Morning Comments; Wednesday, April 22nd, 2020
Agrivisor - SETZ - Wed Apr 22, 6:40AM CDT

Corn and soybeans held steady in overnight trade while wheat trended lower. The greatest influence on the commodity market right now is demand, and the United States is seeing mixed indicators when it comes to demand for its corn, soybeans, and wheat in the global market. Over the past few weeks corn demand has perked up as the US has become the cheapest source of that grain in the global market. This has generated an increased level of export interest as even China has made purchases. The lack of competition from alternative sources has also benefited US corn exports, as has the uncertainty over global production. Weather in South America has caused many analysts to reduce their corn production estimates, especially in Brazil. Brazil needs corn following last year’s over-selling of stocks, which may also limit how much corn the country can export this year. Doubts over the Argentine corn crop are also providing export potential for the US. The same is true on wheat where global production uncertainty and an unwillingness for some countries to over-extend sales are bringing more buying interest to the US. One factor that is limiting US wheat sales is transit costs, as even though US wheat is current some of the cheapest in the world market, transportation costs are keeping buying interest low. Soybean sales have also struggled in recent weeks as South America continues to offer soybeans at a discount to ours. This is fully expected during their harvest which should start to wind down in the next few weeks. Hopes are this will bring the US elevated soybean interest later in the summer months, although this may be less than anticipated. China reportedly has its needs covered through May and has been inquiring on Brazilian June and July offers. While this does not mean that is where China will source soybeans from, the simple fact they are showing interest is worrisome for US exporters.

Highlights

* Concerns build over US economy

* Demand destruction in crude not a quick fix

* 50% of US ethanol capacity idled

* Additional support packaged for small businesses passes

* Reports of an energy support package being planned

* China may import US corn for storage

* China claims Phase 1 will still be met

* Active planting being reported

* Basis firms as focus turns to planting

* Soy buyers continue to go to Brazil

* Feeders shift to maintenance rations

Corn

* China projects crop of 260 mmt

* Planting reports mixed for US

* Feed demand questioned

* China may waive corn import tariffs

* South Korea buying from SAM over US

Soybeans

* Chinese purchases remain light

* Chinese imports to remain strong through 2029

* Palm oil weakest since 2009

* US weekly loadings at 19.8 mbu, Brazil was 128 mbu

* Large meal/Oil stocks becoming an issue

Wheat

* Russian exports perk up ahead of suspension

* Suspension to only benefit US for roughly 6 weeks

* Black Sea production being questioned

* Egypt continues to shop for needs

* Cold temperatures did impact US winter crop

Livestock

* Livestock industry losses at $13.9 billion from Covid-19

* 10% of US pork capacity now off-line

* Wholesale beef values perk up

* Hog slaughter up from week ago

* One of Canada’s largest packer halts operations

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