drawn down as far as thought.

Questions are also arising on China’s frozen meat supplies. China has released several tons of meat from its frozen reserves, mainly pork. Speculation is this has cut China’s pork supply to historically low levels. While possible, China did import a huge amount of pork prior to the Lunar New Year, and much of this was not used as expected. While not fully offsetting, this surplus has helped ease the releasing of government reserves.

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.

Morning Comments; Wednesday, March 25th, 2020

Congress has approved the US economic stimulus package to help negate losses from the Coronavirus. While the bill is providing nearly $2 trillion in relief, economists claim the total bill could end up providing $6 trillion if fully utilized. The initial reaction to this was friendly, but we are now seeing market soften as the long-term support from funding is being questioned. The main underlying factor in the market right now remains the Coronavirus and the impact it is having on attitude, both near term and long term. It is not out of the question that the worst has yet to come from this virus, both from a health stance and from an economic point of view as well. From the health side it all depends on how well the US population listens to travel restrictions and contamination ends. The economic fallout from Coronavirus may be longer lasting, possibly much longer. This is from the fact the US equity markets were trading at all-time highs and due for a correction. Many indicators pointed to a market that was overinflated to begin with and selling was needed to bring it back into line. The fact many Americans are losing their jobs and some positions will be eliminated altogether will be an issue we will have to contend with as well. One shift we have started to see is more interest in safe haven buying in the market. At the start of the outbreak this did not happen. We are now starting to see more buying interest in commodities, mainly gold. It is not uncommon for this to support all commodities as buyers want a physical product in time of market uncertainty.

Highlights

* Stimulus package passes

* China to inject $7 trillion into economy

* US ethanol industry continues to shutter

* 2 billion gallons of demand could be closed by week end

* Stay at home orders to reduce fuel demand even more

* Available employee numbers a concern for US businesses

* US weather not favorable for early planting

* Summer forecasts more favorable

* Market economics impact acreage

* Debate continues over RFS waivers

Corn

* China to raise corn grower subsidies

* More US ethanol plants slow/stop

* Closures to cut production 2 billion gallons

* DDG values in china +2.4%

* Global corn demand questioned

Soybeans

* Chinese demand on the rise

* Doubts on SAM exports

* Shrinking DDG stocks to benefit meal demand

* Brazil exports getting back to normal levels

* Brazil March soy exports could top year ago

Wheat

* US flour supply shrinks

* China may have bought more US wheat

* Global supply questioned

* Buying interest surfacing in global market

* US wheat overbought/overvalued

Livestock

* Cattle futures undervalued to cash

* Spread has widened to $22.00 at times

* Cattle supply to tighten

* China’s Jan/Feb pork imports +158%

* Stored pork volume in China questioned

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.

Closing Comments; Tuesday, March 24th, 2020

Commodities were on both sides of unchanged today, with corn ending up as the leader late in the session. A recovery in the outside markets took much of the interest today as all eyes were on the economic stimulus package that was being put together in Congress. Thoughts that not just the US but the world economic markets may be stabilizing were seen as beneficial for commodity demand. This comes at the same time China is increasing its commodity appetite. The energy market was finally able to post a recovery which was very beneficial for the corn complex.

The highlight of today’s news was the stimulus package that was being put together in Congress. This is expected to total close to $2 trillion in relief and hopefully offset some of the economic losses that US consumers are facing. The comes after the Fed already announced it would be willing to buy debt if it would help prop up the economy. China has also announced an economic relief pack is being put together in that country and will total close to $7 trillion.

The global market is seeing signs of the Coronavirus stabilizing in some countries. Most of the attention is on Italy, South Korea, and China where new cases have started to level out or decline. This is starting to remove some of the shock that comes with new cases being reported and allowed financial markets to steady themselves. These is also a certain amount of risk acceptance that comes with an outbreak such as the Coronavirus which is when new cases are no longer surprising. Experts are still quick to warn that the virus is not done spreading and many more cases are likely, especially in the United States.

More attention is starting to be placed on possible balance sheet adjustments in the next supply and demand report, especially on soybeans. In recent weeks we have seen reductions to production in both Brazil and Argentina. It is not out of the question we could see a drop in soybean production from these two countries of 8 million metric tons. This comes at the same time China is starting to ramp up its soybean buying as domestic reserves in the country are at historically low levels. It is not out of the question we could see global soybean demand rise at the same time production drops to shift ending stocks a considerable amount.

More ethanol plants across the US are suspending operations due to poor margins. It is believed that most ethanol plants in the US are currently suffering a negative margin or roughly 30 cents on each gallon of ethanol produced. Rather than run at these losses, plants are opting to simply halt manufacturing altogether. It is believed that by the end of this week the US will have 2 billion gallons of ethanol capacity idled. This could lower domestic US corn demand by 300 million bu.

The lack of demand we are seeing for corn could easily end up being a factor in this year’s acreage. The USDA is currently estimating corn plantings of 95 million acres this year, but the recent loss of demand and pressure it has brought corn futures has some farmers rethinking their options. The ratio between new crop corn and soybeans has also started to widen which favors soybean production over corn. Trade is also monitoring weather outlooks as a wet spring is less friendly for corn planting.

One factor trade is starting to consider as we approach the spring planting season is the number of acres in the Conservation Reserve Program. There were 22.32 million acres in CRP in 2019, but that is expected to decline to 21.85 million in 2020. Officials also claim they only expect to see 2.67 million acres of prevent plant in the US this year, compared to a large 17.5 million in 2019. This decrease in prevent plant acres is based on a return to favorable planting conditions in the US which are slow to develop.

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.

Morning Comments; Tuesday, March 24th, 2020

The greatest benefit for the commodity market right now is global logistics. This is especially the case for wheat, as many European countries have shut down borders to prevent the spread of Coronavirus. This is especially the case with France who is a leading supplier of wheat to the global market. With France exports removed, it greatly favors the US as a wheat source. We are also seeing logistic issues from South America as Argentina is halting exports from some of its main ports. This is a great benefit for US exports of soybeans and meal. Further benefit is coming from the export issues in Brazil, as the country remains focused on soybean loadings and not meal. Ongoing harvest delays and the supply disruption this is causing in Northern Brazil is also an issue for the world market, mainly China. China’s soybean appetite is starting to increase at the same time these disruptions are beginning which is stressing global supply lines even more. Aside from the movement of global commodities, production numbers are also a factor in price discovery. We have started to see reduction to global production figures, mainly from adverse weather in South America. Given recent crop estimates for Brazil and Argentina, it is not out of the question global soybean production could shrink 8 million metric tons from current estimates. It goes without saying this would have a sizable impact on global balance sheets. We are also starting to see doubt over global corn production estimates, and the likelihood for that crop to be reduced as well. While none of the reductions being forecasted would push the world into a rationing situation, the shift in the market from a growing supply to a shrinking one is worth noting.

Highlights

* Stimulus packages again fails to pass

* 2020 Summer Olympics to be delayed

* Additional US travel restrictions issued

* Global logistics favor US exports

* Stressful weather continues in SAM

* Widespread rains for US Corn Belt

* Russia suspends cereal exports for 10 days

* World food inflation expected

* Stats Canada Acreage report April 4th

* One week from USDA acreage/stocks data

Corn

* Argentine export forecast unchanged at 33.5 mmt

* US export loadings need to increase

* Russian grain supply -4.35 mmt from year ago

* Economics do not favor US corn production

* Future feed demand questioned

Soybeans

* Canada expects larger canola crop

* Brazil harvest 66% complete

* Soybeans rally in China

* Soybean shortage in China halts crushing

* Argentina claims exports will continue

Wheat

* Canada raises crop estimate

* French wheat 63% G/E

* Australia to make up for Europe losses

* Global logistic issues

* EU soft wheat yields -2.1%

Livestock

* Tyson to add incentive for cattle supplies

* Tyson to pay $5.00/cwt live cattle, $7.99 on dressed

* US beef in cold storage 491 mil pounds; 477 mil in 2019

* US pork in storage 661.6 mil pounds; 615.6 mil in 2019

* Pork bellies in storage 74.4 mil pounds; 53.77 mil in 2019

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.

Closing Comments; Monday, March 23rd, 2020

Soybeans and wheat posted solid advances in today’s session which corn hung back. Logistical issues were the main benefits for soybeans and wheat as these are happening at the same time demand is starting to rise. The commodities are starting to distance themselves from the equity market which is also beneficial for values. We are finally starting to see safe haven buying surface in the market with gold posting a sizable jump today as well. Advances were capped by a hesitation to extend buying at this time, as well as long-term concerns over the US economy and what it could mean for commodity demand.

Over the weekend Congress tried to put together a $2 trillion stimulus package, but this fell short of receiving necessary votes to pass. The main reason for its failure was the lack of clarity when it came to corporate funding. Under the proposal, large businesses would receive a significant payment and be allowed to spend money as they wished without detailing expenditures. This package would have provided a reported $50 billion in Ag relief through Commodity Credit Corporation loans. The Fed instead announced it would be buying mortgage backed debt with no limit, and even though this provided early support, it is not a long-term solution to the current economic recession.

Export loadings for the week ending March 19th fell short of weekly needs on corn, soybeans, and wheat. Corn inspections for the week totaled 32.1 million bu, soybeans came in at 21 mbu, and wheat inspections totaled 12.8 mbu. While these were lower than we have seen in recent weeks, thoughts are numbers will increase in upcoming weeks as more buyers have surfaced for US offerings.

Much of the strength in commodities recently has come from logistic issues, which have developed at the same time global demand has ramped up. This is especially the case on soybeans into China, where the country booked a reported 35 to 40 vessels from South America last week. This is from a rebound in China’s crush demand as feed usage rises. Soybean supplies in China have dropped to a point where crushers have had to slow operations, with crush capacity going from 87% last week to just 39% now. While China has been buying South American soybeans, they are struggling to get them loaded in a timely manner which may cause a shifting in origination to the US if disruptions continue.

While soybeans and wheat have shown strength in recent sessions, corn continues to struggle as weakness in the energy market impacts corn futures. This is from the correlation formed with the ethanol industry. Energy values were initially pressured from a build in output, but now pressure is coming from a lack of demand as travel becomes restricted across the United States and around the globe. The world energy market is now over-supplied, and futures continue to drop. This has caused many ethanol plants across the US to slow operations or simply halt operations, reducing corn demand. Some industry officials believe this could reduce domestic corn demand by 250 to 300 million bu.

Weather conditions remain less than perfect in both the United States and South America. Current models indicate the US Corn Belt will remain wet for the next several days, although conditions may shift in early to mid-April. Even so, this is not conducive to an early start to the spring planting season. South American weather remains dry for Southern Brazil, but a drying trend may develop for northern parts of the country. Argentina is also forecast to see rains, but these may do little to improve crop quality at this stage.

The March cattle on feed report gave the complex some much needed support. As of March 1st, the US had nearly the same volume of cattle on feed as last year at 11.8 million head. February placements dropped a large 8% though to just 1.7 million head. At the same time marketings jumped 5% from a year ago. These numbers indicate the tight US beef supply is likely to continue for the next several months.

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.

Morning Comments; Monday, March 23rd, 2020

Last week the market basically shrugged off all supportive fundamental news and focused instead on the spread of the Coronavirus and its impact on equity markets. The main source of supportive news is the reduction we are seeing to South American crops. The Brazilian soybean crop is now projected to be 121 mmt by many crop scouts. While this would still be larger than last year’s crop, and a record, it is to the point where reductions could drop soybean production under a year ago. Last year’s crop was 119 mmt according to USDA figures. We are also seeing smaller projections on corn in both Brazil and Argentina. These cuts should actually be more of a market factor than the ones on soybeans as world corn production is already under projected usage, and this will just create a larger deficit. While parts of South America will see improved weather for the early part of this week, stressful conditions will return by week end. Trade is also overlooking much of the impact from US weather at this time and how it is not conducive to the large acreage that is currently being predicted. The question with all of these figures is if demand has been reduced enough to compensate for any loss of production. This is especially the case on corn where ethanol manufacturing is dropping due to poor margins. Several US ethanol plants have slowed operations and more have suspended production altogether. There are thoughts this could add over 300 million bu to the US corn supply. While exports have showed more activity in recent weeks, they will not negate a loss this large in the ethanol sector. As this week progresses, we will start to see estimates for next week’s quarterly stocks and prospective plantings reports, but these could be overlooked if the equity market continues to act as they have in recent weeks.

Highlights

* Stimulus packages stalls in Congress

* US sees elevated demand for wheat

* Coronavirus continues to spread at rapid rate

* More favorable weather for late spring

* Ethanol production to drop

* Gulf basis showing strength

* Exporters concerned with Brazil export pace

* Closures taking place to SAM ports

* Despite sales, US vessel line-up lowest in 32 months

* Spring flood risk considered high

* USDA says no delays to report releases

Corn

* China corn buying highest in 6 years

* Corn continues to follow crude

* South Korea remains an active buyer

* Feed production picks up in China

* 87% of Chinese feed mills now operational

Soybeans

* Brazil unable to export meal

* Argentine suspends exports at some ports

* SAM crop is shrinking

* Argentine crop 35% G/E; -4% last week

* Soy meal in China at 5-month high

Wheat

* EU crop reduced

* Global wheat supplies adequate but shrinking

* China books US wheat

* Weather hurting Black Sea production

* Surge in demand for wheat products; IE flour, pasta

Livestock

* March 1st cattle on feed 100% of 2019 at 11.8 million head

* Feb placements -8% from 2019

* Feb marketings up 5%

* China auctions more pork from reserves

* US consumers turn to poultry

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.