- Chicago grain futures are mixed at midday in diminished volume. The DOW is sharply higher on optimism that surrounds Covid-19 (Italian infections peaking and following a curve like S Korea) amid US President Trump’s call for Americans to get back to work in a week. We note that DOW volatility has been acute and often forms an early week low, with a midweek rally, followed by a late week decline. A bottom in the DOW hinges upon the efficacy of a Covid-19 treatment or that US infections reach a peak.
- We doubt that Covid-19 infections will reach a peak until April. However, the US needs to be stern in stamping out the virus. Without eradication, the virus will “dog” the economy and the markets for months. A mixed Chicago close is forecast, with a “reduction of risk” the theme from stay-at-home traders. It is the activity from Index Fund managers that must be closely followed heading into the end of a rough 1st quarter on redemptions.
- Chicago brokers estimate that funds have sold 3,200 contracts of corn, 1,900 contracts of soybeans, and 1,400 contracts of Chicago wheat. They have bought 3,100 contracts of soyoil and sold 900 contracts of soymeal.
- CME cattle futures are locked with the expanded $4.50/cwt limit with April priced at $106.15. Cash bids are unavailable with feedlot asking prices said to be $124-126.00. CME cattle futures became too cheap on the fear that a Covid-19 infection would close a kill plant for 2 weeks.
- There was a reported employee infection at a Sanderson’s Farm Kill facility. The area where the employee was stationed was scrubbed/disinfected which allowed the plant to reopen. This is likely to become a “blueprint” for other processor outbreaks which suggests that long plant closures are unlikely (in meat kill facilities, wheat millers and soybean processing plants).
- The Argentine Government has declared that its ports will remain open for business by amending last week’s order saying that “transport of cargo to ports will be exempt” from the nationwide quarantine. Local Government can no longer block transit of trucks, trains or ocean vessels at berth. However, exporters report that keeping employees on the job is proving difficult.
- The Senate is finally making progress on the massive US Coronavirus Assistance Bill which was struck down late Monday. The size of the Bill will be more than the entire proposed US budget for 2020 at over $2.0 trillion. The financial assistance for a married couple is expected to be $1,200 and $500 for a child with an income cap. It is expected that the CCC refunding will be included (not in the Democrat proposal) to offer additional MFP aid to the ailing US farm economy. A vote is expected this afternoon with Senator Schumer saying the Bill is now on the 2-yard line.
- USDA/USTR stated that China and the US are moving in the right direction in implementing the Phase One Trade agreement signed on Jan 1. USDA Secretary Perdue stated that US cattlemen could export as much as $1 billion dollars of beef products, US poultry produces $1 billion of poultry products and changes in China’s anti-dumping regulations could help US exporters recapture a share of China’s feed marketplace in DDGs. Since March 2, Chinese importers are receiving tariff relief for US ag good purchases.
- The USDA/USTR comments were made to offer support that China is making the right overtures for US ag goods following its Covid-19 fight of recent months. No new purchases of US grain or other ag goods can be confirmed this morning. The announcement caused a rally in Chicago corn, wheat and soy futures at midday.
- The news that the US/China are making fresh progress on Phase One US ag purchases lifted Chicago futures heading into midday. However, the losses for US ethanol demand will be substantial, unless Russia/Saudi Arabia end their crude oil fight for world market share. We would see any rally to $3.70-3.75 Dec corn as new sales opportunity. Wheat is become political on the Russian debate over export restrictions.