Market Commentary  04/03/20 3:08:51 PM Printer Friendly VersionPrinter Friendly Version

Friday April 3, 2020

Corn rallied a bit off session lows but still closed 2-3 cents lower nearby and steady/1 cent higher in the deferred months. For the week CK fell 15 cents. Funds were sellers of 5,000 contracts mid-day to add to their estimated short position of 163,000 contracts. The announcement that China bought 567 tmt of U.S. corn (63 tmt for 19/20 and 504 tmt for 20/21) is a positive but didn’t impact the market much, though it is interesting to see China buying U.S. corn for 20/21. It was a tough week for animal agriculture this week too, as cattle futures lost $13, hogs $18, and cheese/milk/butter were all sharply lower. The loss of demand at restaurants, schools, and general slower economic activity given credit for the defensiveness - not good from a feed demand angle. Sanderson Farms in GA announced the slowing of chicken production in the near term on Covid19 problems. The one bright spot is the RBOB/Ethanol spread fell from a 30-40 cent premium ethanol to “only” 15 cents at week’s end. Crude futures have rallied $7/barrel this week as Saudi Arabia and Russia have supposedly agreed to slow production. Offhand comment is that summer vacations (if they happen) most likely will be by auto and not air – hopefully raising fuel usage.

Soybeans also able to rally off session lows but closed 4½ cents lower nearby and 1½ cents lower in new crop. SBM down almost $6/ton while SBO a bit firmer. Funds were sellers of 4,000 soybean contracts at mid-session to add to their estimated short position of 26,000 contracts. For the week SK lost 27 cents as soybeans caught in the general negative attitude in the market. S. American soybean production estimates are down roughly 5 MMT, but this is not viewed as problematic. China continues to buy Brazil origin (no surprise) and while logistics issues remain in Argentina and Brazil, their influence on futures seems less as the week ends. Brazil’s president said the country will not follow guidelines much of the rest of the world in following regarding Covid19, so that should be interesting moving forward regarding logistics and vessel quarantine issues.

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