Weekly Market Recap April 10, 2020

Good Friday

The CBOT is closed today in observance of Good Friday

Here are some comments to end the week: 

May corn futures finished the week at $3.31 3/4, up a penny from last Friday, and December futures ended at $3.50 3/4 on Thursday, unchanged for the week.

May soybean futures were up 9 on Thursday, ending at $8.63 1/2, up 9 1/4 on the week, while November beans gained about 8 yesterday, to close at $8.75 3/4, up 14 1/2 from last Friday.

Even though there was a USDA WASDE report yesterday, it was overshadowed by the agreement hammered out in the Oil Industry. OPEC+ announced that they will be reducing output by 10 million barrels per day during May and June. That is 420 million gallons of crude oil. They also said that if they do not make these cuts, they would expect all global storage facilities to be full and prices to be in the single digits. West Texas crude finished the week just below $23/barrel, down more than $2 yesterday. There was also talk that these cuts should last beyond 2022. This will mean that both the Russians and the Saudis will produce about 8.5 million barrels/day, which is down 2 million for Russia and down 4 million for the Saudis. 

They also expect countries that are not part of the agreement, like Mexico and the U.S., to cut 5 million barrels/day. Shortly after the announcement, Mexico released a statement saying they would NOT be cutting production. In fact, they intend to continue to increase their production. This is probably what led to the lower close at the end of the day, as prior to the OPEC announcement, crude oil had been $3 higher.

From the WASDE report: 

  • U.S. ethanol usage was reduced by an unprecedented 375 million bushels to 5.05 billion, due to stay at home orders and a decline of about 45% in gasoline consumption. There are some analysts saying that the USDA will need to make further cuts in subsequent reports, with this number eventually falling below 5 billion bushels 
  • USDA also reduced South American production by 3.5 million metric tons (MMT’s), or about 128 million bushels. They did this by reducing Brazil’s output by 1.5 MMT’s and taking Argentina down 2 MMT. Some analysts expect further cuts.
  • The negative for soybeans from the WASDE was the increase in U.S. soybean ending stocks, now estimated at 480 million bushels, up from 425 million. 50 million of this was due to a cut in exports. There are some that believe exports could/should be cut further based on the export pace so far this year. 

For more in-depth analysis, tune in later today to our Bull Bear Banter podcast. You can find the link here to previous episodes, and/or check this link this afternoon for this weeks episode: https://landuscooperativeexperience.podbean.com/