MAR CORN

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The action in the corn mkt reminds me of the old adage – if we didn’t have “bad news”, we wouldn’t have any news at all! First, last week the US Annual Outlook Forum put out some bearish #’s – and then this morning the Coronavirus reared its ugly head ONCE AGAIN leading to sharply lower everything – but once the smoke clears, are we too cheap??

 

FACTORS IMPACTING THE MKT

1. EXPORTS – Mon Inspections were an impressive 912,922 (795,399) & Fri sales were a whopping 1.250 (700-1,100)
   163,290 MT to Mexico
2. US AG OUTLOOK FORUM – was negative across the board
   A) Prod – 460 (13.692 – ly)
   B) Yield –    5   (168.0 – ly)
   C) Stocks – 637  (1.892 – ly)
   D) Acres – 0     (93.6-est  89.7-ly)
3. CORONAVIRUS – just when you thought it was safe, it wasn’t! Last week, it looked like the CV was being controlled in China & then this morning, news broke that a deepening spread of the virus to South Korea, Italy & Iran had concerned investors that a global health pandemic would negatively impact world economic growth! So everything was sharply lower – the stock market, the grains & the livestock!
4. SOUTH AMRERICAN WEATHER – the forecast has been normal but a record bean crop still forecast for Brazil – but dry pockets exist in Argentina
5. US DOLLAR – has rallied nearly 500 points (96-99.80) since the first of the year – though lately correcting 100 points – so along with everything else, this has been a deterrent to US exports!

FEAR has grabbed a hold of the global mkt place & won’t let go! The Coronavirus is definitely a “black swan event” which we’ve never experienced before – fostering the idea that it will slow down the global economy! So far, Mar Corn has been pressured but not decimated – as it’s held 5-month lows! We feel the Coronavirus will soon run its course and return Mar Corn to its own supply/demand fundamentals – which from current price levels appear friendly!

 

MAR BEANS

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The USDA Ag  Outlook Conference put out some positive #’s – mostly over last year but less than expected – Prod – 4.195 (ly-3.558) –  yield – 49.8 (ly-47.4)  – acres – 85 (exp- 84.6, ly – 76.1) but carry-out was 320 (425)! And though many mkts got slammed on Mon, Mar Beans managed to hold its Feb lows! Brazilian Beans are still forecast to be a record but that news is dialed in! Overall, should Mar Beans continue to stabilize – in the face of a global malady – that would indicate they’re at fair value – hovering just over 10 year lows – awaiting Chinese exports!!

 

MAR WHT

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Larger than expected crops in Russia & Ukraine coupled with the Coronavirus pushed Mar Wht 20 lower on the week but it was able to rebound for a 4 cent higher close – a very promising development – given the DJI has lost nearly 2000 points since the latest iteration of CV reared its ugly head! It could be the wht mkt is starting to consolidate as both corn & beans also finished higher – the latest virus fears hit the wht mkt when it had already corrected 45 cents (595 – 550) off its highs – and the USDA’s Ag Outlook Conference forecast ending stocks at 777 MB (ly-1.08BB) – which would be the lowest in 6 years! Quite possibly, enough is enough!!

 

APL CAT

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April cattle  suffered a second consecutive beat-down off the Coronavirus – as it has lost over $6.00 (119-113) since last Friday – leaving it at a huge discount to cash!  A neutral cold storage report after the close on Monday provided little help!  The rationale is that DEMAND is taking a huge hit – be it true or not – as people are afraid to go out to dinner & exports are dormant!  Fund selling has been the primary downside driver but needless to say the mkt is extremely oversold now!!

 

APL HOGS

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Unlike its sister mkt Apl Cattle, Apl Hogs managed to stabilize today – closing steady & even managing to close the downside gap left on Monday!  So given all the carnage this week, Apl Hogs are only $2.50 lower on the week! That tells us that the contract has factored in all the bearish supply news  the past few months – and is “assuming” solid Chinese pork demand is right around the corner1 Even with most mkts getting nailed in the past few days, Apl Hogs impressively were unable to take out last week’s lows!! 

 

 

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