On The Money Grain Commentary 3-26-20

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Corn Outlook:

A two trillion-dollar stimulus package implemented by the Trump Administration has somewhat eased anxiety in the financial markets from fear of the economy shutting down. Meanwhile, the grains were already divorcing themselves from the turbulence and looking at other issues. While soybeans and wheat have turned up, corn is underperforming because the sell-off in crude oil has put ethanol margins in the red causing some plants to close and others to cut back purchases. Meanwhile, exports have improved over the past few weeks, but the pace is beginning to level off. Inspections last week were 32.1 MB and must average 46.3 MB to reach USDA’s target of 1.725 BB. Currently, they are on track for 1.460 BB. Looking at next week, all eyes will be on the Prospective Planting Report scheduled to be released on March 31st.

Bean Outlook:

Soybeans have recovered from their 3-month decline as logistics are becoming an issue with port stocks in China that are at a 10-year low. This may have been the reason behind an initial purchase of corn, soybeans, and wheat in the Phase I trade agreement last week. This is giving traders encouragement that the worst may be over. Meanwhile, additional support is developing from ideas that port facilities in South America may face slow loading operations because of the coronavirus. If so, business could be diverted to the U.S. Looking at exports, inspections last week were nominal at 20.9 MB. Since late November, the pace of shipments has fallen 65 percent and will likely fall further. China took 2.5 MB which is an insignificant amount, but it beats the zero shipments reported the previous week.

Wheat Outlook:

Wheat as export shipments in Europe have slowed because of the coronavirus. This is causing users to turn to the U.S. for inventory. Additional support has come from grocers restocking empty shelves of bread and pasta because of hoarding by consumers. Exports have improved since late January, but the pace has fallen the past three weeks. Last week, inspections were mediocre at 12.8 MB and must average 26.1 MB to reach USDA’s projection of 1.0 BB. We are running short of that mark and are on track for shipments of 910 MB.

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