Morning Comments; Monday, March 16th, 2020
Agrivisor - SETZ - Mon Mar 16, 6:36AM CDT

Yesterday the Fed announced it would be cutting the US interest rate to zero. This came following several others who reduced their interest rates over the weekend. This caused another wave of panic selling in the equity markets, which continues to weigh on the commodity market as well. While it seems early, trade will soon start to position for month end. This is not from the turn of the calendar, but rather from the data that will be released on March 31st. This will be the quarterly stocks data and the prospective plantings. It is not surprising that the acreage numbers are being most talked about as they have received attention ever since harvest concluded last year. The USDA has already published lofty predictions for corn and soybean plantings, and now we will see if farmer sentiment is the same. We need to keep in mind that these numbers are just estimates and will undoubtedly change, especially in regions where weather will impact soil conditions. More attention should be placed on the quarterly stocks data, as those numbers are firm and can be backed up with factual figures. Trade is fully expecting to see adequate reserves of all three main commodities to finish out the marketing year. The real question is if demand projections need to be adjusted for the remainder of the marketing year. In recent weeks we have seen corn demand perk up in the export market while soybean demand has flattened. This could easily give us a larger stocks number on soybeans than we have been projecting for the end of the marketing year. Trade will also start to pay more attention to weather outlooks now that we are at mid-March as we are approaching the start of the planting season. Any indication of a repeat of last year’s spring will alter the way trade looks at the prospective plantings numbers.

Highlights

* Fed cuts interest rate to zero

* Coronavirus uncertainty builds

* Equity market under heavy losses

* China to receive flexibility on Phase 1

* No floor trade on CME starting today

* Stimulus plans not benefitting markets

* Many US schools/businesses closing

* More reductions to Argentine crops

* Overall commodity demand questioned

* Chinese ports seeing more normal unload times

* Spring/summer weather looks more favorable

* Market now waiting for March 31st reports

Corn

* Feed demand to grow

* Test weight rising on late harvested corn

* Ethanol margins negative, plants slowing

* Gulf basis is firming

* Buyers surfacing for US offers

Soybeans

* Reductions to Argentine crop

* NOPA crush report today

* Line up building for SAM soybeans

* Basis at gulf firms

* Concerns build over potential cancellations

Wheat

* EU again raises export forecast

* Rains benefit US plains

* Russia to leave export tariffs at zero

* US sees elevated competition

* US exports may still pass expectations

Livestock

* Livestock see more limit losses

* Consumer confidence is dropping

* Beef exports +34.4% from year ago

* China has bought 37% of US pork exports

* Cash trade is weak

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




 

Market Commentary provided by:

Karl Setzer Grain Commentary