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3 Big Things Today, March 4, 2020

Soybeans Higher in Overnight Trading; Agriculture Trade Will Continue to Take Coronavirus Hit.

1. Soybeans Higher in Overnight Trading on Economic Moves

Soybeans were higher in overnight trading on economic optimism after central banks took action in the wake of the coronavirus spread.

The U.S. Federal Reserve on Tuesday cut its federal funds rate by 50 basis points in an emergency move in a bid to boost the economy.

The Group of Seven countries and several central bankers yesterday pledged to do whatever was necessary to give the global economy a boost in the wake of the disease, which led to a selloff in equity and commodity markets in recent weeks.

The World Bank and International Monetary Fund also said this week that they stand ready to help offset the shock of the spreading disease.

The U.S. now has more than 100 cases and nine deaths, and China reported it now has 80,270 cases and almost 3,000 deaths. Almost 100 peopled have died in Iran, and in Italy, there have been 79 fatalities from the disease.

Soybean futures for May delivery rose 4¢ to $9.07½ a bushel overnight on the Chicago Board of Trade. Soy meal fell 10¢ to $310 a short ton, and soy oil gained 0.58¢ to 29.74¢ a pound.

Corn futures fell ¼¢ to $3.81 a bushel overnight.

Wheat futures for May delivery dropped 3½¢ to $5.23¾ a bushel, while Kansas City futures lost 3¾¢ to $4.54½ a bushel.

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2. Agriculture to Feel Effects of the Coronavirus as Long as Demand From China Continues to Falter

Researchers at Refinitiv put out a report this week explaining the impact of the coronavirus, or COVID-19, on global economies.

The company said the spread of the disease will have a “significant” impact on commodities trading, including agriculture, in China. Crude oil demand has “hit a wall,” metals markets will suffer, and trading of agricultural products will “continue to see significant issues,” the report said.

“Agriculture in the U.S. will feel the effect of weaker demand from China, but again the recent trade wars have already stemmed the tide,” Carl Larry, the performance director for Refinitiv, said in the report. “One would have never had the foresight to predict that learning to cope with weaker trade because of tariffs would mitigate the pressure brought on by this pandemic.”

In North America, investors should be looking at the future effects of the disease, Refinitiv said in its report.

“The effect of lower imports and exports to the major economies in Asia is going to show up in Q2 and Q3 (company) results,” Larry said.

The report, which was released before the U.S. Federal Reserve slashed its key interest rate by a half point in an emergency move yesterday, said the cut will help offset some economic weakness, but isn’t going to solve global trade issues.

The long-term effects of the disease and its impact on global trade remain to be seen, and much will depend on how long soybean, grain, and livestock producers in the U.S. can hold out with depressed Chinese demand.

“There is hope that Japan may make up for some of this loss with the upcoming 2020 Olympics, but that is a large question mark on how it unfolds,” the report said. “We have seen this virus off to a fast start, but containment is key. If brought back to manageable levels, we should see enough time for Japan to prepare for the Olympic economic boon. That should be enough for the U.S. to pull through these tough times in agriculture.”

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3. Red-Flag Warning Issued For Much of Central Nebraska Amid Low Humidity, Strong Winds

A so-called red-flag warning is in effect for much of central Nebraska this morning amid low humidity and strong winds that are creating tinderbox-like conditions, according to the National Weather Service.

Humidity in the region is expected to be around 15% to 25%, and winds are forecast to gust around 25 to 30 mph, the NWS said in a report early this morning.

That will create conditions prime for wildfires.

“Any fires that may occur have a high potential to spread rapidly and may be difficult to control given the critical fire weather conditions and favorable fuel conditions,” the NWS said.

In North Dakota, meanwhile, flooding is a concern, as snowmelt may lead some rivers and streams to overrun their banks. Ice jams along waterways also may lead to flooding in some areas, the agency said.

The threat of flooding will continue throughout the week, the NWS said.

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