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Corn exports have seen an uptick since mid-January but have a long road ahead in reaching USDA’s target of 1.725 BB. Currently, shipments trail last year by 40 percent. Meanwhile, inspections last week were better than expected, a marketing year high of 49.9 MB. While exports are showing slight progress, ethanol has fallen to record lows because of the decline in crude oil. This has put processing margins deep in the red. With the economy tanking because of the coronavirus, ethanol demand has been slashed causing plant closings. However, there may be light at the end of the tunnel. If China rebuilds its hog industry, it could create demand for DDG’s. In the meantime, we still have the growing season ahead with many doubting USDA’s 10 million acre increase in plantings to 97 million, the second largest on record. Because of declining corn values, producers are still undecided about planting. In short, corn faces many uncertainties this season.
Soybeans turned down this week on profit taking amid comments made by President Trump that as many as 240,000 deaths could occur in the U.S. because of coronavirus. Meanwhile, transportation disruptions in South America continue to slow loadings as measures are being taken to safeguard workers from the virus. In Argentina, there are reports of road blockages to crushing plants by city governments to prevent its spread. This has led to optimism that exports to the U.S. could see a boost as a result. So far, that has not happened as shipments continue to dwindle with inspections last week a marketing year low of 15.2 MB. Since late November, the pace of shipments has fallen 68 percent. They could decline as much as 80 percent.
Profit taking developed this week ending a 2-week rally in wheat. However, logistical problems created by the coronavirus remain. Grocers are restocking shelves with wheat products and ship loadings in Europe are slow. Meanwhile, Russia announced this week that they will limit exports for the next 3 months to 7 million tons as a food security measure. Meanwhile, export inspections last week were mediocre at 13.7 MB and below the average of 27.7 MB needed to be shipped each week to reach USDA’s projection of 1.0 BB. Since the end of February, the pace of shipments has fallen 24 percent.
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