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Mark's Market Talk

March 23, 2020

It was a mixed week for commodities last week as May corn lost 23 cents while May beans were up 16 cents. The corn market cannot outrun the faltering energy market. Crude oil in the low 20-dollar range is really pressuring ethanol prices. With many people staying home due to the virus, fuel usage is off which is creating a double whammy. Basis levels at ethanol plants have started to widen, some greatly, as the red ink gets darker. Even a large export announcement of corn to China last Friday morning couldn’t save the market from finishing lower that day. South American weather is causing some limited concerns about the timely planting of their corn crop, but it’s too early to say it will help us. Cool and wet weather has taken over our own corn belt. If you remember March came in as a lamb with very mild temperatures. It could very easily go out as a lion which may affect our corn planting. The bean market showed some strength last week driven by a sharp increase in meal prices. Meal traded higher as world demand is increasing. China is coming back to life as they get on top of their virus issues. Exports of meal from Argentina have been hampered by export taxes and port closures due to the coronavirus. If those issues continue it is expected that China could be taking some US beans and meal before they planned to. Livestock markets have been on a wild ride the past 3 weeks just like other commodities. Producers must be scratching their heads as their prices plummeted while retail meat prices have held steady or increased. Packer margins are near all time highs and the rail speeds are running fast as they cash in on the profits. I’ve been told that most grocery stores have been out of ground beef last week more often than they had it to sell. As producers we must tell consumers there isn’t a shortage of meat, it’s a supply demand issue. 3 weeks no one could have predicted all that’s happened the last 10 days. For many we have went from a comfortable life to one of concerns for their health and wellbeing. This was something you read about other countries experiencing, not the US. We will recover from all of this. Social distancing is a new phrase that has become a way of life and will probably continue as a way of life for some time. I have no doubt that we will conquer this disease. However, I do doubt we will ever understand why toilet paper and bottled water became priority needs for so many to the point it caused many shopping aisles battles.     
Posted: 3/23/2020 5:00:00 AM by Rob Matherly | with 0 comments

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