By Kirk Maltais
--Wheat for May delivery fell 0.5% to $5.25 a bushel on the Chicago Board of Trade on Friday, responding to mass selling in commodities and equity markets as the spread of the coronavirus threatens to upend economies. The most active contract was down 4.3% for the week.
--Soybeans for May delivery lost 0.3% to settle at $8.92 3/4 a bushel.
--Corn for May delivery rose 0.1% to $3.68 1/4 a bushel.
Ungraceful Exit: Managed money traders have reportedly offloaded a large portion of their wheat contracts, driving futures lower. "The trade will be looking for large specs to have sold net some 28,000 lots of wheat on tonight's [CFTC Commitment of Traders] report," said Charlie Sernatinger of ED&F Man Capital. By comparison, hard red wheat and soft red wheat had a net long position of 72,949 contracts for the week ended Feb. 18, according to the CFTC's last report. In the longer term, a weak wheat price will likely prompt farmers to plant less of it this spring, Mr. Sernatinger said.
Coronavirus Consequences: Grains futures shed more value Friday in response to global equity markets dropping below correction thresholds. This has some traders questioning the promised benefits of the phase one trade deal with China. "We can't help but wonder if the spread of the coronavirus will give the Chinese the excuse to hold off buying," says Tomm Pfitzenmaier of Summit Commodity Brokerage.
The Biggest Loser: Soyoil futures on the CBOT are down about 17% for the year, more than double soybeans' slide of about 6.6%. The main driver for the loss is the continued liquidation of Malaysian palm-oil futures, according to AgResource, which have fallen for most of February on concerns about the coronavirus's impact on demand for cooking oil. Soyoil for May delivery ended down 1.8% at 28.68 cents per pound.
Spring And A Young Trader's Fancy: As the start of the spring planting season approaches, traders are likely to shift their focus from the old crop to the new, Karl Setzer of AgriVisor said. This change in focus may spark a turnaround in grains futures, Mr. Setzer said, with traders adding a risk premium to futures in the event of adverse weather.
Ethanol in the USDA's Tank: The USDA aims to increase its fleet of vehicles able to drive on either gasoline or ethanol. Such flexible-fuel vehicles already make up more than half of the USDA's vehicles used for food safety inspections, agricultural research programs and other enforcement tasks, but the USDA predicts this and other measures have the potential to increase its annual consumption of E85 by 10 million gallons and of E15 by nine million gallons. That's just a drop in the barrel for U.S. ethanol consumption, however, which totaled 14.4 billion gallons in 2018, according to EIA stats.
--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.
--The USDA releases its monthly grain crushings report and annual summary at 3 p.m. ET on Monday.
--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.
Write to Kirk Maltais at firstname.lastname@example.org
(END) Dow Jones Newswires
February 28, 2020 16:15 ET (21:15 GMT)
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