Closing Comments; Friday, April 17th, 2020
Agrivisor - SETZ - Fri Apr 17, 2:10PM CDT

Grains were the leaders today as light pre-weekend short covering developed in those contracts. Oversold indicators on corn were also supportive, as was the general belief that corn acreage is highly overestimated at the present time. Soybeans struggled for much of the session even though an export sale of 120,000 metric tons to an unknown buyer was announced this morning. Commodities all benefited from hopes of an economic improvement for the United States following news that some states are going to gradually start lifting their quarantine restrictions.

Weather is quickly becoming more of a factor in price discovery in the commodity market. Long range weather models indicate that much of the central US will remain wetter than normal this year. While conditions are not forecast to be as wet as last year, this may still be an issue for portions of the region that are still suffering from ongoing soil saturation. This is causing further doubt to be cast over the high acreage number on corn that is being forecast. The last time the United States was not in a wetter than normal pattern was in April of 2018.

The opposite has been true in Brazil, and this has led to reductions being made to crop production estimates. Sources in Brazil have lowered their Safrinha crop estimates to 73.9 million metric tons compared to 74.3 mmt a year ago. According to field scouts the next two weeks with be critical in whether additional reductions needs to be made to crop size or not. This will greatly impact Brazil’s corn export potential, as the Safrinha crop provides Brazil with 75% of its corn supply, and nearly all of its exportable stocks.

Wheat traders are keeping a close eye on developments in the Black Sea, mainly Ukraine. The Ukraine government announced they will limit wheat exports to 20 mmt for this marketing year which ends in June. Ukraine wheat exports are already at 18 mmt so additional sales will be limited for the next few months. The Ukraine government is forecasting a sizable drop in next years wheat exports, with no more than 12 to 15 mmt forecasted.

While the domestic ethanol market in the US has seen demand destruction take place, the export market has actually improved in recent days. The current export bid on ethanol is $1.02 per gallon, a 7.5% rebound from its low. This is mainly from a tightening of supplies as deliveries dwindle following the closure of more US manufacturers. While an improvement, ethanol at the gulf is still down 28.7% from a year ago.

Cumulative exports on corn and soybeans are giving mixed outlook indications. At the present time US corn exports are 48% of the yearly projection compared to 55% of the total a year ago. While total exports are forecast to be down and we have seen an increase in demand in recent weeks, this indicates our current USDA estimate for the year may be too high. Just the opposite is taking place in the soy complex. Yearly exports on soybeans are 68% of expectations compared to 62% last year. This indicates the yearly estimate on soybean exports may be too low.

Even with efforts being made to increase production, China’s pork output continues to decline. During the 1st quarter of 2020 Chinese pork production was down 29%, making it the 6th consecutive quarter with reduced pork production. This is the ongoing result of the African Swine Fever outbreak that devastated China’s hog herd. The continued reduction in pork production indicates a shortage of breeding stock to rebuild the nation’s hog supply. Economists believe total pork production for 2020 will be down 20% from 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


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