May contracts in the soybean complex and two of three wheats ended with small gains Friday, while Dow Jones Industrials and May crude oil were moderately lower. May corn ended down 2 3/4 cents, pressured by ongoing concerns about production cuts in the ethanol industry.
May KC wheat finished down a half-cent at $4.86 3/4 Friday, ending the week with a 17 3/4 cent gain, but not yet willing to take out the 2019 high at $5.11 3/4. Wheat prices have gotten good mileage out of what appears to be commercial buying this week as flour millers helped keep grocery stores well supplied. May KC wheat finished at a 4 3/4 cent discount to the July contract Friday, still a neutral to bullish indication of demand. Also helping Friday’s wheat prices, Reuters reported Russia’s Ag Ministry was considering limiting wheat exports to 7 mmt or 257 mb for the April-June quarter. May Chicago wheat closed up 2 1/4 cents Friday and was up 32 cents for the week. May Chicago also stopped short of its 2019 high, but with SRW wheat supplies tight and the May/July Chicago wheat spread showing a bullish inverse of 14 cents, this is one contract that still has a chance to trade higher. Friday’s weather map showed light, scattered showers across the southwestern U.S. Plains and eastern Midwest, but heavier amounts are expected for the central and eastern U.S. the next seven days. HRW wheat crops will benefit from more rain, but too much rain may be a concern again in 2020 for SRW wheat. On Thursday, the International Grains Council gave early estimates for the upcoming 2020-21 season, expecting another record high world wheat crop. Ending wheat stocks at major exporters however, are expected to come down from 67 mmt to 63 mmt or 2.31 billion bushels. From a technical view, the trends turned higher for both winter wheats, but keep in mind that markets are more nervous than usual in this coronavirus era. DTN’s National HRW Index closed at $4.65 Thursday, down from a new one-year high and 22 cents below the May contract. DTN’s National SRW Index closed at $5.52, down from a two-month high.
May corn ended down 2 3/4 cents at $3.46 3/4 Friday, but was able to hang on to a small weekly gain. Given the bearish strain that corn prices are under as spot ethanol trades near all-time lows, it was a bullish surprise for corn to finish the week higher, but repeat performances may be difficult. In Friday afternoon trade, May crude oil was down $1.36 and May RBOB gasoline was up 2.20 cents. May ethanol was slightly lower near the close, last seen slightly below 99 cents a gallon. On the export front, USDA said 4.5 million bushels (mb) (114,048 mt) of U.S. corn were sold to unknown destinations for 2019-20. As much trouble as corn is having with export and ethanol demand these days, at least feed demand should be holding up well. Late Thursday, USDA said the U.S. inventory of hogs and pigs totaled 77.6 million head on March 1, up 4% from a year ago and a new record high for the date. On the production side, early fieldwork has not gotten much of a chance yet in the southeastern Corn Belt as conditions have been wet. The seven-day forecast expects more moderate to heavy showers in all but the far northwestern Corn Belt. In southern Brazil where conditions have been dry, chances for moderate rain amounts showed up in Friday’s seven-day forecast, offering some benefit to crops. Late Thursday, the Buenos Aires Grain Exchange said 16% of Argentine corn is harvested, but efforts are being delayed by excess rain in Buenos Aires and Santa Fe. Argentina’s corn crop estimate was unchanged at 50 million metric tons (mmt) (1.97 bb). Fundamentally speaking, corn prices remain under bearish stress with plenty of concern about cuts in ethanol production. Wednesday’s report of ethanol production from the Energy Department remained high enough to help support corn prices, but market incentives are extremely bearish and are apt to win out over time. Technically, the trend in cash corn remains down after making a new one-year low last week. DTN’s National Corn Index closed at $3.23 Thursday, near its lowest price in over a year and 26 cents below the May contract. In outside markets, Dow Jones Industrials are trading down 631 points and the June U.S. dollar index is down 0.66 after CNBC.com reported the U.S. House of Representatives passed the $2 trillion stimulus bill. Most other commodities are lower Friday.