As we approach the prospective plantings and grain stocks reports on Tuesday, there is plenty of uncertainty surrounding the markets.
Many hope USDA is going to find fewer bushels from last year, whether it was due to test weight or actually because of bad yields not properly reported or unharvested acres. Even if there is a lower stocks report, demand is now being taken away from ethanol.
“If we get a pop in the market, I think people better be protecting something here in corn for sure,” said Roy Plote of PCI, a division of L&M Commodities.
Plote is keeping an eye on soybeans as Brazil is having problems with weather and shipping. If coronavirus hits there, it could curtail shipping and farmers will hold back some.
Livestock demand is there since everyone wanted to stock-up on meat as the freezers were emptying and cattle aren’t really in a troubling situation at this point with carcass weights going up.
“Keeping current may be the issue if we have any sort of packing house problems with the virus,” Plote noted.
There have been some packing house issues which have been taken care of already but we certainly don’t need many plants being closed down leading to a backlog.
“Then, how are we going to handle that going forward?”
With crude oil dropping so much, we are seeing pressure on gas, heating oil and ethanol. That translates to a 20 percent cut in ethanol grind and a 50-70 percent cut in fuel and gasoline demand.
“Now they are arguing over how long that could occur – if we’ll be back somewhat to normal by the end of May or if that could go all the way out to June or July,” Plote explained.