Morning Comments; Wednesday, April 29th, 2020
Agrivisor - SETZ - Wed Apr 29, 6:34AM CDT

Month end positioning is starting to intensify in the markets. This led to the mixed trade we had in yesterday’s session and is causing the same to start today’s as well. Demand is always a factor in price discovery, but it has been the only factor for the past several weeks. This is a direct result of the Covid-19 outbreak and the demand destruction that followed. We are now seeing a more mixed tone when it comes to exports. The initial reaction in the market when demand started to falter was a collapse in values. We are now starting to see some buyers look at this as a buying opportunity, as US values are now some of the most affordable in the global market. This is especially the case on corn, and even on soybeans the spread between the US and Brazil has narrowed considerably. Buyers have started to surface as a result, especially China, who needs to rebuild its reserves after several weeks of suspended imports. The greatest uncertainty on demand is now on the domestic side as we continue to see ethanol plants slow or halt operations as energy demand is down. Logistic issues are also plaguing the ethanol industry as plants cannot get product moved out and storage is filling quickly. The same is happening in the soybean crush industry as facilities are filling with product faster than it can be consumed. Many ethanol and crush plants are now renting storage to hold goods, including rail cars. The concern with this is that even when we do start to see an increase in demand it will take some time to work through this product glut.

Highlights

* Farmers not concerned with planting in cool soils

* Demand destruction remains biggest factor in market

* Loss of demand negating any production issues

* US food banks reporting shortages

* Consumer confidence is falling

* Planting to slow this week

* Experts warn of Covid resurgence

* Milk consumption down significantly in EU

* Rains become critical for Russian development

* Mixed weather forecast for SAM

* Market struggling for fresh news

Corn

* High freight causes collapse in Argentine corn

* US carryout expected to rise

* Russia is still loading out product

* Funds continue to add to short position

* Rains will slow planting this week

Soybeans

* Farmers not waiting to plant soybeans

* Pressure building from Canadian canola harvest

* Crush margins weaken

* Brazil exports up 45.7% from last year

* Rains stall Argentine harvest

Wheat

* Improved Black Sea weather

* Wheat over-priced for feed grain

* Concerns remain over global wheat supply

* Spring planting pace to advance

* US not competitive in global market

Livestock

* Yearly cattle slaughter -2%

* Yearly hog slaughter +3%

* Heavy animal weights a concern

* Consumer demand turns local

* President Trump orders packers to stay open

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