By Kirk Maltais
--Corn for May delivery fell 1.7% to $3.26 a bushel on the CBOT as traders took a hands-off approach while ethanol's outlook suffers from uncertainty about when the U.S. economy will reopen.
--Wheat for May delivery fell 1.1% to $5.48 3/4 a bushel.
--Soybeans for May delivery fell 0.9% to $8.47 a bushel.
Corn Crunch: The closure of ethanol plants across the Midwest are putting pressure on corn prices. Ethanol producers were on shaky ground before measures to contain the new coronavirus slammed the U.S. economy. "The corn market continues to suffer from poor fundamentals with U.S. ethanol demand slowed by the stay-at-home orders which has resulted in cars staying parked in the garage," said Tomm Pfitzenmaier of Summit Commodity Brokerage. "The corn market, along with most others, is trying to figure out when the U.S. economy will begin to recover."
And Now the Weather: Weather forecasts showing an above-average level of precipitation hitting the Black Sea region in the next two weeks pulled U.S. wheat futures down, said AgResource. "There's a risk of speedy liquidation if regular rainfall materializes in the Black Sea and continues into May," the firm said, predicting managed money funds would flee positions if wheat fields in Russia and the EU continue to see favorable weather. Both are key competitors to U.S. wheat on the export market, and with the coronavirus sparking food security concerns elsewhere in the world, a healthy crop bolsters their market domination.
Soy Switch: With 97 million acres of corn expected to be planted in the U.S. this year, the absence of ethanol demand has some farmers thinking about switching crops. "I think some people are looking at increasing their soybean acres," said Scott Vanderwal, a corn and soybeans farmer in Volga, S.D. Mr. Vanderwal sells roughly 120,000 bushels of corn to surrounding ethanol plants each year, and while he was able to sell all of his old crop before the economic impact of the new coronavirus hit the U.S., many of his neighbors weren't so lucky. Soybean acreage is projected at 83.5 million acres in 2020.
The Deere-Slayer: Citi downgrades Deere to neutral from buy and trims its target prices on Deere and fellow ag-equipment maker Agco amid a lower-for-longer corn price scenario, which the analysts say will weigh on farmer cash flows and capital spending. Citi sees the potential for further near-term downside in cash corn prices, and the analysts believe it may take a few years for ethanol and corn markets to rebalance. Citi targets $155 for Deere's shares, from $160, and $57 for Agco, from $69.
--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.
--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.
(Colin Kellaher contributed to this article.)
Write to Kirk Maltais at email@example.com