Corn Clips Seven-Session Slide
By Kirk Maltais
--Corn for May delivery rose 1.1% to $3.31 1/2 a bushel on the
Chicago Board of Trade on Tuesdad with managed money investors
opting to cash in short positions in corn ahead of Thursday's WASDE
--Soybeans for May delivery fell 0.1% to $8.54 3/4 a bushel.
--Wheat for May delivery fell 1.2% to $5.49 1/4 a bushel.
Bargain Basement: After falling to nearly $3.25 per bushel
Monday, grains traders viewed corn futures as oversold even with a
lack of demand from the ethanol industry as coronavirus keeps
consumers off roads and limits gas consumption. "Corn still has
problems with questions regarding ethanol demand moving forward,
but the market is extremely oversold with U.S. corn the cheapest
grain in the world," said Doug Bergman of RCM Alternatives. Fund
investors opted to be cautious instead of continuing the corn
Trimming Risk: Caution was the main motivator for traders
Tuesday. Managed money funds cut risk ahead of the release of the
USDA's monthly WASDE report on Thursday and the planting season.
Investors covered short positions in corn and soybeans while
cutting long positions in wheat, according to AgResource. "Traders
do not want to chase strength or weakness until Midwest corn/soy
seed is planted in abundance. Choppiness appears to be this week's
price trend," the firm said.
A Hardy Crop: Indications that the U.S. winter wheat crop is
healthier than expected were another factor pressuring wheat
futures Tuesday. In its first crop progress report for 2020, the
USDA said 62% of the crop was in good or excellent condition. In
previous trading sessions, wheat prices on the CBOT were buoyed by
sentiment of a tighter world supply as nations like Russia try to
limit exports in order to be prepared for coronavirus fallout.
Poet Idles Plants: Ethanol producer Poet said Tuesday that it
will idle production at its bioprocessing facilities in Chancellor,
S.D.; Ashton and Coon Rapids, Iowa, and delay the start of its new
plant in Shelbyville, Ind. as coronavirus has pressured producer
margins and consumer demand. The stoppages are expected to reduce
corn demand by 110 million bushels and reduce ethanol production by
330 million gallons. "Plummeting fuel demand amid the coronavirus
pandemic has overwhelmed markets already suffering from continued
trade barriers, a foreign price war over oil and regulatory
uncertainty here at home," Poet CEO Jeff Broin said. A steep drop
in oil prices has made ethanol unprofitable for producers.
Changing Focus: With the USDA releasing its monthly WASDE report
Thursday, many traders are expecting the factors moving grains
futures to shift from coronavirus-related news to more 2020/21
supply-and-demand fundamentals. "A major report looms large for
Thursday and that will be the key for prices all next week," said
Jerry Welch of Midwest Market Solutions. Analysts polled by The
Wall Street Journal this week are expecting grain stockpiles in the
U.S. to rise while South American production declines.
--The EIA releases its weekly update on ethanol production and
inventories at 10:30 a.m. ET Wednesday.
--The USDA releases its monthly World Agricultural Supply and
Demand Estimate report at noon Thursday.
--The Chicago Board of Trade will be closed on Friday in
observance of Good Friday. It will reopen for trading on
Write to Kirk Maltais at firstname.lastname@example.org
(END) Dow Jones Newswires
April 07, 2020 16:02 ET (20:02 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.