News

Morning Commentary

May corn down 2 ¼ at $3.4625

May beans down 1 ½ at $8.80

The DOW is down

USD is weaker

Crude oil down $.89 at $23.60

Good morning,

Corn bears continue to keep a lid on most rallies as the fallout in crude oil and the coronavirus lockdown has ethanol on its heels. Yesterday’s EIA numbers showed weekly gasoline demand falling aggressively. Not only are energy traders penciling in a lot fewer gallons of gasoline demand but in turn, many are now penciling in a lot fewer gallons of ethanol demand. At the same time, ethanol surplus is thought to be around the second-highest level ever for this time of year. Most inside the trade are in full agreement that the USDA will soon be cutting its overall ethanol demand estimate the question now isn’t if but rather by how much? Several believe the USDA will take a conservative and tiered approach towards reducing its estimate, i.e perhaps cutting -100 million bushels in demand early, then cutting -50 million a clip as they learn more about closures and overall demand. Ultimately, however, there’s concern that over -250 million bushels in demand could be lost. Bulls are hoping that stronger exports and greater demand for feed help soften the losses from ethanol. The bad news is the fact some bears are already starting to talk and spread rumors that we could see nearly 3.0 billion bushels in U.S. ending stocks as ethanol demand waivers, U.S. soils are mostly recharged, and U.S. corn acres are thought to be climbing higher in 2020.

Soybean bulls continue to talk about possible complications associated with coronavirus. Crushing facilities in Argentine are operating mostly uninterrupted, but we are starting to hear more talk about possible lack of supply as transportation in and around the nation becomes an issue. If the crush facilities can’t get their hands on the soybeans it will certainly tighten global supply.

Americans are stockpiling eggs during the coronavirus crisis as they cook more meals at home. That’s leading to supply shortages and a spike in prices at some supermarkets. Egg sales increased +44% for the week ending on March 14 compared with a year ago, according to the most recent Nielsen data. Walmart and other big grocers have implemented limits in recent days on purchases of products that are in high demand from customers, including eggs. Retailers are ordering up to six times their normal egg volumes and have depleted the supply that producers were beginning to build for Easter. Wholesale egg prices have risen +180% since the beginning of March, according to Urner Barry, which publishes a daily benchmark for the industry.

A trio of refineries on Tuesday appealed a recent court decision blocking them from obtaining biofuel blending waivers, a pivotal ruling that scrambled the Trump administration’s ethanol policy. But energy sector officials say the White House isn’t backing the new appeal. Two months ago, the federal court said the EPA could not hand out new waivers to any oil refiners who weren’t continuously exempt from their obligations under the Renewable Fuel Standard, which mandates that certain volumes of biofuels are blended into the U.S. gasoline pool. The decision was a massive win for ethanol interests who have long argued against the legality of the EPA’s use of waivers, which have skyrocketed under the Trump administration. But the refiners affected by the ruling called it a “death knell” in their appeal. The White House has waffled between planning to accept the ruling or fight it. Oil industry members say Trump decided not to challenge the decision and will instead seek other ways to provide financial assistance for oil refiners. (Source: Poltitico)

 

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