Coronavirus spread pressures grains, oilseeds
Soybeans were sharply lower on fund and technical selling, closing near the lowest levels in several months. Commodities and the broader market responded to the spread of coronavirus in China and other countries, with new reports of outbreaks in Japan, South Korea, Iran, and Italy. The trade was already uncertain about demand from China because of the expected record production in Brazil and demand from Beijing was already slower than anticipated but the demand concerns linked to coronavirus has just exacerbated those uncertainties. Mexico bought 163,290 tons of 2019/20 U.S. soybeans Monday morning – the first sale announced by the USDA in three weeks. Weekly export inspections were bearish. Soybean meal and oil followed beans sharply lower.
Corn was lower on fund and technical selling, holding up relatively well when compared to most ag commodities, but the May contract still notched a multi-month low. The USDA is projecting a big increase in planted area this year, but that will be dependent on weather. Parts of the Corn Belt are receiving more precipitation this week and long-term forecasts are wet in some key U.S. growing areas. The USDA’s prospective planting numbers are out at the end of March. Corn is also watching conditions in Argentina and Brazil. Ethanol futures were lower. China is reportedly interested in U.S. corn, DDGS, ethanol, and sorghum, but aside from sorghum, none of those demand expectations have apparently come to fruition. Nearing the halfway point of the 2019/20 marketing year, corn export inspections remain bearish. DTN says a South Korean feed mill bought 65,000 tons of optional origin corn.
The wheat complex was sharply lower on fund and technical selling. Hard red winter conditions generally look good, while some soft red winter areas are excessively wet and probably going to get wetter. Spring wheat planting delays are probable in parts of the northern Plains. That’s not only because of weather this year, but also the significant harvest delays last year, including some corn being left in the fields. Export inspections were bearish and while the recent decline in price might help competitiveness, Russian wheat prices have also moved lower recently. SovEcon sees Russia’s 2020 crop at 83 million to 87 million tons.