- Ag futures are mixed, with grains down sharply and soybeans steady. It is more of the same in Chicago and elsewhere as focus sits squarely on the spread of coronavirus. The virus’s spread into Latin America and Europe will make containment all the more difficult, while discretionary spending will on the margin be trimmed until the disease is controlled. Recall the 2020 summer Olympics are due to take place in Tokyo in July. It is premature to forecast the duration of coronavirus, but summer travel will be hit hard should it continue.
- The US equity market has entered correction territory. Spot crude oil is down $1.25/barrel with gasoline and ethanol prices following.
- There has also been a real lack of bullish fundamental input. Argentina’s corn harvest will begin in earnest in the weeks ahead. More of the trade is beginning to digest recent and upcoming rainfall in both Western and Eastern Australia, where a years-long drought will be eliminated amid normal March precipitation.
- Russian wheat prices have been moving lower as farmers in the South become more active in selling remaining old crop bushels. The Ruble at midday is sharply weaker as crude’s decline is extended. This will only add to selling incentive in the Black Sea.
- US export sales through the week ending Feb 20 featured decent interest in US corn but uninspiring interest in wheat and soybeans.
- Corn sales through the period totalled 34 million bu. This compares to 49 million the previous week but is well above the 26 million bu average needed to meet the USDA’s target. Another 1-2 weeks of sales in excess of 30 million bu is expected before global demand shifts to the Southern Hemisphere. Wheat sales were 14 million bu, vs. 13 million the prior week. Soybean sales totalled 12 million bu, vs. 18 million the prior week and vs. 24 million in late Jan/early Feb. Increasingly the USDA’s 2019/20 US soybean export forecast appears much too high. China last week secured just 72,000 mt of US beans. Soy oil sales totalled just 5,600 mt, vs. 29-53,000 in Jan and early Feb.
- We would mention that China was confirmed to have bought 119,000 mt of US sorghum, with another 324,000 mt of sorghum sold to unknown destinations. Chinese interest in US crop markets is otherwise absent. The GFS weather forecast has shifted soaking rain next week south. MO, IL and IN will be spared. Lasting, and needed, Midwest dryness is probable into mid-March.
- In S America, the midday GFS forecast is drier in Argentina in the 11-15 day period. The GFS keeps the current pattern stagnant into the middle of next month. Near daily showers will be ongoing across Mato Grosso, Goias, Minas Gerais and far Northern Brazil. Very little rain is forecast elsewhere in S America over the next 10 days. Argentine temperatures are forecast to rise as soil moisture erodes, with high temperatures projected in the low 90s. A majority of corn in Argentina has passed through pollination, but later planted crops will be in need one 1-2 more rain events in the next 30 days.
- Fund length in Chicago wheat looks to be eliminated, while global GDP growth uncertainty will make lasting rallies very laboured in the weeks ahead. We would advise against selling into this correction, but the next potential ag markets spark is likely the release of NASS’s stocks and seedings data in late March.