The Good: The corn market reacted positively to the news that ethanol stocks declined by 1.4 million barrels to 26.3 million barrels. The stocks of ethanol are still at very high levels, but the drop indicates that the reduction in ethanol production is likely at the minimum. Ethanol production dropped by 23 million barrels to 537 million barrels. This is nearly half the production level from last year. About two to three weeks of restricted production will be required to bring ethanol stocks back to the five year average.
As more states begin to unthaw their economies, the demand for ethanol will increase, which in turn will accelerate the rate of stock decline. Although consumption is expected to be lower than average levels through the summer, there is a light at the end of the tunnel for the ethanol industry. This should help support corn prices as we move into the 2020 production year.
The Bad: Wheat prices continued to drop as rains are forecast to cover most of the main growing areas of Northern Europe. Minneapolis spring wheat futures continued to move lower today with the July contract dropping to contract low of US$5.075 per bushel. The drop in the futures comes despite strong wheat exports in North America. Stocks levels of wheat are still adequate to support the export program and new crop planting is underway. A stronger Canadian dollar is also providing some headwinds for cash wheat prices in western Canada.
The Ugly: As if Alberta did not have enough to deal with on the COVID-19 impacts, flooding in Fort Mac has caused the latest natural and manmade disasters to hit the province. Ice jams on the the Athabasca River have flooded the city which is still reeling from shut downs caused by low oil prices. Hopefully the ice will clear quickly, but the damage to most homes and businesses is already done. #YMMStrong