Charts of the Day – April 6, 2020
Afternoon Market Commentary – April 6, 2020
by: Chris Betz
|Old Crop (futures month, change, settle price)||CK0||3’0||327’6||SK0||1’2||855’4||WK0||6’4||555’6|
|New Crop (futures month, change, settle price)||CZ0||2’4||348’2||SX0||3’6||8653’2||WN0||6’0||551’0|
Mixed bag to start a holiday shortened week with corn closing down 3, beans up 1 ¼, and wheat up 6 ½. Outside markets had a risk on tone on renewed optimism regarding the spread of COVID-19 as Italy announced the lowest daily increase of new cases since the middle of March. This is supporting the idea that economic shutdowns are working, and that there perhaps an end in sight.
Corn continues to grind lower on decimated ethanol demand amidst the travel shutdowns along with burdensome U.S. planting intentions in the latest USDA report. Oil was lower on the day as a scheduled OPEC meeting was put off reportedly because of the ongoing conflict between Russia and Saudi Arabia. The meeting was supposed to allow for an agreement to be reached to cut production.
Soybeans have been capped by ongoing harvest in South America, which is keeping a healthy discount for Brazilian ports to the U.S. Gulf.
May corn notched another new contract low. Resistance is the 20 day at 347’4, then around 355. On the continuous chart, support is at 318, then eleven year low at 301, which is very much in play should travel restriction be dragged out.
May soybeans remain in a lower short term trend, but the outlook is more sideways, although volatile. Resistance is the 20 day at 862’4, then the 40 day at 879’6. Support is the contract low at 821.
May Chicago wheat continues to bounce off technical support at the key 100 day moving average, which is support at 544’0. Resistance is around 565, then 587.
Technical Thoughts – April 2, 2020
By: Ken Lake
Last week I talked about the demand destruction in corn as it relates to ethanol production and gasoline use. USDA added to ours woes this week in their Prospective Plantings report when they projected that US farmers might plant nearly 97 million acres of corn. That number coupled with lower demand from the ethanol sector adds significantly to our supply and projected carryout in 2021. The ratio between soybean and corn value is a benchmark that the trade will follow in order to detect whether farmers are being unduly incented to plant corn.
The chart below displays that ratio for the November soybean contract divided by the December corn contract. Today’s ratio of 2.47 to 1 favors planting corn. The ratio needs to move closer to 2.5 or 2.6 to 1 for the trade to believe that farmers may switch corn acres to soybeans. In order to get there we either need lower corn prices or higher soybean prices or some combination of the two to make the ratio favor soybeans.
When the May corn contract exceeded its previous low this week at 355, I began measuring for downside counts. Today downside projections are that we trade to the 342, 339 range. Likewise in the December contract lows were exceeded and now project downside trade to 335 to 342.
May soybeans have support at 856. Target 865 to 885 to advance sales. November soybean contract support is 856. Target 870to 890 to advance sales.
The July wheat contract has seen its high for now. End users have extended coverage beyond harvest and are out of the market. Catch up sales are warranted.
Robert’s Thoughts – March 26, 2020
By: Robert Geers
Last week I mentioned that the country elevator was turning to the things they know and that is a market without ethanol. We continue to see ethanol plants across the US shut down, reduce hours, or take extended maintenance shut downs. While this is all happening the country elevator is still open, receiving grain, shipping grain, and finding feed and export markets for grain. We are also preparing equipment and filling storage space with nutrient and chemistry products for the upcoming agronomy season and we will be ready.
It is also important that as the ethanol markets work through this challenging time that we be patient and understanding of the situation they are in. As we are asked/ordered to social distance or stay home to reduce the spread of COVID-19 and the stress it could put on our health care system, we will drive significantly less. In the coming weeks we could see miles driven down anywhere from 25-50%, the ethanol market did not ask for that but they are doing what they need to do to survive what should be a temporary situation.
At MAC we feel fortunate to work in agriculture, an essential industry and will continue to serve the needs of our customers, while protecting the health of customers, our employees, friends, families and communities. If you have any questions or concerns please reach out to us. We’re here to help.
Fertilizer Update – January 6, 2020
By: John Ezinga
Thoughts in the new year by product:
The charts below represent 10 year time frames of the corn price relationship with each product.
- Red= HOLD or caution before buying
- Yellow = NEUTRAL
- Green= BUY!
As you can see from the long term urea affordability index chart above it is clearly in what I call the buy zone as the price per pound of N as compared to corn is under 10%. If you need urea it would be smart to get it bought now. We are 70 bucks off the highs from last spring and seem to have found a bottom in the paper markets. I expect prices to improve from here. Although I do not expect them to rally significantly I do expect them to rebound 20-40 going into spring application season.
The chart below on 28% shows a buy signal as well. I hear there are a lot of import tons working through the system so there may be deals to be had if there is some desperation amongst the traditional holders of 28% at this time of year. In either case the price is not going to hurt you at these levels and likely will look pretty smart in the spring.
Obviously this chart (Phosphate affordability index) is pointing to a year in which you should be clearly building your soil P levels. We are at 10 year lows and this product should be bought. I expect that like urea this product has found a bottom and will rebound so do not drag your feet to get coverage here if you need it.
Potash is not as clear-cut as N and P. It is hovering on a neutral rating on my affordability index vs corn. I think that the Potash cartel is in control of their pricing and supply and so therefore tips the scale into a buy rating from me. If it does set back, I would expect it to be very modest.
I expect flat pricing here forward with a spike right in the demand season.
We are awash in AMS…buy as you need.
If you were not aware, MAC Middleton is warehousing Sulfate of Potash and organic SOP too!! Call for pricing.
Gypsum (ag grade)
If you have gypsum in your normal spreading program you will find that prices have moved up 15-25 bucks a ton since last year. The driving culprit is the temporary closure of mines in Alabaster, MI. US Gypsum is working thru some expansion problems with the DNR and will be out of supply for the next 2 years or so. We have synthetic gyp available.
Supply should be very adequate
With lack of fall usage there should be good supply for spring application.
Contact us for specific products you would like to quote or be updated on.