Markets are higher this morning with corn up 1, beans up 1 and wheat up and wheat up 5 to start the day.
OPEC is scheduled to hold a virtual meeting on Monday to discuss a new agreement to reduce output. Traders are expecting some sort of resolution between Russia and Saudi Arabia to bring the oil war to an end. President Trump indicated that his conversations with Russia’s President Putin and Saudi Arabia’s Crown Prince suggested that they were willing to cut 10-15 million barrels per day. However I don’t expect to see much support in the corn market as ethanol producers won’t see any relief until people return to more normal driving patterns.
With the drop in ethanol prices, plants shutting down, storage tanks filling and demand down as people stay home and leave their cars in the garage it could be a long time before there is demand in the ethanol industry again. I do not expect much of an upside in old crop corn with the sudden lack of demand and expectations for large new crop acres. The 2019 crop has a lot of quality issues which is going to make it even more difficult for producers sitting on unpriced inventory. New crop prices do not show a lot of upside potential at the present time and if we get anywhere near the acres projected in Tuesday’s report we will be looking at a 2.5-3.0 billion bushel carryout. Those type of numbers are going to make the current fall prices of $3.20 look good.
At Didion we are currently buying old crop corn for the summer months to fill our mill needs. Quality will be monitored closely and we will be sticking very tightly to our discount schedule as everything we will be buying will have to go to our mill.
Have a Safe Day!