Corn: Steady to down 1 cent
Soybeans: Narrowly mixed
Wheat: Up 5 to 7 cents
GENERAL COMMENTS: Wheat futures are firming on weather concerns. HRW leads, reaching a two-week high overnight, on cold temperatures the next few mornings across the central U.S. and dry conditions in parts of the Black Sea and Europe. Corn and soybeans are soft this morning, erasing overnight gains after oil prices retreated after rising on news of global deal to cut supplies. The world’s top oil producers pulled off an agreement to reduce global petroleum output by nearly 10%, putting an end to the devastating price war that brought the energy industry to its knees. The focus now shifts to skepticism whether the cuts can dent the massive oil glut and how quickly demand will recover. Crude oil futures opened higher last night but are making new one-week lows this morning.
The weather forecasts for the U.S. are wet and cool but it does not look like we got cold enough to hurt any HRW during the weekend. More cold temperatures the next several mornings will be monitored closely. The U.S. planting season is starting in average condition, maybe a little cooler than farmers would like, slowing germination, but there are no major problems at this time. Brazil still has a bit of dryness in the south and raising risks for the safrinha crop if it continues into May. There are a few showers coming for the Russian, Ukraine and European wheat crops, but it looks too light to be beneficial for development. It’s also too early to start slashing wheat yields.
Weekly CFTC Commitments of Traders data showed no major surprises. Funds were smaller sellers than expected in corn. Funds increased net short positions in corn more than 10,000 futures and options to 110,402 contracts. In soybeans, Funds cut their net-long positions about 6,000 contracts to 17,161 contracts and reduced their net-long SRW wheat position almost 10,000 contracts to 26,165 contracts.
This morning’s daily USDA export sales reporting service announced 120,000 metric tons (MT) of hard red winter wheat for delivery to unknown destination, evening divided between old- and new-crop delivery. On Friday, USDA’s daily reporting service announced 165,000 MT of US. wheat sold to China, with 55,000 for old-crop delivery and 110,000 for new-crop arrival. Also, USDA said 120,000 MT sold to unknown destination, evenly split between old- and new-crop delivery.
China’s ambassador to the U.S. says Beijing is still implementing the first phase of their trade deal. That's as the contraction in China’s foreign trade is set to continue. China’s ambassador to the U.S. said his country is still implementing the first phase of a trade agreement signed with the U.S. earlier this year and called for both nations to assess the changing situation as the coronavirus presents global economic challenges. Cui said China is still buying agricultural products from the U.S. and removing some of the restrictions on foreign companies in its domestic financial market as part of the agreement. The ambassador said the global economic landscape has been drastically changed by Covid-19.
Parts of the U.S. may be ready in May to ease emergency measures taken against the coronavirus pandemic, but there’s no universal “light switch” to flip on, the federal government’s top infectious diseases expert said. With Americans poised to start receiving stimulus payments this week, Federal Reserve Bank of Minneapolis President Neel Kashkari warned the economy could still face 18 months of rolling shutdowns.
Donald Trump’s top adviser on coronavirus testing said that by May the U.S. will be in the “ballpark” of the diagnostic capacity it needs, should the president decide to recommend parts of the country relax economy-crushing social distancing practices. Admiral Brett Giroir said in an interview Saturday the U.S. is working on four forms of diagnostics it needs to reopen the economy: widespread surveillance to catch new flare-ups; testing of people who have specific symptoms; contact-tracing for confirmed cases; and antibody testing to know who’s recovered from the virus, which he said is weeks away. “By May we’ll have a lot more testing than we do now,” Giroir said. “By May, we certainly will be in the ballpark. Whether we are exactly there depends on some factors, including how much is circulating and where regionally this falls out.
Meanwhile, China has tightened restrictions on academic research of the coronavirus in what appears to be an attempt to control the narrative of the virus' origins. Under the new policy, all academic papers on Covid-19 will be subject to extra vetting before being submitted for publication. Studies on the origin of the virus will receive even more scrutiny and must be approved by central government officials, according to now-deleted posts by two Chinese universities. Several published studies on the origins of the virus, like when human-to-human spread first started, have raised questions over the official government account of the outbreak.
Top trade officials in the U.S. and European Union seem poles apart on whether nations should move production home or not as the coronavirus causes supply shortages on both sides of the Atlantic. Sabine Weyand, the European Commission’s director-general for trade, says that moving supply chains home is inefficient. For now, this puts the EU in stark contrast with President Donald Trump’s administration and its policy goals. Trump this month invoked the Defense Production Act to direct manufacturing of medical equipment and is mulling an executive order that would seek to re-shore the making of U.S. medical supplies. This push has support from a bipartisan group of lawmakers that’s already talking about legislation to be considered immediately after the crisis. Peter Navarro, whom Trump picked to coordinate domestic supply policy, went on the CBS News program “60 Minutes’’ on Easter Sunday night and blamed America’s dependency on globalization for its shortages: “If we made it here, we wouldn't be faced with this. That was, that was the original sin.”
CORN: Brazil's government aims to announce this week measures to support an ethanol sector battered by falling demand and a sharp drop in gasoline prices due to turmoil in global oil markets, Agriculture Minister Tereza Cristina Dias said on Monday. The USDA did some major reshuffling to the domestic corn balance table last week amid the coronavirus pandemic and crude oil collapse. Corn use for ethanol for 2019-20 was cut 375 million bu. to a seven-year low at 5.050 billion bu., while feed use was raised 150 million bu. to 5.675 billion bu., the highest yearly number since 2007-08. Export prospects are down for the second straight season to 1.725 billion bu., the lowest since 2012-13.
SOYBEANS: Safras & Mercado is estimating Brazilian soybean exports in April at a record 13.5 MMT, a second consecutive high mark after March’s 13.3 MMT total. Weakness in meal prices ocntinue to limit soybean rallies.
WHEAT: Prices rising on weather, wheat sales to China announced last Friday, and news that Romania will ban wheat exports thru May 15. it’s a weather market and fundamentals have little influence on price direction until we get thru the next 6 weeks. Short term, the cold weather to the West needs to be watched. Freezing temps are forecasted well Southwest in Oklahoma. Damage is expected to be light but nevertheless, the next two days is the focus. Russia has had some showers, but they appear to have been light and scattered
Smithfield Foods, the world’s biggest pork processor, said on Sunday it will shut a Sioux Falls, South Dakota plant indefinitely due to a rash of coronavirus cases among employees and warned the country was moving “perilously close to the edge” in supplies for grocers. The plant processes between 4% and 5% of pork in the U.S. South Dakota Governor Kristi Noem on Saturday said that 238 employees at the plant had active cases of the virus and recommended the plant be shuttered for at least two weeks.
Meanwhile, an infectious and fatal strain of H7N3 bird flu has been confirmed in a commercial turkey flock in South Carolina, the first case of the more serious strain of the disease in the U.S. since 2017. The high pathogenic case was found at an operation in Chesterfield County, South Carolina.
Cattle: Futures are seen lower on rising absenteeism at meat plants or cutbacks on slaughter activity from Covid-19. Last week’s kill was down 90,000 head from the week prior (14.4%) and 102,000 head (16.0%) from year-ago levels, according to USDA, adding to concerns about plants’ ability to produce meat amid the coronavirus. While cattle supplies are plentiful, the slowdown in production means consumers will see less meat in stores for a few weeks. Boxed beef prices finally turned higher on Friday, with Choice rising $1.26 and Select firming 76 cents. But movement slowed to just 64 loads.
Hogs: Futures seen opening on the defensive amid worries about slaughter capacity restrictions from plants closings and slowdowns from Covid-19. On Friday, the national hog price fell another 64 cents. However, Pork cutout values rose $1.78 on good movement. Slaughter last week estimated at 2.407 million head, down 158,000 head from a week earlier and 14,000 head above a year ago. China confirmed two new cases of African swine fever (ASF) in the northern provinces of Gansu and Shaanxi, the country’s ag minister confirmed over the weekend.