MarketsFarm — The COVID-19 pandemic has continued to pressure U.S. markets, including the Chicago Board of Trade (CBOT), according to Scott Capinegro, president of Barrington Commodities at Barrington, Ill.
“It’s like that movie Groundhog Day. You wake up and it’s the same thing every day,” Capinegro said.
There’s a domino effect in the grain industry because of the pandemic, he said, noting it will adversely affect the supply and transportation infrastructure in the weeks and months to come.
Wheat had been the leader at CBOT for about the last two weeks, he said, as prices came close to yearly highs. Wheat prices have since backed off, but there could be some support in the offing as Russia considers cutting grain exports, including wheat.
The CBOT soy complex also made gains, as Argentina contends with problems getting soybeans to port and shipping them out because of COVID-19 concerns.
However, the U.S. market has turned lower as well because of the unknowns surrounding the pandemic, Capinegro said.
“Beans had a nice run, they needed a correction. Maybe that’s what we’re seeing right now?”
As for corn, Capinegro pointed to major problems in the the U.S. ethanol industry. Not only has the pandemic required many ethanol plant workers to remain at home, but consumer demand has fallen sharply as well. Added to that is the Saudi Arabia/Russia crude oil price war, which has made ethanol production unprofitable.
Also because of COVID-19, he seriously doubts U.S. farmers this year will plant the 97 million acres of corn the U.S. Department of Agriculture (USDA) has projected.
USDA on Tuesday issued planting intentions estimates including a forecast for an eight per cent increase in corn acres from 2019 levels. One thing USDA didn’t take into the account in the report, just yet, was the pandemic and how it could affect spring planting.
The forecast also increased soybean acres by 10 per cent to 83.5 million, while total wheat acres slipped one per cent to 44.7 million.
USDA on Tuesday also released its report on grain stocks as of March 1, which saw declines in corn, soybeans and wheat.
The department estimated corn stocks to be down eight per cent at 7.95 billion bushels. Soybeans were reduced 17 per cent to 2.25 billion bushels. Total wheat stocks were lowered 11 per cent to 1.41 billion bushels.
— Glen Hallick reports for MarketsFarm from Winnipeg.