By Kirk Maltais
--Corn for May delivery rose 1.1% to $3.31 1/2 a bushel on the Chicago Board of Trade on Tuesdad with managed money investors opting to cash in short positions in corn ahead of Thursday's WASDE report.
--Soybeans for May delivery fell 0.1% to $8.54 3/4 a bushel.
--Wheat for May delivery fell 1.2% to $5.49 1/4 a bushel.
Bargain Basement: After falling to nearly $3.25 per bushel Monday, grains traders viewed corn futures as oversold even with a lack of demand from the ethanol industry as coronavirus keeps consumers off roads and limits gas consumption. "Corn still has problems with questions regarding ethanol demand moving forward, but the market is extremely oversold with U.S. corn the cheapest grain in the world," said Doug Bergman of RCM Alternatives. Fund investors opted to be cautious instead of continuing the corn drubbing.
Trimming Risk: Caution was the main motivator for traders Tuesday. Managed money funds cut risk ahead of the release of the USDA's monthly WASDE report on Thursday and the planting season. Investors covered short positions in corn and soybeans while cutting long positions in wheat, according to AgResource. "Traders do not want to chase strength or weakness until Midwest corn/soy seed is planted in abundance. Choppiness appears to be this week's price trend," the firm said.
A Hardy Crop: Indications that the U.S. winter wheat crop is healthier than expected were another factor pressuring wheat futures Tuesday. In its first crop progress report for 2020, the USDA said 62% of the crop was in good or excellent condition. In previous trading sessions, wheat prices on the CBOT were buoyed by sentiment of a tighter world supply as nations like Russia try to limit exports in order to be prepared for coronavirus fallout.
Poet Idles Plants: Ethanol producer Poet said Tuesday that it will idle production at its bioprocessing facilities in Chancellor, S.D.; Ashton and Coon Rapids, Iowa, and delay the start of its new plant in Shelbyville, Ind. as coronavirus has pressured producer margins and consumer demand. The stoppages are expected to reduce corn demand by 110 million bushels and reduce ethanol production by 330 million gallons. "Plummeting fuel demand amid the coronavirus pandemic has overwhelmed markets already suffering from continued trade barriers, a foreign price war over oil and regulatory uncertainty here at home," Poet CEO Jeff Broin said. A steep drop in oil prices has made ethanol unprofitable for producers.
Changing Focus: With the USDA releasing its monthly WASDE report Thursday, many traders are expecting the factors moving grains futures to shift from coronavirus-related news to more 2020/21 supply-and-demand fundamentals. "A major report looms large for Thursday and that will be the key for prices all next week," said Jerry Welch of Midwest Market Solutions. Analysts polled by The Wall Street Journal this week are expecting grain stockpiles in the U.S. to rise while South American production declines.
--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.
--The USDA releases its monthly World Agricultural Supply and Demand Estimate report at noon Thursday.
--The Chicago Board of Trade will be closed on Friday in observance of Good Friday. It will reopen for trading on Monday.
Write to Kirk Maltais at firstname.lastname@example.org