Good Morning from Allendale, Inc. with the early morning commentary for May 6, 2020.
Grain Markets eased lower overnight as demand concerns still loom from the lasting affects of the coronavirus. But losses were limited as weather concerns grow in South America, energy prices rally, and meat processing plants begin to re-open.
The U.S. trade deficit increased the most in more than a year last month as a record drop in exports offset a shrinking import bill, suggesting the coronavirus outbreak was disrupting the global flow of goods and services. The Commerce Department said the trade deficit jumped 11.6%, (largest increase since December 2018) to $44.4 billion.
President Trump urged China to be transparent about the origins of the novel coronavirus outbreak. “We want them to be transparent. We want to find out what happened so it never happens again,” he said.
Brazilian corn farmers hoping for relief from drought were disappointed by weaker than expected rains this week, while frost expected in the state of Parana could bring further losses, weather forecasters said. “The risk of corn losses has increased a lot,” said weather forecaster Marco Antonio dos Santos at Rural Clima.
The U.S. and Britain launched formal negotiations on a free trade agreement on Tuesday, vowing to work quickly to seal a deal that could counter the massive drag of the coronavirus pandemic on trade flows and the two countries’ economies. “If we get a good deal with the UK on agriculture, it’s going to embarrass Europe,” U.S. Senator Chuck Grassley said.
Private exporters reported to the USDA export sales of 378,000 metric tons of soybeans for delivery to China with 136,000 mt during this marketing year and 242,000 mt during next year. There was also an export sale of 109,135 metric tons of corn for delivery to Mexico with 45,220 mt during this year and 63,915 mt during next year.
Oklahoma crop experts projected Oklahoma’s 2020 winter wheat harvest at 96.524 million bushels, with an average yield of 33.16 bushels per acre, following an annual tour of the state. Oklahoma produced 110 million bushels of winter wheat in 2019, according to the USDA.
Tyson Foods Inc. will resume limited production at its largest U.S. pork plant this week, the company said. Tyson Fresh Meats, the beef and pork subsidiary of Tyson Foods, had indefinitely suspended operations at the Waterloo, Iowa plant on April 22 to contain the spread of the coronavirus. The plant will resume operations on Thursday.
Beyond Meat (a plant-based burger maker) plans to offer large value packs and discounts to some U.S. retailers this summer, hoping to grab a greater share of the market as prices for beef rise amid production disruptions. “It’s putting us closer within range, and we’re going to try to further reduce that gap,” CEO Ethan Brown said. “However, the discounts would be temporary. We’re not going to do anything on long-term pricing,” he added.
Dressed beef values were higher with choice up 18.94 and select up 34.05. The Feeder cattle index is 119.59. Pork cut-out values were up 5.77.