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Corn Falls as New Coronavirus Cases Rise

06/25/2020 | 04:00pm

By Kirk Maltais

 

-- Corn for July delivery fell 2.2% to $3.17 1/4 a bushel on the Chicago Board of Trade Thursday as Texas paused reopening plans and new coronavirus cases and hospitalizations increased in a number of states.

-- Soybeans for November delivery fell 0.2% to $8.68 1/4 a bushel.

-- Wheat for July delivery rose 0.5% to $4.88 1/4 a bushel.

 

HIGHLIGHTS

 

Coronavirus Comeback: The resurgence of Covid-19 in many states such as Texas, which halted reopening plans, has grain traders on edge that the hit on the food service industry by restaurant closures will continue.

"Covid-19 is returning into the mindset of ag trading as the hospitality/food service industries will be hobbled through the summer," said AgResource. "This will produce a negative demand lean for U.S. grain and ag prices."

 

Apprehension Abounds: Corn futures in particular were under pressure Thursday as traders are looking ahead to Monday's weekly crop progress report from the USDA, expecting rainfall in the Midwest will only bolster crop conditions, if not at least maintain them.

"Favorable weather for the U.S. is expected to leave corn conditions near unchanged when updated by USDA on Monday," said Terry Reilly of Futures International. Seventy-two percent of the U.S. corn crop is assessed at being in either good or excellent condition, the USDA said in its last crop progress report earlier this week.

 

INSIGHTS

 

Corn Contraction: The acreage of corn planted by U.S. farmers this year is expected to be shown at 95.2 million acres, according to grain analysts surveyed by The Wall Street Journal. That would be a roughly 1.8 million- acre decrease from the USDA's last estimate of 97 million acres. That may not be enough to quell the sentiment among grain traders that corn supplies are going to be abundant, while demand is questionable amid a resurgent Covid-19.

"Little change to the overall supply/demand situation is expected," said Tomm Pfitzenmaier of Summit Commodity Brokerage.

 

Stockpile Shrinkage: Soybean inventories in the U.S. are expected to drop by over 400 million bushels in the USDA's next quarterly stocks report, according to analysts surveyed by The Wall Street Journal. A stockpile of 1.38 billion bushels is expected to be shown in next week's report, analysts say, which is down from last year's assessment of 1.78 billion bushels.

The drop in soybean stockpiles would coincide with an uptick in Chinese buying of U.S. soybean exports, with China buying 5.5 million metric tons of U.S. soybeans combined for the 2019-20 and 2020-21 marketing years since the start of May, according to USDA data. However, China can cancel 3.2 million tons of these purchases.

 

Pure Packaging: Coronavirus can't be transmitted via food or the packaging the food comes in, the USDA and FDA said in a joint statement Wednesday following the closure of the markets.

"Efforts by some countries to restrict global food exports related to COVID-19 transmission are not consistent with the known science of transmission," said U.S. Secretary of Agriculture Sonny Perdue and FDA Commissioner Stephen M. Hahn, M.D. in a joint statement. "There is no evidence that people can contract COVID-19 from food or from food packaging."

Earlier this week, Chinese authorities suspended chicken imports from a Tyson Foods facility in Arkansas because of what Chinese officials said were Covid-19 infections among the plant's employees.

 

AHEAD:

 

-- The CFTC is scheduled to release its weekly commitments of traders report at 3:30 p.m. EDT Friday.

-- The USDA is due to report its weekly grain export inspections data at 11 a.m. EDT Monday.

-- The USDA is scheduled to release its weekly crop progress report for the 2020-21 crop at 4 p.m. EDT Monday.

 

Write to Kirk Maltais at kirk.maltais@wsj.com

 

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