April 1st, 2020   -  Good Afternoon!
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Click below for the latest AgriVisor advice for: 
Futures Prices 
CK20
334 3/4
-6
CZ20
347 1/4
-10 1/4
Dollar
99.800
 +0.708
SK20
862 3/4
-23 1/4
SX20
863 1/2
-14
Dow
20907
-841
WK20
550 1/4
-18 1/2
KWK20
475
-18
Crude
20.46
-0.02
 In Summary
 **** Good Afternoon! ****

Corn, soybeans, and wheat were all under considerable pressure today as all market reacted to the bleak outlook the President has given on the Coronavirus. Renewed concerns over the impact the virus will have on the US economy also spilled over into commodities today, mainly what impact it will have on overall demand. Yesterday's USDA reports had little impact on trade today as thoughts are the tighter inventory levels will be negated by lessening demand. Trade volume was relatively low today which likely caused losses to be overextended. 

Ethanol manufacturing data for the week ending March 27th was poor but as expected. For the week the US produced 5.88 million barrels of ethanol, a 1.15-million-barrel decrease from the previous week. This was the lowest weekly production total for the United States since September 2013. Stocks still managed to climb 1.6 million barrels to a record 25.72 million barrels. 

These low manufacturing numbers are expected to continue. Analysts claim that by the end of next week up to one-third of the US ethanol production capacity could be idled. While it is unknown how long these plants may remain offline, if these closures last, they would lower corn demand by 1.8 billion bu on a yearly basis. Ethanol continues to trade at a sharp discount to gasoline which will continue to pressure the complex. 

The US ethanol industry has finally received some friendly news, however. Chinese officials claim that country will likely import $800 million of ethanol, once trade gets back to a more normal routine. This depends heavily upon the advancement of the Coronavirus however, and how long it takes for energy demand to get back to a normal level. While this will not prevent more ethanol plant closures in the immediate future, it does give the industry long term hope.
 
The decline in ethanol demand on corn is being noted by trade, but there are also other demands that will likely rise for corn. One is for feed as a decrease in distiller grains will elevate the need for whole corn. Not only is this in the US, but globally. While this will not be a one-for-one offset, it will ease the impact of the loss of ethanol production. 

Despite all of the negative news during the month, commodities finished March mixed. May corn was the most pressured during the month and lost 27 ½ cents. May soybeans were also under pressure and posted a 6 ¾ cent decline. May wheat was able to rally during the month though, posting a 43 ½ cent gain. The markets were volatile in March though, and there is no indication this will subside in April.
 
The declines we did see in commodities in March paled in comparison to the losses the equity market posted for the first quarter of 2020. The Dow shed 23% of its value during the month, the greatest loss since 1987. The S&P, which is the main economic forecasting tool, lost 20% of its value. That was the worst quarter for the S&P since 2008. The Nasdaq decreased by 14% to start the year. These losses applied additional pressure to the commodity market as investors turned to safe haven buying, mainly the treasuries. 

The Brazilian firm Agroconsult updated its crop forecasts today with mixed numbers. The firm lowered its soybean crop outlook to 123.5 million metric tons from the previous 124.3 mmt. This was a direct result of the adverse weather the crop has been subjected to over the past month. While a reduction, this would still leave Brazil with a 3.9% larger soybean crop than a year ago. The firm also adjusted its Safrinha crop estimate, raising it by 700,000 metric tons. This is from an adjustment to planted area though, and not from yields.