The corn and soybean markets finished slightly lower in dull, uneventful trade before the long weekend. Wheat finished slightly lower. As coronavirus expanded to 64,000 infected, with upwards of 1,400 deaths, and forecasts for South America showing more beneficial weather for growing crops, the big hope for U.S. soybeans and ag products is the release of duty-free import licenses after the holiday. Corn is under pressure on rumors that China may have bought 500,000 mt (19.7 mb) of Ukrainian corn this week.
Wheat finished the week with dull, listless trade, and little in the way of news. Pressuring wheat is the U.S. dollar, with the U.S. dollar index showing its ninth straight higher close in 10 days, making U.S. wheat less competitive in world markets. Russian wheat values have now dropped roughly $11 to $12/mt from lofty January levels, so Russia could become an even greater obstacle to U.S. sales. While U.S. wheat commitments so far are exceeding last year by 22%, it is likely that the EU and especially Russian and Black Sea exporters will provide a stiff challenge in coming months. The Russian wheat production estimate was recently pegged at 82 mmt by Sov Econ, and that would be up 8.5 mmt from last year’s crop. On the other side of that coin, the EU has been plagued by very wet conditions, hampering planting. Both France and German wheat areas are expected to fall by nearly 6% and just over 7% respectively, with the United Kingdom wheat area down close to 20%. France has garnered much of the recent sizable wheat business, with sales to China, Algeria and Egypt. However, Russian wheat values have fallen, narrowing that spread to just $5/mt premium Russia. While recent rains and snow have undoubtedly helped southern and western Plains hard red wheat areas, excess rain has fallen in the Delta and Southeast soft red areas. Although the wheat markets appear to be getting oversold, it sure feels like there is more downside to come. DTN National HRW index closed at $4.43 and the average basis is at 23 cents under the March contract.
For three straight weeks, March corn has been coiling in a sideways range bounded by $3.76 and $3.85, and on Friday challenged the low side of that range. While U.S. corn exporters have a window of opportunity to boost sales, Ukraine and Argentina continue to provide solid competition. Rumors on Friday have China buying up to 500,000 metric tons (mt) (19.7 million bushels) of Ukrainian corn. U.S. corn sales, while we continue to close the gap between this and last year, remain 22% below on total commitments. As a percentage of USDA’s recently revised export projection, sales figure only 54% compared to a normal pace of 65% at this time of year. South Korea has ramped up buying this week on weakness, with up to 300,000 mt bought, but the jury is still out on where that optional origin corn will come from. Weather in South America is conducive to large, if not record large, Argentine and Brazilian corn crops, with normal to above rains projected the next few weeks. Argentine corn is rated 98% fair to excellent — up from 89% the prior week, according to the Buenos Aires Exchange. The BA Exchange pegs the crop at 49 million metric tons (mmt) — just below USDA’s 50 mmt, and just under last year’s record large 50.6 mmt crop. Some analysts see that possibly moving as high as 53 mmt in the end. Couple that with USDA’s 101 mmt projection, and that would make both crops record large. When China does decide to buy, it is thought that they will be more inclined to buy U.S. pork, beef or ethanol before corn. Look for March corn to remain in that same narrow range, with only a close below $3.75 being bearish. DTN National Corn Index closed at $3.67 on Thursday and is 12 cents under March futures.