Chinese buyers seeking tariff waivers Chinese buyers started applying on March 2 for one-year tariff waivers on imports of U.S. ag goods. Waivers were immediately requested for soybeans, wheat, sorghum, dried distillers grains (DDGs), pork, poultry and dairy products. The waiver request is the first step in the process and doesn’t guarantee purchases or timing of any buys.

China has already ramped up purchases of some U.S. products, including pork, poultry and sorghum; those pur-chases will continue. Because China is protein-deficit, U.S. DDGs should also actively be purchased for spring deliv-ery. But sales of U.S. soybeans to China will likely be for late-summer forward, as new-crop South American sup-plies are available for export and those nearby prices are cheaper than U.S. beans (see News page 2).

Perdue: Less than 10% odds of MFP 3 USDA Secretary Sonny Perdue sees a “less than 10%” chance producers will get a third round of Market Facilitation Program (MFP 3) payments this year. Perdue told a Congressional panel he expects China to fulfill its promise in the initial deal to purchase $36.5 billion in U.S. farm goods this year. He said MFP is a trade disruption program, not a price support, so the fact that prices have not gone up does not mean that more aid is necessary.

Still, some say lower spring crop insurance guarantees (see News page 4) may increase the odds for MFP 3.

WASDE Report should be anticlimactic USDA’s March 10 World Ag Supply and Demand Estimates (WASDE) Report isn’t expected to be a major market-mov-er. Historically, the World Board just fine tunes its usage estimates in March, and pre-report estimates signal traders aren’t anticipating any major adjustments.

Where there could be changes: higher export forecasts for pork and sorghum, two commodities China has been active-ly purchasing over the past month. Impacts from coronavi-rus are the wildcard, though the February WASDE signaled USDA is going to trail, not anticipate usage changes.

Panic selling briefly abates, but returns — Coronavirus concerns continue to erode investor risk appetite, highlighted by surging safe-havens such as U.S. bonds and gold. The threat of additional selling in risk-based assets, including commodities and the stock market, will persist until investors’ fears abate and outside markets return to normal. Wheat futures extended their recent losses last week as funds continued to liquidate long positions. Cattle futures plunged to new lows, as corrective buying early in the week gave way to fresh sell-ing Thursday and Friday amid falling cash prices and outside market influence. Soybeans were choppy last week, as outside market pressures erased gains from earlier in the week. The corn and hog markets bucked the trend and worked higher on corrective buying.

Timely rains forecast for Argentine cropsThere were notable declines in Argentine crop condition ratings last week as weeks of hot, dry weather depleted soil moisture. With the soybean and corn crops filling, forecast rains for this week will need to develop or Argentine crop estimates will start to be trimmed.

In Brazil, dry weather is expected into mid-March that will allow soybean harvest and safrinha corn planting to advance in central areas, but will stress crops in the south-ern states. Rains are forecast for northeastern Brazil.

EPA still wavering on blending waivers The Trump administration reversed course and reportedly now plans to appeal a recent 10th Circuit Court of Appeals decision on small refinery exemptions (SREs). The court ruled the Environmental Protection Agency should only have waived Renewable Fuel Standard blending obligations for refiners facing financial hardship in instances where doing so would have been an extension. The administration apparently caved after a major push by oil-state lawmakers.

Refinancing opportunity as rates plungeThe Fed last week cut interest rates by 50 basis points — only the sixth time in history it has acted outside of a poli-cy-setting meeting. The emergency rate cuts by the Fed and other global central banks were an attempt to calm market panic over coronavirus. But 10-year U.S. bond yields con-tinued to drop after the Fed action, plunging below 1% for the first time ever and signaling traders fear a recession.

However, plunging interest rates do present an opportu-nity to refinance (see “From the Bullpen” on Analysis page 4).

Strong jobs data not an economic cure-allThe U.S. added a much-stronger-than-expected 273,000 non-farm payrolls in February and hourly earnings increased 0.3%. Plus, December and January payrolls were revised up a combined 85,000. But the data failed to ease traders’ fears with the economy since it didn’t reflect coro-navirus impacts and the economic outlook has weakened.

News this week...2 — South American beans, corn cheaper than U.S. supplies.3 — Coronavirus has major impact on China’s factories. 4 — Spring crop insurance prices the lowest since 2016.

March 7, 2020 Vol. 48, No. 10

Go to ProFarmer.com

March 7, 2020 / News page 2

Follow us on Twitter:@ProFarmer@BGrete

@ChipFlory@JWilson29

@DavisMichaelsen@MeghanVick

@DoaneAg_Nelson@RobHatchett1

Record soybean crush in JanuaryU.S. soy processors crushed 188.8 million bu. of soybeans in January, which was up 5.7 million bu. from last year and a record total for any month. Soybean crush for the first five months of the 2019-20 marketing year totaled 897.7 million bu., down just fractionally from last year’s pace over the same period. To reach USDA’s projection of 2.105 billion bu., crush must average 172.5 million bu. over the final seven months of the marketing year, which would be nearly 2 million bu. per month above last year’s pace. Given that crush margins are strong through summer, USDA’s forecast is achievable.

Soyoil stocks at the end of January were the largest monthly figure since July 2018 at 2.352 billion pounds. Monthly soyoil use rebounded contra-seasonally during January, likely due to increased demand from the biodiesel industry after the $1 per gallon tax credit was renewed. We expect strong demand from biodiesel to continue through its seasonal peak in summer.

Strong January corn-for-ethanol useA total of 519.4 million bu. of corn were consumed for indus-trial uses in January, including 469.5 million bu. used for ethanol production. While both figures were down around 2% from December levels, total corn grindings were up 5.4% and corn-for-ethanol use rose 5.7% from year-ago levels. Through the first five months of 2019-20, corn-for-ethanol use at 2.250 billion bu. fell 0.9% from the same period last year. Between February and August, corn-for-ethanol grind needs to exceed last year’s pace over the same period by an average of 9.7 million bu. per month to reach USDA’s forecast of 5.425 billion bushels. With China expected to buy U.S. ethanol (and DDGs) as part of its Phase 1 commitments, we forecast 2019-20 corn-for-ethanol use 25 million bu. higher than USDA.

Brazil corn exports slow as soybean shipments accelerateBrazil exported just 346,400 metric tons (MT) of corn in February due to tight supplies. That was down sharply from the 2.3 million metric tons (MMT) it shipped in January and 1.6 MMT a year-ago. Brazil’s soybean exports surged to 5.1 MMT last month as new-crop supplies became available. That was up sharply from shipments of 1.5 MMT in January but down slightly from 5.3 MMT last year.

Brazil’s ethanol exports were strong at 164.2 million liters, which is more than double January’s 78.1 million liters and well above last year’s 112 million liters in shipments.

Argentina raises soy export taxesThe Argentine government hiked taxes on soybeans, soymeal and soyoil by three percentage points to 33%, as widely expected. Since President Alberto Fernandez took office in December, soy export taxes have been raised eight percentage points. The country is in a financial hole and it hopes to lean on soy trade as a means of filling budget gaps, paying down debt and reviving the economy. Export taxes on corn and wheat will remain at 12%.

The four major farm groups in Argentina are calling for a nationwide halt to farmer sales from March 10-14 in pro-test of the soy tax increase. Key will be whether the pro-tests last beyond the currently planned four days.

Brazil has soybean export advantageThe three-percentage-point increase to Argentine soy export taxes and a temporary halt in farmer sales aren’t going to have much impact on U.S. soybean demand. Even if there’s an extended disruption in soybean movement in Argentina, the U.S. wouldn’t likely see a dramatic pickup in export business. Brazilian prices are cheaper with its cur-rency at an all-time low versus the U.S. dollar. U.S. corn would have a greater chance of picking up export business if there are prolonged farmer protests in Argentina.

While U.S. corn export prices are h i g h e r , Brazil’s old-crop corn supplies are e x t r e m e l y tight and n e w - c r o p f u l l- season corn will flow first to the livestock and ethanol sectors. Brazil won’t have plentiful corn for export until the saf-rinha crop is harvested.

Soybean Export Price ($ per MT)

Jan. 15 March 5

$370

$360

$350

$340

$330

U.S.

Brazil

Argentina

Corn Export Price ($ per MT)

Jan. 15 March 5

$195

$190

$185

$180

$175U.S.Brazil

Argentina $170

March 7, 2020 / News page 3

China’s factory sector sickened by coronavirus in February The coronavirus outbreak took a heavy toll on China’s vast manufacturing sector last month. China’s official purchasing managers index (PMI), which covers large and state-owned firms, plunged to a record low of 35.7 in February. The Caixin/Markit PMI, which covers small and mid-sized private factories, fell to a record low of 40.3 last month. Both sets of data showed factory production and new orders collapsed to the worst levels on record, while employment also took a heavy blow. New export orders also sank at one of the sharpest rates ever.

With many of China’s factories still closed or working at less than full capacity, the hit to China’s manufacturing will continue to be felt this month and possibly longer. Support measures from China’s government and the central bank won’t be strong enough to avoid a deeper economic downturn.

OECD warns coronavirus outbreak could halve global economic growth The Organization for Economic Cooperation and Development (OECD) says the world economy is “at risk” and warns the widespread closure of factories and businesses in China is likely to severely cut global economic growth. OECD lowered its global GDP forecast from 2.9% to 2.4%. That puts the global economy on the verge of a recession, which is traditionally defined as consecutive quarters of negative growth. If coronavirus spreads widely throughout the Asia-Pacific region, Europe and North America, global growth could drop to 1.5% this year, half the rate projected prior to the outbreak, OECD warns.

ACTUAL DOANE FORECASTS*YearAgo

LastWeek

ThisWeek April April-

June July-Sept.

(Monthly & quarterly avg.)CORN Central IL, bushel 3.36 3.63 3.84 3.90 4.00 4.05 Omaha, NE, bushel 3.55 3.64 3.81 3.95 4.05 4.10 Dried distillers grain, IA, $/ton 140.00 140.08 138.82 -- -- --SOYBEANS Central IL, bushel 8.37 8.78 8.95 9.15 9.30 9.35 Memphis, TN, bushel 8.90 9.10 9.27 9.70 9.80 9.75 Soymeal, 48% Decatur, IL, ton 303.30 299.80 310.40 310 310 315WHEAT Kansas City, HRW, bushel 4.34 4.48 4.58 4.75 4.85 5.15 Minneapolis, 14% DNS, bushel 7.28 6.59 6.62 6.75 6.75 6.95 St. Louis, MO, SRW, bushel 4.65 5.64 5.54 5.75 5.75 5.90 Portland, OR, soft white, bushel 6.10 6.15 5.97 6.20 6.25 6.30 Northeast MT, durum, 13%, bushel 4.52 6.18 6.23 6.25 6.30 6.15SORGHUM, Kansas City, cwt. 5.89 6.50 6.87 6.85 6.95 6.75COTTON, 11/16 SLM, 7 area, ¢/lb. 67.50 57.18 57.80 62.00 64.50 69.00RICE, nearby futures, cwt. 10.54 13.42 13.41 13.45 13.40 12.75BARLEY, Montana, malting, cwt. 8.62 8.85 8.00 8.25 8.25 8.25OATS, Minneapolis No. 2 heavy, bushel 3.11 3.33 3.33 3.45 3.40 3.20ALFALFA, NW Iowa, lg. sq. prem., ton 160.00 -- -- 175.00 180.00 170.00SUNFLOWERS, Fargo, ND, cwt. 17.15 19.75 19.63 19.50 19.65 18.85HOGS, Nat’l basecost cwt. 51%-52% 44.80 50.22 50.60 61.80 63.00 66.00FEEDER PIGS, 40 lbs., nat’l avg., head 68.65 57.79 57.25 63.50 60.00 57.50CHOICE STEERS, NE feedlots, cwt. 128.18 114.87 113.00 123.00 118.00 112.50FEEDER CATTLE, Oklahoma City

Steers, 700-800 lbs./cwt. 140.74 135.46 136.33 145.00 145.00 148.00Steers, 500-550 lbs./cwt. -- 169.55 174.58 173.00 168.50 165.50Heifers, 450-500 lbs./cwt. 155.40 152.32 160.21 148.50 149.00 145.50

COWS, utility, Sioux Falls, SD, cwt. 59.75 60.75 56.99 60.00 63.00 64.00MILK, Class III, CME spot MO, cwt. 15.09 16.99 16.32 16.75 16.90 16.95LAMBS, Slg., San Angelo, TX, cwt. 134.36 164.40 -- -- -- --ENERGY

Ethanol, IA, gallon 1.27 1.25 1.21 -- -- --Farm diesel, U.S., gallon 2.31 2.32 2.33 2.40 2.49 2.38

*Average prices expected for the indicated time periods based on available information. Forecasts will be revised as necessary to reflect changing market conditions. Diesel prices are from Inputs Monitor.

Meat backing up at portsMeat intended for export to China is stacking up at U.S. cold storage warehouses along the West Coast. Slowdowns at Chinese ports due to coronavirus have delayed shipments to China and undercut packers’ plans to take advantage of stronger U.S. meat sales to the country. Until the excess stockpiles are worked through, recoveries in the cash cattle and cash hog markets will likely be delayed as packers try to slow slaughters with lower prices.

Rains impact outlook for Aussie wheat, beef After recent rains, there’s hope Australia’s wheat production can surge around 40% from a 12-year low of 15.2 MMT in 2019-20, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). It expects a 19% increase in wheat plantings and higher yields. But planting of the crop won’t begin until April, and after three years of drought, there are doubts weather will improve even though El Niño has ended and ENSO-neutral conditions are fore-cast into midyear.

Rains have also improved pasture con-ditions. As a result, ABARES expects Australian beef production to fall almost 14% to 1.95 MMT, as farmers rebuild herds after the prolonged drought.

March 7, 2020 / News page 4

The average closing price of new-crop futures during February sets the spring crop insurance rate for

spring-planted crops. That price and farmer’s yield history determine the level of revenue protection available during the crop year. The spring crop insurance price also helps lenders determine the line of credit they can extend to a producer for the new-crop marketing year.

Spring insurance prices the lowest since 2016The spring

crop insurance prices for 2020 are set at:

•Corn: $3.88, down 12¢ from last year.

• Soybeans : $9.17, down 37¢ from 2019.

• S p r i n g wheat: $5.56, down 21¢ from last year.

•Cotton: 68¢ (March 15 end date), down 5¢ from 2019.

Those are the lowest prices for all four major crops since the 2016 growing season. For corn, soybeans and spring wheat, the price is the second lowest of the past decade. For cotton, the spring crop insurance price is the third low-est over the past 10 years.

Acreage implications from spring insurance pricesThe soybean-to-corn price ratio is 2.36, down slightly

from 2.39 last year. That’s the lowest soybean-to-corn spring insurance price ratio since it was 2.29 in 2016. In that year, corn acres increased 6% and soybean acres rose only 1%. At 2.36, we consider the soybean-to-corn price ratio to be relatively neutral, meaning there shouldn’t be a big influence on acreage decisions from the spring crop insurance price.

But... record prevent-plant acres in 2019 create an extra level of uncertainty for this year’s planted acres. Both corn and soybean acres will increase significantly, regard-less of the spring crop insurance price.

Spring price isn’t the final say for insurance levelsMany producers elect to purchase the harvest price option

with crop insurance policies, which utilizes the higher of the spring or harvest price to determine the insurance indemnity — if applicable. The harvest rate is determined by the average closing price for new-crop futures in October for corn, soybeans and cotton. It is determined by the average price of new-crop spring wheat futures during August.

Perdue considers adjusting crop insurance ratesUSDA Secretary Sonny Perdue is mulling whether he

can do something about the drop in crop insurance price guarantees this year. “As prices have gone down, the safety net has gone down as well,” he said. But Perdue later backtracked, signaling he had been advised that USDA does not have legal authority to adjust crop insur-ance prices.

Crop insurance sources: Not so fast, Sonny! Even if USDA could adjust crop insurance prices, industry

sources tell us that would “challenge the integrity of the program” and set a major precedent, something the admin-istration should strongly consider before acting. Any increase in prices would likely be arbitrary — not set by the market. Also, because any price adjustment would come after the contract change date, the private sector would need to have its risks covered. There are already private products that allow farmers a price bump, and RMA is prohibited by law from offering a policy that is already offered as a private product. One source says if price increases were high enough, it would influence planting decisions and lead to more acres. Action to support the profitability of producers could create a hangover beyond 2020.

Spring Price — Corn

Spring Price — Soybeans

Spring Price — Sp. Wheat

Spring Price — Cotton

Spring crop insurance prices set — most likely by Editor Brian Grete and Washington Policy Analyst Jim Wiesemeyer

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson • Washington Policy Analyst Jim Wiesemeyer

Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis Michaelsen • Sr. Economist Rob Hatchett • Sr. Economist Alan BarrettSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2020 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber • Division President Grey Montgomery

Feed MonitorFEED

Corn Game Plan: We have advised buy-ing all corn-for-feed coverage in the cash market through the middle of April. Be ready to add to coverage below $3.80 in May futures.

Meal Game Plan: Soybean meal needs should be covered through the middle of April in the cash market. Be ready to add to coverage when May meal futures fall below $302.00.

Corn I’20 100% II’20 15% III’20 0% IV’20 0%

Meal I’20 100% II’20 15% III’20 0% IV’20 0%

Analysis page 1

$317.30

$304.10

DAILY MAY MEAL

DAILY APRIL LEAN HOGS

Position Monitor

HOGS - Fundamental AnalysisFutures inched higher amid firmer cash bids, but mixed wholesale pork trends limited market strength. Freezer storage is tight and that limits demand for bellies, trimmings and hams. Chinese export demand remains record strong for U.S. and other origin supplies. American sales to China are up nearly 10 fold in the first two months of 2020 from a year ago and represent 42% of total business. The problem for the U.S. market has been record pork production. Seasonally, the market bottoms in the first quarter and then rallies into the summer. But that rally won’t begin until weekly slaughters show a more noticeable decline.

Game Plan: The cash hog and pork markets are enter-ing a seasonally stronger period and should lead a fu-tures recovery. A recovery could be explosive if Chinese buys accelerate.

CME FEEDER CATTLE INDEX ($/CWT.)

CME LEAN HOG INDEX ($/CWT.)

Position MonitorGame Plan: Futures are below cash, suggest i ng an oversold market. Corrective ral-lies will be led by stronger packer bids and any improvement in exports.

Feds Feeders I’20 0% 0% II’20 0% 0% III’20 0% 0% IV’20 0% 0%

Initial resistance is old support at $116.125. That level must be cleared to signal a low is in place.

Initial support is the prior contract low at $109.375. Stronger support on the continuation chart is near $104.00.

Initial resistance is at $68.45. Stronger resistance is at $71.95.

The Feb. 3 contract low at $61.00 is initial support. If that level is violated, the downside would extend to this month’s low of $54.675 on theweekly continuation chart.

DAILY APRIL LIVE CATTLE

$121.90

$68.45

CATTLE - Fundamental AnalysisLive cattle futures are trying to confirm a seasonal low, but weak packer bids offset slightly firmer beef prices. USDA reported packer weekly sales of beef jumped to the highest since last October. Retailers and food service purveyors will be attracted to the lowest wholesale beef prices heading into spring since 2017. Retail margins are expanding, and the Choice/Select premium is moving higher, positive demand signals for a seasonal rebound. Futures have ignored the better demand because of fears Covid-19 may curb sales. Beef exports have recently been sluggish but total commitments are still up 16% from a year ago.

$71.95

$300.20

$109.375

$123.525$123.525

$116.125

$61.00

$311.10

March 7, 2020ANALYSIS

Lean Hogs I’20 0% II’20 0% III’20 0% IV’20 0%

Strong resistance is at $311.10.

Initial support is at 300.20. Stronger support will be the Feb. 6 low at $292.20. $292.20

March 7, 2020 / Analysis page 2

$5.06

$4.88

DAILY MAY SRW WHEAT

WHEAT - Fundamental AnalysisSRW - Sluggish risk sentiment fueled fund long liquidation. Export business has been routine, but the steep drop in the value of the dollar against some currencies improves the competitiveness of U.S. wheat. New buying will be limited if there are no major threats to the Northern Hemisphere crops.

Position Monitor

Game Plan: Wait for a recovery to get current with our sales recommendations. We also want to wait for a rebound to trim remaining old-crop wheat inventories. Plan to defer additional new-crop sales until spring growth begins.

Initial resistance is at $5.43 1/4. Strongerresistance is the 40-day moving average(green line) near $5.53 and then $5.70 1/2.

Initial support is theNovember low at $5.06.

Stronger support is at $4.88.

$5.43 1/4

$5.90 3/4

$5.70 1/2

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (MAY)

CORN - Fundamental AnalysisFutures rebounded on active fund short covering tied to rumors of Chinese interest in U.S. corn and DDGs. On March 6, USDA announced 211,336 metric tons sold to unknown destinations, which may confirm the interest. China did buy more sorghum last week and the weekly USDA sales report showed the largest milo sales in more than five years with unknown destinations and China the top buyers. The rally stalled midweek as U.S. rates plunged to record lows, raising red flags of a potential global recession that may also curb grain demand. No deliveries against expiring March futures push the contract to a premium, a bullish sign of better demand and tightening nearby supplies.

Bulls need a close above resistance at $3.87 3/4 to signal a price low.

Initial support is the Feb. 28contract low at $3.75.Stronger support is at $3.65 (not shown).

$3.87 3/4

DAILY DECEMBER CORN

$4.11 3/4

$4.04 1/2

DAILY MAY CORNPosition Monitor

Game Plan: We have advised hedgers and cash-only marketers to place a standing order to sell another 10% of 2019-crop in the cash corn market at $3.92 in May futures. We may need to lower that target again. Be prepared to make some 2020 sales when we add to 2019-crop sales. Be prepared to increase sales on any China purchases or weather threats to U.S. or South American crops.

Sustaining prices above the downtrend line near $3.81 would target key winter resistance at $3.99.

Initial support is the September low at $3.74 3/4. Stronger support is the Feb. 27 contract low at $3.65 3/4 (not marked).

$3.99

$4.16 1/2

$3.74 3/4

’19 crop ’20 crop

Cash-only: 50% 0% Hedgers (cash sales): 50% 0% Futures/Options 0% 0%

’19 crop ’20 crop

Cash-only: 80% 30% Hedgers (cash sales): 80% 30% Futures/Options 0% 0%

March 7, 2020 / Analysis page 3

DAILY MAY HRS WHEATDAILY MAY HRW WHEAT

HRW ‑ Prices struggled to find support amid fund long liquidation. Exports continue to fight for market share as weakness in the Russian ruble offset gains in the euro. No new Chinese purchases were announced last week, but Beijing has started granting tariff waivers for imports. Price declines relative to corn may help to boost wheat in feed rations.

$9.80

DAILY NOVEMBER SOYBEANS

HRS ‑ Focus is turning to the wet soils across the Northern Plains and potential for fewer spring acres on top of record-low winter wheat sowings. Ukraine’s ag minister forecast the crop may fall 18% this year because of smaller planted area, reducing exportable supplies. Basis was unchanged last week but still elevated, a sign of tightening supplies.

$9.37

$9.00 1/4

$9.23

Resistance is at $5.51 1/2.

$5.51 1/2

$5.16Initial support is at $5.16.

Initial resistance is at $4.65 3/4.

$4.65 3/4

$4.31

$4.09 Initial support is at $4.31.

$5.11 3/4

Initial resistance at $9.23 is backed by the 40-day moving average (green line) near $9.30. Stronger resistance is at $9.37.

The Feb. 27 low at $9.00 1/4 is initial support. Contract-low support is at $8.75 (not shown).

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (MAY)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (MAY)

SOYBEANS - Fundamental AnalysisFutures rose to a five-week high then retreated amid financial market volatility and Covid-19 fears. Prices rose on a price surge in soymeal in response to Argentina hiking soy export taxes 3 points to 33%, the second increase in four months. The market also gained support on reports Chinese crushers were actively applying for and quickly getting one-year tariff waivers for U.S. soybean imports. Sales to China probably won’t emerge until later this year when cheaper Brazilian supplies are depleted. China is working to rebuild hog herds, which increases demand for soybean imports. Unless rains develop the next few weeks, drier weather will become a small threat to final South American output.

Initial support is at $8.83. Stronger support from the weekly continuation chart is at $8.70.

$9.78

$9.16 3/4

$9.73 1/2

Position Monitor ’19 crop ’20 crop

Cash-only: 50% 0% Hedgers (cash sales): 50% 0% Futures/Options 0% 0%

Game Plan: Hedgers and cash-only marketers should have a standing order to sell another 10% of 2019-crop soybeans in the cash market if May futures hit $9.40. We’ll also likely make 2020-crop sales when the old-crop order is trig-gered. We may have to sell before the price order is reached. Fresh Chinese purchases are needed to sustain a rally above resistance and push near our upside price objectives.

DAILY MAY SOYBEANS

$8.83

Initial resistance at the 40-day moving average (green line) near $9.11 is backed by horizontal resistance at $9.16 3/4.

March 7, 2020 / Analysis page 4

’19 crop ’20 cropCash-only: 65% 0% Hedgers (cash sales): 65% 0% Futures/Options 0% 0%

75.61

Farmland Values & Cash Rents Stay ahead of the latest shifts in land values and cash rents on the farmland you own or are pre-paring to buy with LandOwner newsletter.

Consumer Sentiment IndexWatching for Covid-19 fallout.

FRI 3/1310:30 a.m. CT

5

USDA Export Sales ReportWatching for new sales to China.

THUR 3/127:30 a.m. CT

4

USDA WASDE ReportFew changes expected this month.

TUE 3/1011:00 a.m. CT

3

China Inflation DataConsumer prices on the rise.

2

USDA Export InspectionsImproving corn shipments.

MON 3/910:00 a.m. CT

1

WATCH LIST

MON 3/97:30 p.m. CT

fall to $52 billion this year. Since 2012, the U.S. debt-to-asset ratio has risen from 11.28% to 13.45% last year.

Lower interest rates have been ben-eficial for supporting farmland values the past few years, according to Steve Nicholson, an analyst at Rabo AgriFinance. It also provides a solid equity base that lenders like to use for making decisions on operating loans.

USDA says farmland values peaked in 2015, fell the next two years, but climbed back to the record last year.

You should refinance any long-term loans. Also check into possible revolv-ing lines of credit that offer longer maturities and lower interest rates for use as operating loans.

The Fed rate cut should provide some benefits to the U.S. ag sector.

Interest rates are likely to stay lower for longer. That will keep interest rates as one of the lower-cost inputs for farm-ers, a dramatic shift from just one year ago when that was one of the biggest increases in farmers’ expenses.

Businesses and farmers also benefit from lower interest rates, as the low cost of borrowing encourages some to make equipment purchases. This creates a sit-uation where output and productivity can increase, boosting profitability and building working capital.

Since reaching a record $165.1 billion in 2012, working capital fell to $61.1 bil-lion last year and USDA forecasts it will

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Interest Rates: The surprise 50 basis-point cut in short-term rates by the Fed-eral Reserve roiled the markets.

Lower rates will not cure Covid-19 or find a vaccine; they were an attempt to calm the panic in the stock market. Investors are more worried about declin-ing returns on their savings than catch-ing the virus.

The yield on 10-year Treasury notes plunged to less than 1%. Fears may not

GENERAL OUTLOOKbe tempered until there’s a drop to a crescendo low at the 40-year downside regression projection from the 1981 record near 16% at 0.75%.

The drop in U.S. Treasury yields is concerning as it is red flag of impending U.S. and/or global economic recession. It could also suggest consumer and pro-ducer price deflation. That has helped to keep bears pressing commodity mar-kets, except the save-haven of gold.

DAILY MAY COTTON

Game Plan: Wait for an overdue, de-mand-driven rebound to extend sales. We will wait until the Covid-19 situa-tion calms to reassess upside potential.

Position Monitor AVERAGE COTTON BASIS (MAY)

COTTON - Fundamental AnalysisFutures battled higher despite extreme swings in U.S. stocks, which keeps momentum sellers in play. Weekly export sales jumped to a marketing-year high, up 40% from the four-week average, with China buying and shipping more U.S. fiber. U.S. acres may slide without a rally.

COTTON EXPORT BOOKINGS (’000 BALES)

Reestablishing broken support at 64.88¢ may trigger a challenge of 68.14¢.

Support at 61.07¢ held on the test of that level. Stronger support is at 58.84¢.

DAILY 10-YEAR TREASURY NOTE YIELDS

2,729

68.14¢

73.08¢

64.88¢64.88¢

Record-low yields highlight rising fears Covid-19 will spread,slowing global growthand creating deflation.

61.07¢61.07¢

58.84¢58.84¢