Markets are higher this morning with corn up 4 and soybeans up 10.
The catalyst for the recovery are reports that Chinese interest for US beans and other Ag products is improving. Newswires carried a story that the Chinese intended on making good on their commitments from the Phase 1 trade deal as they look to bolster their state reserves noting that the bulk of the business would come from the US. They did not set a timetable but the reports did note that they would be seeking 20 MMT of corn to go along with 10 MMT of soybeans.
Brazilian soybean exports for April are on pace to surpass the May 2018 record high of 453.7M bu. Brazilian farmers are taking advantage of a weak real and strong export demand and booking significant sales for the 2020/21 marketing year. Growers in Mato Grosso have already sold 82% of their 2019/20 soybean crop and 55% of their corn. In Parana, 54% of this year’s soybean crop is contracted for sale, compared to 35% a year ago.
Brazilian farmers are looking at long-term sales as well, booking 30% of new crop Mato Grosso soybeans. On average, only 4% of the new crop is contracted at this time of year. Growers in Brazil’s largest agricultural state had sold 23% of the 2020/21 corn crop as of late March, which is well over a year from being harvested.
The US EIA released its weekly Petroleum Inventory Status report and despite a 4.5% increase in weekly gasoline demand, ethanol production set yet another record lower week for output, falling a mere 294M gallons per day to 23.6B gallons per day. Weekly ethanol output has dropped more than 45% since states started putting restrictions on movement in an effort to combat the transmission of COVID-19 went into place a little over a month ago.
Have a Safe Day!