- Chicago grain markets are lower as funds sell amid the general decline in a host of commodity markets tied to coronavirus and Brexit. The end of the month looms and January has not been a kind start of the year for many managers. Risk off is the theme with grains/livestock under acute selling pressure. China’s financial markets will reopen on Monday and strong selling is anticipated, following the losses in other world financial markets amid the coronavirus’s deepening drag on China’s economy.
- The Hong Kong stock market fell 3.5% while Taiwan fell 5.5% overnight. Seasonally, as China returns from its Lunar New Year, US ag futures normally rally on the anticipation of fresh China buying. The fear today is coronavirus could impact on the Phase One Deal ag purchases with the US.
- Chicago brokers estimate that funds have sold 7,000 contracts of corn, 5,400 contracts of soybeans, and 4,200 contracts of wheat. In soy products, funds have sold 4,300 contracts of soyoil and 2,900 contracts of soymeal.
- GASC secured 180,000 mt of French wheat for March 11-25 shipment. The cost of the wheat purchased was $231.10/mt basis FOB plus an estimated $15.00 for freight. This purchase was down $5.10/mt from their purchase of last week which including mostly Russian/Ukrainian wheat. GASC has now covered their import needs and the window for additional purchases before their April/May wheat harvest is closing, when Egypt normally looks to secure its own domestic crop for milling needs.
- The WHO (World Health Organization) stated that coronavirus is not a not a global health emergency. The new virus is causing acute sickness and an unfortunate death of 2.2% of those infected. The mortality rate has been in decline for the past few weeks with those perishing largely elderly or the young. The decline in the mortality rate is good news and will help calm nerves following the China’s return from the Lunar New Year on Monday.
- US export sales for the week ending Jan 23 were; 23.7 million bu of wheat, 48.6 million bu of corn, and 17.3 million bu of soybeans. For their respective crop years to date, US wheat sales are 769 million bu (up 111 million or 17%), 848 million bu of corn (down 423 million/33%) and 1,164 million bu of soybeans (up 48 million) or 4.3%.
- US soymeal sales were (again) huge at 438,800 mt with soyoil sales at 29,400 mt. US soymeal sales are above last year while soyoil sales are up 143,000 mt or 34%. The US soy product sales pace should rally US crush margins.
- The midday GFS weather forecast is like the overnight release with good rains across much of S America. No extreme heat is offered which will aid crops in both Brazil and Argentina. Research maintains that Brazil will harvest a record large soybean crop in 2020. The Argentine rainfall prospects look to improve during February.
- Chicago markets are under acute pressure on fund sales and the confirmation of the first human to human transmission of coronavirus in Illinois. The coronavirus risk is front and centre and it is a risk off day. The trading focus will shift to the February 11 WASDE report and the likelihood that China will issue duty free import licenses to restock their shelves in the coming week. This is no place to make new sales.