Soybeans close 19¢ higher Friday

Thursday's Grain Market Review

On Thursday, the CME Group's farm markets close up double digits.

At the close, May corn futures finished 10¼¢ higher at $3.45½; July corn futures closed 9¼¢ higher at $3.51.

May soybean futures settled 17¾¢ higher at $8.43½; July soybean futures closed 15¼¢ higher at $8.48.

May wheat futures closed 26¾¢ higher at $5.35.

May soy meal futures finished $10.80 per short ton higher at $314.80. May soy oil futures closed 0.44¢ higher at 25.48¢ per pound.

READ MORE: 3 Big Things, March 19, 2020

In the outside markets, the NYMEX crude oil market is $5.31 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 325 points higher.

Jack Scoville, PRICE Futures Group, says the rally in crude oil seems to be supporting all commodities today.

"Plus, all of these markets were really oversold. In beans, we are now competitive with Brazil, and I am reading some research on how the Chinese should start buying U.S. This research is coming from China. The export sales report was pretty strong for beans and corn, a little disappointing for wheat. All in all a rather dramatic recovery in a market that is full of dramatic moves these days," Scoville says.

Separately, the USDA's Weekly Export Sales Report Thursday shows strong corn demand figures.

Corn: 960,600 metric tons (mt) vs. the trade's expectations of between 600,000 and 1.3 mmt

Soybeans: 701,200 mt vs. the trade's expectations of 400,000 to 950,000 mt

Wheat: 482,100 mt vs. the trade's expectations of between 375,000 and 650,000 mt

Soybean meal: 129,100 mt vs. the trade's expectations of 200,000 to 400,000 mt

Al Kluis, Kluis Advisors, says investors will be eyeing how ethanol plant struggles will impact corn prices.

"With the negative ethanol margins and ethanol plants shutting down, we will see corn basis wider for most of the summer," Kluis told customers in a daily note.

Kluis added, "We had another very volatile day in the U.S. stock market. U.S. and world economies continue to feel the pain as economies shut down. Crude oil was down hard again on Wednesday. That put pressure on ethanol, which put pressure on the corn market. Ethanol plants are shutting down, causing basis levels to soften up on corn. However, wheat futures had a nice rally. Wheat millers improved their wheat basis by 40¢ this week as nearby demand for wheat to make bread increases."

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Wednesday's Grain Market Review

On Wednesday, the CME Group's farm markets diverge.

At the close, May corn futures finished 8½¢ lower at $3.35½; July corn futures ended 8½¢ lower at $3.41¾.

May soybean futures settled 1¼¢ higher at $8.25½; July soybean futures ended 1¾¢ higher at $8.32¾.

May wheat futures closed 9¢ higher at $5.08¼.

May soy meal futures settled $5.70 per short ton higher at $304.00. May soy oil futures closed 0.20¢ lower at 25.04¢ per pound.

READ MORE: 3 Big Things Today, March 18, 2020

In the outside markets, the NYMEX crude oil market is $6.20 per barrel lower at $20.75 per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 2,000 points lower.

Britt O'Connell, cash adviser for Commodity Risk Management Group, says the grain markets continue to struggle amid the economic fears that remain concerning the long-term impact that the COVID-19 virus will have on our country.

"We are left to speculate on the long-term effect this will have on our economy. Conventions, sporting events, weddings, and social gathering have been cancelled or delayed for the foreseeable future. With people's movement greatly restricted, demand for fuel has curbed dramatically. One estimate from yesterday had estimates pegged at a 20% reduction in March, 40% in April, and 20% in May. Crude oil prices continue to be a gushing wound with May now trading $4.50 per barrel lower and below prices we experienced back in 2016."

She added, "Ethanol is down again, today, and DDG prices held down by soybean meal. Wet mills (ADM plants) are holding in a little better than dry mills (co-ops, country facilities). Have seen basis back off 5¢ to 10¢ from Thursday of last week through today. So, a worse situation for plants that were already break-even at best. Seeing reduced hours at some plants, rumor mill starting on temporary closures, but big ships are slow to turn, so this will take a few weeks to play out."

For corn shipped by rail, one buyer, yesterday, reported that they couldn't find a bid at the moment. Plus, the PNW showing no bid for #2 corn, weaker for #3 corn, and the Hereford, Texas, market flat to weaker overall, O'Connell says.

"The next couple weeks could be a great opportunity to lock in some physical for buyers lacking coverage," she says.

Soybean processors, flip the story. Bean futures dropping off and soybean meal hanging tough around $300 per short ton.

"We could see continued improvement at the crush plant for beans as they are making good margin right now. Nearby board crush attached. Export side, bean cif is weaker on low demand, so river values have fallen off. This may limit basis improvement at the crush plants," O'Connell says.

Al Kluis, Kluis Advisors, says investors will be eyeing how the energy markets impact corn prices.

"With the downturn in the energy markets over the past few weeks, it is not surprising to hear that ethanol margins have moved negative. This, in turn, has caused corn basis levels to weaken quickly in many areas. Some ethanol plants went from thinking there may not be enough corn locally to make it to new crop, to now thinking they may not need to buy much more corn unless the energy markets turn around. Oil demand will likely have a direct impact on corn futures over the near term as traders try to assess what happens to ethanol demand," Kluis told customers in a daily note.

Brazilian consultancy AgRural, which is based in Curitiba, has adjusted its soybean production forecast for the country to 124.3 million metric tons this week. That is over 1 million metric tons less than what was projected one week before.

Kluis added, "If analysts continue to lower crop sizes in South America, then the grain bulls may finally get a story they can start working with."

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Tuesday's Grain Market Review

On Tuesday, the CME Group's farm markets try to recover from a dismal Monday.

At the close, May corn futures finished 10¾¢ lower at $3.44; July corn futures ended 8½¢ lower at $3.50.

May soybean futures settled 2½¢ higher at $8.24¾; July soybean futures are ½¢ higher at $8.31.

May wheat futures ended 1¼¢ higher at $4.99.

May soy meal futures settled $2 per short ton higher at $298.30. May soy oil futures closed 0.25¢ higher at 25.24¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.56 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 785 points higher.

In the outside markets, the NYMEX crude oil market is 12¢ per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 345 points higher.

On Monday, the DJIA fell 8%, triggering the system's circuit breaker. The markets closed for 15 minutes before resuming trade.

Al Kluis, Kluis Advisors, says investors should prepare for another volatile week.

"On Monday the stock and energy markets again collapsed, taking the grain markets sharply lower. Livestock futures again fell to new life-of-contracts lows," Kluis told customers in a daily note.

Kluis added, "When the bull spreads start working in the corn and soybean markets, it may signal a low. Bull spreads start working when commercials are active buyers, more than offsetting massive fund-selling. Watch the plunge in gasoline and ethanol prices. The nearby gasoline price dropped by 21¢ per gallon, falling to 70¢ per gallon. This is now at the lowest price since November 2002. Ethanol prices fell to new all-time lows on Monday, falling 16¢ per gallon to $1.03 per gallon. It is unusual to see ethanol trading at a 33¢-per-gallon premium to gasoline, rather than a 30¢ discount."

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Monday's Grain market Review

On Monday, the CME Group's farm markets get weighed down by the continued coronavirus crisis.

At the close, May corn futures settled 11¢ lower at $3.54½; July corn futures ended 10¢ lower at $3.58.

May soybean futures finished 27¢ lower at $8.21¾; July soybean futures closed 25½¢ lower at $8.30¾.

May wheat futures closed 8¢ lower at $4.98.

May soy meal futures closed $3.20 per short ton lower at $296.30. May soy oil futures closed 0.79¢ lower at 25.58¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.84 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials (DJIA) are 3,000 points lower, it's the most the market has fallen in one day ever.

On Monday, the DJIA fell 12%, triggering the system's circuit breaker. The markets closed for 15 minutes, before resuming trade.

READ MORE: 3 Big Things: March 16, 2020

Jack Scoville, PRICE Futures Group, says the ag markets are holding reasonable well, although the meat markets are limit down.

"Rice is seeing a lot of demand, as rice is nonperishable. So are some other items. The funds and other specs are still selling, I think. Maybe some commercial buying and some short covering by specs. Been absolutely incredible what has happened, not only with the coronavirus but the Saudi-Russian trade war. A perfect storm for demand hitting the markets," Scoville says.

Peter J. Meyer, S&P Global Platt's head of grain and oilseed analytics, says the story remains a macro story, but corn spreads are getting attention today.

"With gasoline making multiyear lows of 68¢ per gallon and oil below $30, the ethanol business is incurring even more pain. Rumors were flying this morning that ethanol plants were making drastic cuts to their cash bids, which seems to be reflected in the relative collapse of corn futures spreads and resulting steepening of the curve. This would suggest that ethanol pants are indeed shutting down, as ethanol prices reach their lowest April levels in history," Meyer says.

Al Kluis, Kluis Advisors, says investors should prepare for another volatile week.

"The Federal Reserve Board made an emergency cut in U.S. interest rates on Sunday, taking short-term rates down to zero in an effort to stabilize the global financial system. However, it is not working, so far. Grains are mostly lower," Kluis told customers in a daily note.

Kluis added, "Yesterday, the Fed took interest rates to zero and announced it would put $700 billion into a quantitative easing program. This shows how fast the U.S. economy is heading to a recession. This is the first of several steps that the Fed will take. Watch the global and U.S. stock markets. When the stock market stabilize, the grain and meat markets will find a bottom."

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