Ag Markets Attempt Recovery

Good Morning from Allendale, Inc. with the early morning commentary for March 19, 2020.

Grain Markets are recovering as governments across the world offer stimulus measures in an attempt to ward off the economic meltdown caused by coronavirus. This comes despite the fact that stock futures signal another day of declines.

The results of our annual acreage survey were released yesterday morning. Our survey expects to see corn acreage at 94.631 million acres, soybeans 83.740 million, and wheat 44.465 million. Implied production is 15.369 billion for corn, 4.163 billion for soybeans, and 1.874 billion for wheat. For more details, check out our survey release video here.

Weekly export sales will be out this morning at 7:30 AM CDT. Analysts expect to see corn sales of 650,000 to 1,350,000 tonnes, soybeans 460,000 to 1,100,000, wheat 250,000 to 700,000, soymeal 150,000 to 400,000, and soyoil 5,000 to 35,000.

The weekly ethanol report was again strong at 1035K which was +3.1% compared to last year. That is still strong and still beating USDA expectations. With the enormous drop in crude oil, however, this is not expected to continue.

This year China’s hog and sow herds will begin to recover from the impacts of African Swine Fever, pushing up protein meal feed use, soybean crush volume, and total oilseed demand in marketing year (MY) 20/21. The gradual recovery of the swine and crush sectors will also push up soybean imports in MY20/21 to 86 MMT compared to an estimated 84 MMT in MY19/20. (USDA Attache to China)

Florida Rep. Mario Díaz-Balart announced he tested positive for COVID-19 after developing symptoms Saturday. He is the first member of Congress to test positive for the novel coronavirus. Later, Rep. Ben McAdams announced he tested positive.

JP Morgan lowered its GDP forecast suggesting the U.S. economy could shrink 4% this quarter and 14% next quarter. For the whole year they see a 1.5% reduction.

Boxed beef cutout values have been sharply higher on good demand and heavy offerings. Select and Choice rib and loin cuts firm to higher while chuck and round cuts sharply
higher. This is likely short term due to consumer stockpiling.

Allendale, Inc. has released their Cattle on Feed & Cold Storage estimates for reports being released later this week.  Allendale estimates On Feed (as of March 1st) at 0.2% under last year at 11.775 million head, Placements at 8.8% under last year at 1.694 million head and Marketing at 6.2% over last year at 1.787 million head.

Cold Storage (end of February) is expected at 673 million lbs. according to our estimates, total pork storage (five-year average at 622 million lbs., 574 million lbs. previous month).  Beef stocks are estimated at 456 million lbs. (487 million lbs. five-year average, 490 million lbs. previous month).

Dressed beef values were significantly higher with choice up 7.31 and select up 9.18. The Feeder cattle index is 123.36.  Pork cut-out values were up .48.

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