Weekly Market Recap February 7, 2020

Grain Corn Pile Closeup

Today, March corn futures gained 4 1/4 to finish at $3.83 1/2. That is 2 1/4 higher for the week. December corn was also up 4 1/4, to $3.94, which is up 3 1/4 this week. 

March soybean futures added 1 cent today, closing at $8.82, and gaining 9 1/2 for the week. November beans lost 1 1/2, ending at $9.18 1/2, up 6 1/4 since last Friday. 

In the midst of U.S. soybeans continuing to face downward price pressure from South America’s harvest and questionable Chinese demand, producers received the third and final round of Market Facilitation Program payments. These payments, designed to compensate low U.S. soybean prices as a result of the drawn-out U.S. and China trade issues, are not expected to be duplicated for the crop going in the ground this spring. Producers are encouraged to incorporate the payment in what they would normally receive for their grain and not to consider it as “extra” income.

Ethanol production jumped last week to 318 million gallons. This was somewhat unexpected, given the previous week was 303 million, and crude oil values have been under pressure, moving closer to $50 per barrel. The other part of the EIA report showed ethanol stocks declining below the 1 billion gallon mark, now at 986 million. This is a very similar number to this time last year and in 2018. 

March Crude Oil futures hit a high on January 8th at just over $65, and then bottoming out earlier this week at just above $49. That’s a drop of more than 20%. Both of these numbers represent a 1-year milestone. $65.40 on January 8 was a one year high and this week’s $49.31 is a one year low. We continue to hear talk of OPEC trying to reduce production, but that always seems to be easier to say than do. Canceling of International flights, and reduced travel in general due to Coronavirus has really pushed fuel demand lower. Some analysts believe that China will use anywhere from 1 to 3 million barrels less per day. With 42 gallons in a barrel, that is somewhere between 42 and 126 million gallons PER DAY of reduced consumption. Ethanol production and crude oil values are the two biggest factors impacting corn prices. 

For soybeans, exports continue to be impressive compared to last year, even with the weekly shipments decreasing. The cumulative number of 927 million bushels, is beating last year at this time by 180 million bushels. So, even though we hear that South American values are cheaper than the US, we’re still shipping beans into export channels. More than 40% of last week’s loadings went to China. The #2 destination last week was The Netherlands, but from there will go to several European countries. 

On January 2nd, March soybean futures hit a recent high at $9.61. Compare that to where we closed for the week at $8.82. If we don’t see some sort of major weather issue somewhere in the world, we could be talking about even larger than normal world ending stocks, and that is what is driving prices lower. 

This week we have heard, seen and smelled more grain quality issues than normal for this time of year. We’ve seen some youtube videos that make us concerned for the safety of the individuals involved. If you are having issues with grain quality, whether that is grain hung up on the side of a bin, or a crust that has formed on the top, please take a few minutes to check competent facts on the internet for the SAFE way to address the issue. We have FREE Price Later open in many of our locations. Please check with your local Landus Cooperative facility for availability. We’d much rather have you bring suspect grain in now than have a bigger problem on both of our hands later. Please let us know how we can help. 

We’re one week away from our Women in Ag event, Ventures. This will be held on Saturday, the 15th, in Ankeny. We have some great speakers lined up and expect to have a lot of fun learning about various Ag related topics. For more info, or to register, use this link: https://www.landuscooperative.com/news-events/blog/ventures-2020

The latest episode of our weekly podcast, the Bull Bear Banter can be found here: