Corn: Down 3 to 5 cents
Soybeans: Down 9 to 14 cents.
Wheat: Down 5 to 9 cents.
GENERAL COMMENTS: We are in a new phase of the coronavirus outbreak. The widening spread of the virus outside of China increases fears that doctors and countries have lost containment and now the markets need to see the spread slow. Wheat prices are headed for a fourth straight decline and old-crop corn futures are the lowest in five months with new-crop futures have forged new contract lows for a second straight session. Soybeans are seen extending last week’s declines.
USDA’s daily export sales reporting service did report that private exporters sold 163,290 metric tons of soybeans for delivery to Mexico during the 2019-20 marketing year. The markets will be focused on daily new sales in the weeks ahead after China announced tariff exemptions starting March 2.
Renewed fears that the coronavirus will harm global growth rocked stock and commodity markets again on Monday, with oil and metals prices tumbling while gold soared toward $1,700 an ounce amid a flight to haven assets. Global government bonds and notes are rallying while the dollar is sharply higher. Coronavirus cases spiked in Italy as the euro zone’s third-largest economy grapples with the largest outbreak outside of Asia with more than 150 reported cases and four deaths. South Korea’s cases climbed to more than 830, with seven deaths.
As the deadly virus spreads more widely outside China, raising the threat of a global pandemic, finance chiefs and central bankers from the world’s largest economies said they see downside risks persisting. That’s spurring fresh alarm in commodity markets that had started to recover from lows hit earlier in the month when China’s virtual shutdown threw supply chains into chaos. With the International Monetary Fund cutting its global growth forecast and warning that it’s also looking at more “dire” scenarios, investors are concerned that risks to raw-material demand are worsening. Oil led the losses on Monday, tumbling more than 4% in London and New York. Until Friday, Brent crude had been in the longest run of gains in more than a year thanks to Chinese fiscal stimulus and new threats to supplies from Africa and Latin America.
State broadcaster CCTV quoted Xi as saying at a meeting of the Communist Party’s Politburo on Friday that the situation in Hubei was still serious. “The battles to defend Hubei province and Wuhan should be well fought, and measures should be taken to contain the spread of the outbreak,” he said. China has delayed its annual legislative session that was slated to begin March 5. The White House will soon ask Congress for emergency funds to fight the coronavirus outbreak, after weeks of hesitation by the administration to press for additional funding, Politico reported, citing four individuals with knowledge of the pending request.
Speculators’ bullish bets in SRW wheat expanded more than expected in the week ended Feb. 18., rising to 64,715 futures and options contracts, up from 45,940 a week earlier, according to data from the U.S. CFTC. Funds' outright wheat longs shot to a record 143,987 contracts and replaced the high from three weeks earlier Money managers also increased their net long in HRW wheat futures and options to 14,312 contracts through Feb. 18, up from 10,479 a week earlier. That is funds’ most bullish view on hard red winter wheat since October 2018. Through Feb. 18, money managers trimmed their net short position in soybean futures and options to 89,763 contracts from 92,172 in the prior week. The latest stance is more bearish than at any point in 2018, when the U.S.-China trade war began. Funds reduced their net short position in corn futures and options to 61,461 contracts through Feb. 18 from 72,084 in the previous week. However, trade estimates suggest that commodity funds sold about 31,000 corn futures contracts between Wednesday and Friday.
Heavy rains slowed soybean harvest in Brazil last week and they disrupted soybean shipments, according to data from the agribusiness consultancy Arc Mercosul. It detailed that wait times for vessels at Paranagua widened from nine days early in the month to 11 days last week. Last year at this time, the wait time was six days, the consultancy details. The record-setting size of this year’s crop could also be playing into the lengthy wait times. Weekend rains varied from as much as 7 inches in Goias to 1 to 2 inches elsewhere in the north and west. Southern areas continued dry. Showers are due this week that would be helpful for late crops. The harvesting delays and corn planting delays will be monitored. Dry weather will continue to build the next ten days in Argentina. Some crop stress may develop but production cuts are not expected unless the dryness last into late month.
Corn: May futures are extending Friday’s losses after USDA said U.S. corn stockpiles are projected to grow sharply by the end of the 2020-21 marketing year. The corn crop was forecast to rise by 12.9% to 15.460 billion bushels, based on an average yield of 178.5 bushels per acre, the USDA said. The USDA is projecting ethanol consumption in the US to rise by only 1% this year; however, furthering trade talks with India could lead to opening a strong new market for US ethanol, a USDA official told the annual Outlook Forum last week. India is very protectionist, but the country "desperately needs ethanol; their agricultural needs are not limited to US ethanol.
Soy: May soybeans are testing the early Feb lows at $8.83. November beans fell to the lowest since May 23. The charts are weak and there a few positive fundamentals to turnaround the selling pressured. Last Friday, the USDA said the 2020-21 outlook for U.S. soybeans is for higher supplies, crush, and exports, and lower ending stocks. USDA forecast the soybean crop at 4.195 billion bushels, 17.9% higher than the previous marketing year, with plantings recovering from last year's weather-related drop. Overnight, palm oil futures fall 3% on fears of a sharp drop in demand for vegoils in China.
Wheat: Futures are following the lead of the world markets. Funds are reducing net-long positions despite the improving supply story heading into the new marketing year. After incorporating a record low planted acres and almost steady demand projection, USDA on Friday projected U.S. ending stocks falling 17% to 777 million bushels, the lowest in six years. The 2020-21 outlook for U.S. soybeans is for higher supplies, crush, and exports, and lower ending stocks.
CATTLE: Steady to weak
HOGS: Steady to weak
Cattle: Cattle futures seen heading lower on a lack of sign that the seasonal lows in cash cattle and beef are at hand. Friday’s USDA Cattle on Feed Report, leaned friendly, but the differences were not strong enough to be considered bullish. Therefore, market focus is likely to remain on the product market. Boxed beef prices slid again last week, but the price declines have sparked better movement. Slaughter was up 8,000 head from a week earlier and 47,000 head larger than a year ago.
Hogs: Futures seen following the lead of the tumbling stock and commodity markets. Cash hogs fell on Friday, paring its small weekly gain. The national average price was up 14 cents last week to $49.56. Wholesale pork cutouts rose on Friday, paring its week decline. Slaughter rose to 2.622 million head, up from 2.596 million a week earlier and 5.4% larger than 2.487 million head a year ago. USDA’s Cold Storage Report this afternoon will provide another read on overall demand for U.S. pork.