Grain Exchange

Grain prices rebounded from small overnight losses Tuesday night to close moderately higher Wednesday, as trade and export optimism triggered some technical buying yesterday. Corn and soybeans moved around 0.7% higher, with some wheat contracts climbing as much as 1%. Traders have their fingers crossed for another round of solid export sales data from USDA first thing this morning.

Next Thursday the 20th, the USDA Ag Outlook Forum will put a variety of updated numbers that will include forecasted impacts from Phase 1 execution and CV.  The markets are oversold and without more shocks from China on CV, next week has the potential to return to some solid footing.

And USDA’s 10.7% reduction in U.S. ending soybean stocks from last month should not be taken lightly, argues Duane Lowry, senior risk manager with Silver Creek Commodities. “I ponder the likelihood that we will see further notable cuts in U.S. soybean ending stocks as the marketing year unfolds,” he writes in the latest Ag Marketing IQ blog.

Coronavirus is now being named COVID-19.  There are over 44,000 cases in China with over 1,100 deaths.  The rate of new cases is slowing in China, but is just starting in other countries, according to the head of the WHO response team.  He also said a vaccine could be ready in 18 months.

The severe economic problems in Brazil and Argentina are forcing their new leadership to address their mountain of government debt and sagging economies.  The new taxes that were levied against Ag exports was the start and now they are cutting interest rates to help stimulate some new growth.  Cutting interest rates has tanked both the Real and Peso and they now sit at their lowest levels against the Dollar in over a decade.

As Tuesday’s report results were within estimates and offered nothing surprising, the trade now looks forward to the February 15th Phase 1 installment date to see if China makes a large-scale move to drop additional tariffs and approve import licenses for sizable purchases of US food products.

Stay warm and be safe today,

Jim Fleming