By Kirk Maltais
--Corn for May delivery fell 2.1% to $3.19 1/4 a bushel on the Chicago Board of Trade on Wednesday, with traders reacting to the staggering decrease in ethanol production in recent weeks.
--Wheat for May delivery fell 1.5% to $5.40 1/2 a bushel.
--Soybeans for May delivery eased 0.7% to $8.41 a bushel.
How Low Can It Go: As expected, ethanol production fell to a new record low, reaching 570,000 barrels a day in the week ended April 10. Inventories continued to build as efforts to contain the coronavirus have kept drivers at home and reduced demand for the biofuel. This calls into question the USDA's projection of 97 million acres of corn being planted. "To offset Covid-19-related demand destruction, fewer corn areas are needed in 2020," said Shelby Myers of the American Farm Bureau Federation.
Mixed Bag: The U.S. soybean crush set a monthly record in March, up 6.7% from a year ago to 181.4 million bushels, according to the National Oilseed Processors Association. The data signals increased demand for soyoil and soymeal, but that's not likely to be seen in weekly export sales. Grains traders expect Thursday's report to show lower shipments of beans, soyoil and soymeal, with their soybean projection less than half of the previous week's 867,900 metric tons for 2019/20 and 2020/21.
Soy Pivot: With the steep drop in oil prices this year forcing ethanol plants to reduce production or close doors altogether, many farmers with cattle or hog herds are running into difficulty procuring the dried distillers' grains they rely on to feed their animals. This could prove to be an opportunity for soy producers, said Emily French of ConsiliAgra. Speaking at a virtual conference hosted by the U.S. Soybean Export Council, Ms. French said soymeal will be needed globally to fill the void left by absent DDGs. She expects soybean prices will rise from their current position of below $8.50 a bushel.
China's Quest For Normalcy: While U.S. agriculture finds itself battling the coronavirus crisis, China's agricultural activity is returning to normal with the government slowly lifting containment measures put in place earlier this year following the Covid-19 outbreak, according to Fitch Solutions. The impact of the containment measures on China's crop production in 2020 appears to be fairly limited for now, the firm said. However, the risks of a resurgence of coronavirus in the coming months are very real; "as a result, there are still uncertainties as to the impact of the virus on the sector," it said.
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--Kansas City Southern releases its first-quarter earnings before the market opens Friday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
(Lucy Craymer contributed to this article.)
Write to Kirk Maltais at firstname.lastname@example.org