Good Morning from Allendale, Inc. with the early morning commentary for February 13, 2020.
Grain markets are lower as traders attempt to discern the severity of the coronavirus (still a big unknown), while hopes of Phase 1 purchases linger in the back of their minds.
China has not informed the United States of any delays or reductions of its planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the outbreak of coronavirus, U.S. Department of Agriculture Under Secretary of Trade Ted McKinney said on Wednesday. (Reuters)
New cases of the coronavirus jumped significantly overnight in China’s Hubei province. 14,840 new cases were reported in contrast to the 2,015 new cases reported yesterday. The death toll in the region also rose by 242. Chinese officials broadened their definition of confirmed cases to include those indicated by lung imaging which could explain the jump in confirmations.
Weekly export sales will be released this morning at 7:30 AM. Analysts expect to see corn sales of 700,000 to 1,300,000 tonnes, soybeans 600,000 to 1,000,000, wheat 300,000 to 700,000, soymeal 125,000 to 400,000, and soyoil 7,000 to 30,000.
Ethanol production fell from 1.081 million barrels per day in the previous week to 1.033 last week. We don’t consider that to be a bad thing as production falls seasonally. This week’s production pace was still positive at 0.4% over last year. Our year to date numbers are still -0.5% year/year. This week, USDA raised the corn for ethanol goal from 5.375 billion bushels to 5.425. They are now calling for +0.9% year/year.
Bunge CEO, Gregory Heckman, said it’s too early to tell what impact the coronavirus will have agriculture, and that African Swine Fever, the other major disease to hit the country may have wiped out 40% of their hog herd.
Choice beef pricing has fallen in 12 of the past 14 trading sessions. The decline comes to 8.64 during this period through today’s morning report. This has certainly been an issue impacting cash cattle pricing. Cash cattle fell from $124 in third week of January to $121 last week. Yesterday’s trades were noted at $119 and $120.
Dodge City will see highs of 30 and lows of 16 today. That area will see a rebound back to 62 and 35 respectively on Sunday. At this time, it does not appear that the cold event will be cold enough and it won’t last long enough to impact cattle.
Q1 pork supply has been more than expected. In the six weeks completed for 2020 hog slaughter has been 6.3% over last year. Pork production, due to higher weights, has been 8.3% over last year. Last week’s numbers from USDA were +7.2% and +8.1% respectively.
Dressed beef values were mixed with choice down 1.52 and select up 0.77. The CME Feeder Cattle Index is 140.98. Pork cut-out values were up .31.