Broader market losses hit grains and oilseeds hard
Soybeans were sharply lower on fund and technical selling, falling through what had been support. Ag commodities generally saw pressure from the broader market on concerns about the spread of COVID-19. That included a big drop in the Dow Jones Industrial Average to start April, after the worst quarter in history for U.S. equities. The USDA expects an increase in bean acreage and that could rise further as we get closer to widespread planting because of concerns about corn profitability and ethanol demand. The trade is also keeping an eye out for new demand from China, but China has reportedly been buying soybeans actively from Brazil, with some analysts expecting record shipments during March. AgRural has Brazil’s bean crop at 123.5 million tons, down from the previous guess of 123.5 million, but still a record high. Forecasts for Argentina have beneficial near-term rainfall followed by a drier pattern more conducive for harvest activity. The USDA says February’s soybean crush was 182 million bushels, a decline of 7 million from January, but larger than expected and a jump of 19 million from February 2019. Soybean meal was mostly lower on spread adjustments, while bean oil was down on biodiesel demand concerns and the lower move in beans.
Corn was lower on fund and technical selling, with May near the contract low and December hitting a new one year low. The USDA is currently projecting corn planted area at 97 million acres, potentially the second largest on record, after 2012. That will probably change because of concerns about ethanol demand on the drop in crude oil. The weekly ethanol numbers were very bearish, with average production the lowest in six and a half years at 840,000 barrels, a drop of 165,000 on the week, while stocks were up 1.577 million barrels at a record 25.717 million. Those are both tied to a slowdown in demand because of stay at home and social distancing orders tied to coronavirus. The USDA’s next set of supply and demand estimates is currently scheduled for April 9th. Ethanol futures were sharply lower. The USDA says February’s corn for ethanol use was 433 million bushels, down 8% on the month, but up 8% on the year. DDGS production was 1.82 million tons, 7% less than the previous month, but 7% more than the year before.
The wheat complex was sharply lower on fund and technical selling. Contracts were down on the general bearishness and the bearish global fundamentals, but the USDA expects record low planted area this year and domestic demand is solid. Paris milling wheat was lower heading into the U.S. session. The trade is also watching winter wheat conditions as the crop emerges from dormancy and weather in the northern U.S. Plains ahead of widespread spring wheat planting. The USDA’s weekly crop progress and condition reports resume Monday, April 6th. Russia is still reportedly considering a cap on grain exports proposed by the Ag Ministry. DTN says Algeria bought 250,000 tons of milling wheat and Tunisia purchased 75,000 tons of milling wheat, both from an unknown origin. The USDA’s weekly export sales numbers are out Thursday morning.