Markets were higher overnight with short covering and news that China appears to have stepped up and bought corn, beans and wheat in the last 48 hours. Concerns over supply from South America have been fueled by the coronavirus outbreak in South America and weather concerns. This may lead to more long term support in the markets, but short term the virus and oil wars are going to lead the way.
Demand destruction caused by COVID-19 and a falling energy market due to overproduction in Saudi Arabia and Russia are having a major impact on demand. Research done by a private analyst suggests we could look for a 12% drop in demand for gasoline in March, a 40% drop in April and a 20% drop in May. That is over 8.6 billion gallons of demand for gasoline due to limited or postponed travel. That means a demand drop in ethanol equivalent to o 331 million bushel of corn in 2020! Ethanol plants are slowing down or shutting down daily across the country as demand disappears and margins fall to unseen levels.
Corn is unchanged, soybeans are up 9 and wheat is up 2 to start the day. There will be a lot of fluctuation as stories about the virus swing the markets back and forth.
Have a Safe Day!