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3 Big Things Today, April 27, 2020

Wheat, Corn Lower Overnight; Money Managers Turn Bearish on Beans.

1. Wheat and Corn Futures Drop on Weak Demand

Wheat futures plunged in overnight trading while corn declined on slack demand for the grains.

Overseas wheat buyers have been on the sidelines as the COVID-19 virus continues to spread globally; rain is expected in parts of Europe this week that could boost production.

Still, the northeastern third of European growing areas will see limited rain, according to Commodity Weather Group.

Demand for corn has taken a hit as meatpacking plants close amid the spread of the disease and as consumption of ethanol plunges as people use less gas.

Smithfield Foods, Tyson, and JBS USA Holdings have shuttered meatpacking facilities as they become hotspots for COVID-19 outbreaks.

JBS said yesterday it would close its facility in Green Bay, Wisconsin. Hundreds of cases have been linked to the facility, according to the Green Bay Press Gazette.

Ethanol production, meanwhile, dropped to an average of 563,000 barrels a day in the week through April 17, the lowest on record.

Wheat futures for May delivery fell 5¼¢ to $5.25¼ a bushel overnight on the Chicago Board of Trade, and Kansas City futures dropped 3½¢ to $4.79¾ a bushel.

Corn futures for May delivery lost 2¾¢ to $3.20¼ a bushel overnight.

Soybean futures rose 3¢ to $8.42¼ a bushel overnight, while soymeal gained $1.10 to $293.70 a short ton and soy oil fell 0.08¢ to 25.42¢ a pound. 

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2. Money Managers Turn Bearish on Beans, Increase Net-Shorts in Corn

Money managers turned bearish on soybeans last week while increasing their net-short positions, or bets on lower prices, in corn futures, according to the Commodity Futures Trading Commission.

Investors held a net-short position of 4,868 soybean futures contracts in the seven days that ended on April 21, the CFTC said in a report.

That’s a shift from the 11,447 net-long position they held at the end of the prior week and the first time they’ve been bearish on beans since March 24.

Speculators increased their net-short positions in corn to 160,025 futures contracts, up from 137,294 contracts a week earlier. That’s the largest bearish position in corn since Sept. 24, government data show.

In wheat, investors decreased their net-long position, or bets on higher prices, in soft-red winter contracts to 24,186 contracts, down from 25,786 contracts a week earlier. That’s the smallest such position in almost a month.

Money managers, however, increased their net-longs in hard-red winter wheat to 10,720 futures contracts from 5,137 the previous week, the CFTC said in its report.

The weekly Commitment of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting that futures will decline.

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3. Storms Expected in Iowa and Illinois While Dry Conditions Forecast in Southern Plains

Thunderstorms are possible in much of eastern Iowa and northern Illinois this morning that could bring lightning and some small hail to the area, according to the National Weather Service.

Flooding continues along the Mississippi River on the border between the states.

“Severe thunderstorms are possible Tuesday afternoon and evening as a strong cold front moves through the region,” the NWS said in a report early this morning. “There is a risk for damaging winds, large hail, and tornadoes across the outlook area.”

In the southern Plains, some showers are possible this morning, the agency said, which could give hard-red winter wheat growing in the area a boost.

Warmer conditions arrive tomorrow, which will push down relative humidity to 16% to 20%. Winds likely will be sustained at about 25 mph. That, in turn, creates a “significant risk” of wildfires in the area this week, the NWS said.

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