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Review of Agriculture Commodity Prices - March 2020

Review of Agricultural Commodity Prices
Corn prices remained steady in February compared to January and remain up 5% from February 2019.  Cash corn prices in the United States have remained in a range of $3.93 to $3.68 from August 2019 to the present.[1]   Although the signing of the Phase 1 trade deal was thought to bring excitement to the corn market, there continues to be few catalysts to move the market outside of trade and yield expectations.   
The key corn issues are as follows;
  • It is unclear if China will fulfil its obligations under Phase 1 of the trade deal signed in 2019.
  • Ethanol demand and government support (aka number of refinery waivers) is unclear going forward.
  • For corn prices to move higher, US corn will have to become more competitive as corn from South America is still priced more competitively.[2]
  • The January WASDE raised yield estimates to 168 bushel per acre from 167 bushels per acre.  Although this was increased, acreage expectations decreased to 89.7n million acres from a high of 91.7 million acres in August.
  • The South American corn crop remains large – after increasing by 23% in 2019, it is likely to increase by 3-4% this year to 154 million metric tons.[3]
Result: It is tough to be positive about the price of corn at present.
February soybeans prices decreased 3% from January and are up 1% from year ago levels. 
The resolution of the US-China trade dispute helps the long term outlook for soybeans.  However, in the near term, it is unclear how many soybeans China will need as it rebuilds its hog herd due to African Swine Flu.  Argentina did place an export tax on various soy products which could help the near term oulook for soybeans.  Finally, the South American crop should be large up 8% year over year (to 124 million metric tons).[4]   
Result:  The outlook for soybean prices is strong based off of the resolution of the trade deal.
Wheat prices were flat in February compared to January and is 8% lower than year ago level.  The outlook for wheat has been positive as 1) ending stocks remain at multi-year lows and 2) weather issues in Europe and Argentina should lead to lower yields.  What might dampen any wheat rallies is that Australia is expected to rebound and increase their production by 40% this year after significant drought last year.[5]      
Result:  Wheat may be the best story out of the three commodities reviewed here.
[1] Agriculture Prices – March 2020 -
[2] Commodity Catch Up - March 13, 2020
[3] Ibid
[4] Ibid
[5] Ibid