• Chicago ag futures are sharply lower with wheat and soybeans pacing the decline on the expanding coronavirus pandemic fears. Chicago wheat has fallen below its 50 and100 day moving averages (and January lows) which has sparked wholesale fund liquidation. Funds are long a record amount of Chicago wheat and they are selling on the seasonal weakness in world FOB values.

• Soybeans have fallen back to their late January lows at $8.6875 while March corn has dipped below its January lows at $3.7075. A sharply lower Chicago grain close today is likely to spur additional long liquidation on Tuesday.

• The US DOW has fallen to losses of 1,000 points with the 30-year bond rate falling to a record low of 1.8%. The worry is that world economic growth will be severely crimped by expanding coronavirus infections.

• The decline in asset prices has become emotional this morning as traders/investors try to understand the expanding world coronavirus risk profile. Fund managers report that it’s “risk off” because they cannot measure the economic impact of coronavirus. Ag traders understand that the expanding coronavirus will disrupt supply chains and world demand. The market understands that Covd-19 is not SARs or MERs, but a virulent cousin that is now expected to be disruptive of world economic growth for weeks/months to come. SARs never exploded in world incidence like this coronavirus. Containment will be key going forward.

• US livestock prices will be the “canary in terms of measuring world food demand and economic activity. One should not consider buying corn, soybeans or wheat until a bottom is confirmed in US livestock futures. April cattle futures are limit down with pork futures sharply lower this morning. US meats have a much more bullish outlook amid China’s demand for foodstuffs once coronavirus worries subside.

• US export inspections for the week ending February 20 were; 35.9 million bu of corn, 21.8 million bu of soybeans and 15.1 million bu wheat. Total US grain exports were 73.5 million bu compared to 90.0 million last week and 107.3 million last year.

• For their respective crop years to date, the US has exported 520 million bu of corn (down 462 million or 47%), 1,016 million bu of soybeans (up 138 million or 15%) and 666 million bu of wheat (up 59 million or 9.7%). China shipped out just 5.0 million bu last week, a total that its likely to decline further in the weeks ahead.

• The US$ has stabilised following the morning surge. Much of the world is on Carnival holiday ahead of Ash Wednesday. It is expected that the Brazilian Real will open at a new all-time low of $4.40-4.50 vs the US$ later this week. The Russian Ruble is back to 65.5:1 which is spurring Russian cash wheat selling from the producer. The world farmer will sell into the Chicago decline based on the fall in their local currency (and rise in domestic cash bids).

The midday GFS weather forecast has added to Brazilian precipitation totals while a dry pattern holds across Argentina for the next 10 days. No heat is expected for S Brazil and Argentina, with the 12-15 day period offering a modest rain chance. It will be important that some rain returns to Argentina in the 11-15 day period.

It is hard to be long of any ag commodity amid the fear of declining GDP rates (demand) due to the global spread of coronavirus. There will be periods of short covering, but new buying demands virus containment. Chicago wheat has a record net long fund position that is in liquidation. Watch to make sure the S&P holds its January low at 3,183 (monthly reversal).