Gary's Blog 02/14/20 3:00:33 PM|
Valentine’s day brought out the red on the CBOT as futures drifted lower. The fate of the bulls hangs on the Phase 1 trade deal. Without a significant increase in exports our carryout levels will remain sufficient thus keeping a lid on market rallies. The south American crop is progressing nicely as harvest moves south. With an abundant supply of cheap beans its hard to understand how China will come to the US instead of our southern counterparts. Economically it doesn’t pencil out for them besides a broken promise from “phase 1”. Time will tell. There will be no markets on Monday. Next week the ag outlook will be looking at baseline projections for the coming year. Many expect large corn and bean acres to be forecasted. US weather maps will start to garner more attention as the calendar flips to March as the deep south planting window approaches. There will be no blog next week.
Markets rebounded today with beans leading the way. Marco markets helped push the grains as the Dow punched out new highs. Coronavirus talk was limited as China slowly gets back to business. Some expect Phase 1 purchases to ramp up as China looks to offer duty free permits as nearby food supply dwindles. Locally NW Ohio is bracing for what could be our largest snow of the winter. Forecasts are calling for 4-6 inches by tomorrow morning. End users appear to well covered, and temps return to a more normal profile by the weekend.
2019-20 Carryout (billion bushels)
Feb Avg Est
Corn 1.892 1.864
Beans .425 .443
Wheat .940 .954
Just as expected there were no major surprises in the crop report. The markets first reaction was favorable beans (up2-3cents) and negative corn (down 1-2). Corn and wheat supplies remain at comfortable levels while soybean stocks were reduced 50MB from the previous month. South American estimates were larger with Brazil now pegged at 125MMT for their soybean crop. At the rate they are expanding the world dynamics are shifting. If they could ever develop a reliable infrastructure the US could face some major challenges in the future. With nothing substantial in todays report we look for choppy to sideways trade to continue.
Markets were mostly lower to start the week as the coronavirus concerns elevate. Brazilian bean harvest has slowed with rains falling over the weekend. The window is all but closed now for a weather threat to the S.A. crop. A record sized crop has developed and just needs harvested. Rumors are circulating China has purchased a sizable amount of US beans. This kept beans above unchanged and in the green today. Tomorrow will feature the February crop production report at noon. How will the USDA handle the lagging corn exports and the new “phase 1” deal has been a hot topic lately. Hopefully tomorrow will give us a little more insight. Look for a midday update with the report numbers.