Market News- POET: Portland  02/12/20 8:17:48 AM Printer Friendly VersionPrinter Friendly Version

Weekly POET Grain Report
Feb 12, 2020
  • Tuesday's WASDE report left 2019/2020 corn carryout unchanged, and was a bit of a sleeper of a report. The USDA elected to increase corn for ethanol by 50MM bushels, which was offset by a decrease in corn exports of 50MM bushels. The USDA increased soybean exports by 50MM bushels, and carryout was decreased by the same amount.
  • On a global perspective, yesterday's WASDE left Brazilian and Argentine corn production forecasts unchanged at 151 million metric tons combined. Soybean production in Brazil was increased by 2 million metric tons. Depending on future precipitation in this crop cycle, we could potentially see larger crops in South America going forward.
  • As expected, with yesterday's fairly-neutral report, May corn continues to chop sideways. As is nears the end of the this wedge formation, resistance will probably be seen at the 50-day moving average at $3.90. A second level of resistance should be the downtrend on the wedge formation at ~$3.94.

February 7, 2020
  • The USDA will release their February WASDE report next Tuesday, February 11. Trade is expecting a bit of a "ho-hum" report, with estimates for 2019/2020 corn carryout 1.79-1.94B bushels (January WASDE forecast for carryout was 1.89B bushels). The options straddle is forecasting a limited price movement of only 8.5 cents.
  • The Argentine USDA-equivalent, the Buenos Aires Exchange, has reported that soil moisture is currently adequate for soybean growth. A large majority (96%) of the crop has adequate moisture, which will help in early development stages. A healthy crop out of South America will be of no benefit to U.S. farmers, as the world soybean balance sheet remains flush.
  • The continuous corn chart is nearing the narrow end of the wedge formation, with upside resistance at $3.90 and support in the 3.78-3.80 range.

February 4, 2020
  • The USDA announced that U.S. farmers will begin receiving the third and final tranche of MFP payments by the end of this week.  This third round will complete the current $16B package.
  • There are now more than 20k confirmed cases of coronavirus - with approximately 425 deaths thus far.  In response to the growing threat, the U.S. issued a mandatory federal quarantine on Friday for Americans flying home from China's Hubei Province.  This is the first mandatory quarantine issued by the U.S. in 50 years - which goes back to the time of smallpox.
  • Bloomberg issued an article yesterday saying that China could ask for a temporary grace period in regard to their Phase 1 commitments.  Not overly surprising, however such a resolution does need to be considered given the rapid expansion of Coronavirus in throughout China.
  • Brazil is now approximately 9% harvested on their current soybean crop - vs 19% at this time last year.  Second season "Safrinha" planting has begun in Mato Grosso.  Overall, South American weather remains very favorable for both Brazil and Argentina.
  • May corn is attempting to breakout of the downtrend here - with first upside target at $3.94 - RSI is pretty neutral so hard to be overly bullish or bearish here.  Feels like we're just chewing through options premium until we get a SA weather issue or more clarity on Chinese corn interest.

Jan 29, 2020
  • There are now over 6,000 confirmed cases of the coronavirus, with over 130 reported dead from the virus.  The only deaths thus far have been in China, however the virus has been reported in 16 other countries already.  Still a great deal of uncertainty surrounding the containment and lasting impact of this virus.
  • Bloomberg reporting that the U.S. has developed a vaccine against the current strain of African Swine Fever (ASF) that has proved to be 100% effective.  “This new experimental ASFV vaccine shows promise, and offers complete protection against the current strain currently producing outbreaks throughout Eastern Europe and Asia,” said Douglas Gladue, the principal investigator at the U.S. Department of Agriculture, which developed the vaccine. 
From <https://www.bnnbloomberg.ca/u-s-says-it-s-developed-promising-african-swine-fever-vaccine-1.1381230>
  • South Korea purchased 133kMT of corn in private offers overnight - for mid-April arrival.  While it was deemed to be optional origin, I'd have to imagine this will be originated off the US PNW given the steep discount to South American offers.
  • The up/down yoyo continues in the corn market, with values giving back half of yesterday's gains in the overnight session.  Support sits at Monday's low of $3.78, with resistance at the overnight high of $3.88.

Jan 27, 2020
  • Fears of the spread of Coronavirus in Wuhan province China has applied pressure to world markets. Videos have been circulating the Internet showing Chinese provinces on lockdown, creating uncertainty of the impact on demand. While the current death toll is reportedly no greater than the flu, and there have been no reported deaths due to the virus outside of China, the world be watching the movement and response to the virus closely.
  • Argentine weather forecasts have increased the expected level of rainfall over the next ten days. Crops have been experiencing drier and hotter than normal conditions, leading to some uncertainty in the maturing of the crop. With normal rainfall of 0.5-2 inches expected, Argentine crops are getting some relief.
  • A U.S. appeals court has ordered the EPA to review its decision regarding three biofuel waivers it allowed small oil refineries to be granted. These waivers have been a major source of contention between ethanol groups and the Trump administration, with biofuel advocates saying that the waivers are harming demand for ethanol.
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