Clean Energy Futures

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AgMaster 3-28-20


After last week’s key reversal up,  the mkt tacked on another 20 cents this week – which included a very rare six consecutive up days! The mkt didn’t have to look too far for good news starting with the Macros – the DJI finished a whopping  2500 points higher & the June $$ down 500 points!  Plus tighter stocks in China & supply bottlenecks in South America!


  • EXPORTS – Mon Inspections were 570,642 (494,612) – Thursday sales were 904,000 (400 – 900)

Fri –     114,048 Corn –    Unk

63,290   Beans – Mexico

Wed –   20.000   Oil –      S Korea

138,000 Corn –   Unk

  • PLANTING INTENTIONS & QTLY STOCKS – will be issued on Tues at 11am by the USDA but we suspect its impact will be overshadowed by Covid-19 news!
  • THE $2 TRILLION CORONAVIRUS STIMULUS PACKAGE – passed on Friday had well-deserved good news for the US Farmer –  with as much as $23.5 billion in assistance allocated by Ag Sec Sonny Perdue – this on top of $26 billion in aid passed out to farmers over the past two years
  • UNEXPECTED HELP FROM THE MACROS THIS WEEK – amidst all the chaos of Covid-19, the mkt really embraced the aid package passed on Friday – rocketing up some 2500 points – one of its biggest wkly % gains ever! Also, the US Dollar plunged over 500 points – very export friendly! Finally, the metals surged with gold up $140 & silver up $2.00!
  • THE USUAL S/A ISSUES! Supply bottlenecks in Brazil & Argentina have once again reared their “ugly heads” – helping to support the mkt
  • FLATTENING THE CURVE – is often talked about as the early indication, the virus is slowing – meaning less infections reported day-to-day! That has already occurred in China – certainly a first step toward a resumption of normal export activity
  • WEATHER PREMIUM – as we approach planting, the normal issues of too wet/too dry surface & could necessitate the building of weather premium
  • TOO CHEAP ALREADY BEFORE ALL THE CHAOS – 4-5 weeks ago, before the world got blind-sided by Covid-19, the Ag mkts were hovering just over 10 year lows – it could be easily argued that the virus created “exhaustion selling” – thereby cratering the entire Ag Complex!

I guess it comes down to the old axiom HOW MUCH CAN YOU BEAT A DEAD HORSE? We feel “ enough is enough” – that the grains have finally stopped going down! And going forward, the mkt has no “margin for error” for any weather issues from either hemisphere!



The May Corn contract is clearly the “weak link” in the grain complex & deservedly so with the massive “demand destruction” caused by the faltering ethanol usage! In addition the upcoming Planting Intentions report on Tuesday will highlight an expected large increase in corn acreage at 94.32MA (ly-89.7)!  But for “the glass half-full contingent” there is good news out there – starting with robust weekly exports (816,634 on Mon & 1,897 on Fri) & the US Dollars 500 point plummet last week! We’ll choose to embrace the positives  – opining the mkt is quite oversold,  the bad demand is dialed in & that corn will follow meal & wht up!



The above May Wht Chart speaks volumes as the contract has taken over the upside leadership of the grain complex from May Soy Meal! The near $1.00 upside move (492 – 587) in 11 short days reflects some very positive supply/demand fundamentals – strong domestic usage (bread, pasta, etc),  increased pipeline demand (people simply want to own a little more) &  finally concerns that Russia will impose export controls!  Also helping is the upcoming USDA acreage forecast of 44.9 MA – a slight decrease over 2019’s 45.1 MA! The uptrend is fully entrenched – albeit a little overbought!!



Extreme volatility sabotaged a promising $12.00 rally (98-110) mid-week and turned the impressive gains into a mere $2.30 rally by Friday’s close! It’s hard to attach a fundamental reason to the  late-week  plummet but the mkt was quite overbought on its highs & Thursdays negative Pig Crop didn’t help either! The 60% correction off the highs is not unprecedented – we still feel the seasonal lows were put in on 3/16/20!



Unquestionably, the Apl Hog Contract was extremely overbought after a near vertical $16 upside run (52-68) so the bearish March Pig Crop issued on Thur 3/26/20 was all the reason the mkt needed to correct – “correct it did” in an extreme way finishing limit-down on Friday’s close! However, we feel the mkt’s reaction was overdone & that solid domestic & China demand will rally the mkt early next week!!


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