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ACI Pre-Report Comments

Mar 30, 2020

Agronomy, Crop Management, Grain, Market Update, Soybean, Technology

Grains 

Tomorrow at 11 am the market will get both March 1 Grain Stocks numbers and Planting Intentions from the USDA. ACI is expecting around 94.5 million acres of corn plantings and 83.7 million acres of soybean plantings in the United StatesCurrently, average analyst expectations are 94.1 million acres for corn, 85.0 million acres of soybeans, and 45 million acres of all classes of wheat. Grain stocks are always more difficult to predict, currently, analyst projections are averaging 8.134 billion bushels of corn2.218 billion bushels of soybeans, and 1.430 billion bushels of wheat as of March 1, 2020. 

Corn futures are moving lower due to the ethanol situation – we are estimating something close to a 400-million-bushel decline in ethanol grind in the next four months. Certainly, we will see some of that demand come back in the form of feed or increase in exports (example: we had marketing year highs in corn inspections this morning) but this will still be a serious drop in corn demand and will weigh significantly on the final carryout. 

Traditionally this report is very important for price direction but given all the noise that is going on in the world, we are not sure that it is going to have the same effect that it normally would. Please call us if you want to discuss marketing options ahead of the report. 

Energy 

Crude Oil futures continued to decline to trade under 20 dollars a barrel on further concerns that demand will stay low especially as the United States extends social distancing guidelines through April 30th. President Trump is planning to have a call with Russian President Vladimir Putin today to discuss oil prices and likely the current “fight” that Russia is having with the Kingdom of Saudi Arabia with regards to projected output from the last OPEC (Organization of the Petroleum Exporting Countries) meeting in Vienna, Austria that took place on March 6, 2020. 

MAY CRUDE down $27 (-57.5%) a barrel in the last month: 

Crude Oil Chart

Ethanol continues to struggle with the lack of driving demand in the United States, where we are seeing demand off between 50 and 80% due to shelter-in-place requirements for many states in the union. Currently, about 25 plants are slowing or idling due to the margin structure and the demand outlook – we expect more plants to idle as inventories start to become simply too burdensome to hold. 

Macro 

So far it is a firmer start to the week in US equity markets with the Dow Jones Industrial Average up about 640 points to 22,285 and the Standard & Poor’s 500 Index up 81 points to 2622. While the number of COVID-19 cases and deaths have increased in the United States, (especially out of the New York City area) the market is encouraged at the slowdowns in COVID-19 cases in Italy where the 4,050 new infections in the last 24 hour period would be the lowest increase for the country since March 17, 2020.  

Grain Team – Aaron, Connor, Dallas, Hank, Jenna, Joel and Kevin