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Hope springs eternal. Thoughts that new cases of the coronavirus are approaching a plateau have generated a rebound in equities and stabilized the grains. However, do not expect the economy to come roaring back. Permanent damage has been done. Meanwhile, corn is showing signs of bottoming but will be slow to recover because of diminished ethanol demand and crude oil likely having more downside potential. The bright spot is that exports have improved the past few weeks with inspections last week a marketing year high of 50.0 MB. In other developments, it was no great surprise when the USDA raised 2019-20 ending stocks 200 MB to 2.092 BB. The increase came from a 375 MB reduction in ethanol consumption. World stockpiles grew 5.9 million tons to 303.2 million. Now that traders know where the USDA stands on ethanol, the focus might turn more to weather and planting.
Soybeans have shown strength recently, but it is mostly because of short covering by the funds. Exports are struggling with inspections last week a marketing year low of 10.9 MB. Since November, the pace of shipments has fallen 73 percent. It was no surprise when the USDA lowered their export projection in the April report 50 MB to 1.775 BB. This led to 2019-20 ending stocks rising 55 MB to 480 MB. Meanwhile, world stocks fell 1.9 million tons to 100.5 million. This was because of a 1.5 million ton reduction in Brazil’s crop while Argentina’s production was lowered 2.0 million tons to 52.0 million. China’s imports are projected to rise 1.0 million tons which will likely be fulfilled largely from Brazil.
Wheat is being underpinned from dry conditions in the Black Sea Region and Russia cutting exports quotas for the next 3 months. In the April Report, USDA increased 2019-20 ending stocks 30 MB to 970 MB. This came from a 15 MB reduction each in feed consumption and exports. World stocks rose more than expected to 292.8 million tons for an increase of 5.7 million tons. The increase came from Russia’s exports falling 2.5 million tons and Europe 1.5 million.
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