GRAINS-Corn slumps as ethanol makers feel coronavirus constraints

Source: By Karl Plume, Bloomberg • Posted: Tuesday, March 31, 2020

CHICAGO, March 30 (Reuters) – U.S. corn futures fell more than 1% on Monday on slowing grain demand from ethanol makers, as tightening coronavirus pandemic travel restrictions limited demand for the biofuel.

Soybeans eased too, although losses were limited by concerns about supplies from South America, while wheat, which showed early gains as top exporter Russia appeared poised to restrict shipments, also retreated.

A further drop in crude oil prices kept pressure on grains markets as ethanol producers, users of around a third of the U.S. corn crop, have slashed production or shuttered plants.

“We continue to see pressure on the basis. We continue to see concern about ethanol plants,” Ted Seifried, chief market strategist for Zaner Ag Hedge, said.

“There was hope that today we’d start to hear some better news about maybe coming out of isolation relatively soon, but instead we’re hearing it will take more time. It’s weighing on the energy market and you can’t exclude corn from that because of the ethanol situation,” he said.

U.S. President Donald Trump on Sunday extended his stay-at-home guidelines until the end of April, dropping a plan to get the economy up and running by mid-April.

Chicago Board of Trade (CBOT) May corn fell 5-1/4 cents to $3.40-3/4 a bushel by 12:15 p.m. CDT (1715 GMT). May soybeans were down 2-1/2 cents at $8.79 a bushel, which CBOT May wheat dropped 4-1/2 cents to $5.66-3/4 a bushel.

Soybean futures remain underpinned by the risk of logistical snags in South American soybean belts and reduced palm oil production in Malaysia due to coronavirus.

Argentine shipments of soy corn and other agricultural exports were delayed as the government ramps up inspections of incoming cargo ships.

Grain investors squared positions ahead of two key U.S. Department of Agriculture (USDA) reports due Tuesday on prospective U.S. plantings and quarterly grain stocks.

Analysts polled by Reuters expect the report to show U.S. corn and soybean plantings above last year’s weather-reduced acreage and tighter year-on-year stocks of grain as of March 1.

Weekly USDA export data showed a larger-than-expected volume of corn was inspected for export last week, while soybean and wheat inspections were near the low end of trade estimates. (Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore, Editing by Sherry Jacob-Phillips, Jane Merriman and Alexander Smith)