Weekly Market Recap February 14, 2020

Grain bins dryer

On Friday, March corn ended at $3.77 3/4, down 1 3/4, and for the week lost 5 3/4. December 2020 corn finished at $3.88 3/4, down 3 1/4 and losing 5 1/4 for the week. 

March soybean futures ended the day at $8.93 3/4, down 2 1/2 for the day, but for the week gained 11 3/4. November soybeans ended at $9.22 1/2, down 1 1/4, and for the week gained 4. 

This week, the big news was the February WASDE report, even though there wasn’t much to it. At first glance, the U.S. balance sheet, for corn, doesn’t look like there was any change, as the Ending Stocks number remained the same as the January information, at 1.892 billion bushels. However, looking at it a little closer shows that they did increase ethanol usage by 50 million bushels, but they also decreased exports by 50 million. So, net/net, no changes to the U.S. ending stocks. 

For soybeans, they increased exports by 50 million, so the ending stocks for the U.S. decreased by 50 million to 425 million. Keep in mind that a year ago, we were talking about 900 million to 1 billion carry out. The difference this year is that other parts of the world will be carrying more of the inventory. On Tuesday, the USDA increased worldwide ending stocks by more than 2 million metric tons. That is the equivalent of 73.5 million bushels. This is because they also increased Brazilian soybean production by 2 million metric tons. 

This week’s EIA report showed that ethanol production decreased slightly to 316 million gallons, done 2 million. This is still above the needed pace to reach the new demand number from the USDA. However, ethanol stocks also grew by 1 million gallons. A big item to watch here is crude oil values, which continue to hover around $52/barrel. This is down significantly from $68 in early January. 

Another item to keep a close eye on is the strength of the U.S. dollar. Just a month ago, we were hearing a lot of talk about a weak U.S. dollar. But, in the past month, as the world has come to grips with the Coronavirus outbreak, the dollar has been strengthening. It hit a 4-month high earlier this week. This is because, in times of uncertainty, people flock to the U.S. dollar as a “safe haven”. If this Coronavirus continues to disrupt trade, the dollar will continue to strengthen, which will make it even harder to export goods from the U.S. Along with that, the Brazilian REAL continues to weaken relative to the U.S. dollar, and is down about 8% for the year. 

Soybean export sales continue to be strong enough to hit the USDA’s latest estimate. Last week, the U.S. sold 23.7 million bushels of soybeans for export. This is down slightly from the previous week, but above the 20.8 million bushel weekly number to reach that 1.825 billion for the year.

UPCOMING EVENTS:

  • Monday is President’s Day – the Board of Trade will be closed all day. 
  • February 20 and 21 is the USDA Agricultural Outlook Forum. We expect them to start including impacts from the recent Phase One agreement with China. 
  • Our Averaging Contract sign-up deadline is fast approaching. Please contact your local GMA prior to the end of the month. 
  • Daylight Savings Time begins on March 7th

Next week, February 16 – 22 is Grain Bin Safety Week. Please see the below information about Grain Bin Safety. 

Here are 10 tips to avoid Grain Bin Entrapments: 

  1. Develop a “ZERO ENTRY” mentality – stay out of grain bins if at all possible
  2. When you do need to check grain bins, don’t go alone
  3. Check lockout control circuit devices on augers before entering grain bins
  4. Communicate and let others know if you are entering the bin, so that augers remain off
  5. Break up crusted grain from outside the bin with a long pole
  6. Wear a safety harness and have someone watching
  7. Run ventilation equipment to remove toxic fumes prior to entry
  8. Wear a dust filter or respirator
  9. Install ladders inside the bin and paint bright stripes on it for emergency exit
  10. Keep children out of grain bins