Corn is down 1, beans up 3 and wheat down 3 to open the day. The corn and wheat markets have completely wiped out the gains from the USDA report on Tuesday.
The last two days we have seen the market shifting to what would happen under a Biden Presidency as his COVID19 advisor proposed a 4-6 week national shutdown to control the virus despite having a vaccine. This action would strike directly at the US’s productivity and demand for certain commodities. As experienced in the last shutdown, gasoline took a major hit in usage and still hasn’t fully recovered. Less gasoline usage also reduces the US ethanol consumption. As the USDA removed 465 mbu from the US S/D that pushed carryout below 1.8 bln with new export expectations and lower production, now the trade is presented with a governmental action that could add 250 mbu of supply back to the corn table from reduced corn for fuel ethanol production. COVID19 cases in the US has had some states (CA, IL, IA, MN) take early action to stave off rising positivity rates. Not only is the domestic situation under the threat of shutdown but how much will it bleed into import/exports where countries, who believe they have the disease under control, look to hold off from reimporting the disease.
As I have stated in the last couple weeks, producers should not be complacent and thinking the markets are going to continue to climb or even hang where they are. We have lost 20 cents in the last two days and if we were to see a 4-6 week shutdown this market could crumble back to the numbers seen last spring! The USDA’s report on Tuesday had a 11.5% stocks to use ratio. This could easily climb to 15% with a shutdown. $4 can still be sold for April forward and is a level I would recommend making sales.
Have a Safe Day!