Morning Commentary

May corn down 1 ½ at $3.1775

May beans down ½ at $8.3875

The DOW is up

USD is stronger

Crude oil up $.82 at $17.32

Good morning,

Corn bulls continue to hope for Chinese buying and stabilization in the energy markets. The corn demand losses associated with ethanol are real and working heavily to keep a lid on most all nearby rallies. The trade needs to become comfortable and knowing that ethanol has stabilized and demand is not in a continued freefall. We also have the feed uncertainties as livestock is being backed up in all sectors. The trend for July corn is negative. Closing below 317.25 signals a drop to new lows and possibly 300. Sustained action over 328.75 is the minimum needed to improve the outlook.

Soybean bulls are pointing to more rumors and talk of Chinese buyers like COFCO are making a few more U.S. purchases. Most inside the trade are thinking the Chinese have purchased somewhere between 8 and 12 U.S. cargoes out of the Gulf this week, with prices actually higher than what they could pay out of Brazil. Bears continue to point towards weaker than expected export sales, corona related uncertainty possibly hurting domestic crush demand nearby, and more U.S. acres being planted to soybeans. The trend for July beans is negative. Stable action above 832.75 signals a return to higher trade. Closing over 856.25 confirms the turn. A failure at 832.75 signals new lows for the move.

China is preparing to buy more than 30 million metric tons of crops for state stockpiles to help protect itself from supply chain disruptions caused by the coronavirus pandemic and make good on pledges to buy more U.S. crops, three sources told Reuters. China plans to add about 10 million metric tons of soybeans, 20 million metric tons of corn and 1 million metric tons of cotton to its state reserves. The bulk of the crops would be imports, and mainly from the United States, as China works to fulfil its commitment under the Phase 1 trade deal signed in January, the sources said, declining to be named because of the sensitivity of the matter. Beijing also plans to add 1 million metric tons of sugar and 2 million metric tons of soybean oil to the reserves, the sources said. It was not clear where that would come from. (Source: Reuters)

Tyson Foods will temporarily halt production at a beef facility in Pasco, Washington. This follows the announced closure of two pork processing plants on Wednesday in Waterloo, Iowa and Logansport, Indiana. The Washington unit, Tyson Fresh Meats, said it was working with local health officials to test more than 1,400 workers at the Pasco plant, which produces enough beef in one day to feed four million people. Tyson said workers at the Pasco plant have been asked to self-isolate at home until test results return and they will continue to be compensated while the facility is closed. Benton-Franklin Health District officials reported 91 cases of the coronavirus linked to the facility among residents so far. It’s unclear when the plant may reopen. Steven Stouffer, group president of Tyson Fresh Meats, said in a news release, “Unfortunately, the closure will mean reduced food supplies and presents problems to farmers who have no place to take their livestock. It’s a complicated situation across the supply chain.” (Source: Reuters, East Oregonian) 

The World Bank slashed its outlook for oil and metals prices on Thursday due to the economic fallout of the coronavirus pandemic and said the commodity market shock could hit developing countries hardest. Crude oil prices are expected to average $35 a barrel this year, down -43% from the average in 2019, the World Bank said, marking a sharp downward revision from its October forecast. “The downward revision reflects an historically large drop in demand,” the World Bank said in a press release. It said overproduction from OPEC and other major world oil producers was exacerbating the price decline. Metals prices, meanwhile, are seen dropping -13% overall this year, the World Bank said. But gold, a traditional safe-haven investment, is seen up nearly +15%. It added that the impact of the health crisis on agricultural commodity prices is expected to be moderate, but that supply chain disruptions could raise the food security risk in some places. “This enormous shock to commodity markets and low oil prices could deliver a serious setback to developing economies,” said Makhtar Diop, World Bank Vice President for Infrastructure, in the press release. (Source: Reuters)


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