Morning Comments; Friday, April 24th, 2020
Agrivisor - SETZ - Fri Apr 24, 6:41AM CDT

This has been one of the most volatile weeks for commodity trade is recent history. New contract lows were established on several commodities as fresh selling interest surfaced. Much of this was the result of demand destruction concerns and how they are changing the global economy. The most noted this week was in crude oil where for the first time in history the spot contract went negative in value, and not by just a little bit. While this was the result of being in the delivery period, the fact that deferred contracts were also under significant pressure this week was concerning. Demand is one reason for this, but the fact the world continues to produce more crude oil than needed is an issue that has plagued the complex for several years. The question now is when we may see demand perk enough to help reduce these reserves. Another source of pressure on the commodity market was planting reports from the Corn Belt. While some regions remain idled, others are seeing active planting take place. Some parts of the US claim they will be half done with corn seeding by the end of the weekend. While the projection for 97 million acres of corn being planted is still a stretch, this activity will reduce how many acres may shift to soybeans, or simply be abandoned. The real interest on corn acres is in the fringe areas where planting is not as advanced, and farmers claim to be more willing to use prevent plant insurance this year than last. Low commodity values have started to perk buyer attention though, especially corn, which is starting to provide at least some support. Much of today’s session will likely be spent simply shoring up positions ahead of the weekend and monitoring planting reports from across the Corn Belt.

Highlights

* Markets search for fresh news

* Labor issues impacting global ag

* News of more ethanol plants reducing production

* Ethanol loss may already be priced into market

* Market is void of risk premium

* China continues to buy soybeans

* China looks to accelerate purchases

* Ukraine grain stocks -2.6 mmt year ago

* Country basis starting to firm

* Active planting weekend expected

* Some regions of Corn Belt still struggle with wet fields

Corn

* Corn for ethanol closer to 4.5 bbu; USDA at 5.05 bbu

* Bargain buyers starting to surface

* Corn recovering from 10-year lows

* US corn cheapest in world market

* Heavy planting in central US, fringe areas struggle

Soybeans

* Argentina to reduce plantings

* Product demand not as high as hoped

* Elevated soybean plantings possible

* Some early planted regions hurt from frost

* Chinese buying builds

Wheat

* Global drought a concern

* Freeze damage in US winter wheat crop

* US HRW acres already lowest in almost 100 years

* Spring planting delays continue

* Argentina predicts higher plantings

Livestock

* Beef in cold storage 502.4 mil pounds

* 622 mil pounds pork in cold storage

* Cattle on feed after the close today

* April 1st cattle on feed estimated 95.2% of 2019

* March placements 80.7%, marketings 112.2%

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