Good Morning from Allendale, Inc. with the early morning commentary for February 24, 2020.
Grain markets are pulling back on continued Coronavirus fears as it is quickly spreading to other countries, a stronger U.S. dollar and big numbers released from the USDA AgForum conference last week. Traders have also seen light fund selling on low volume as they continue to wait for any signs of export buying from the previous trade deals.
The U.S. may give American farmers additional money until trade deals with China, Mexico, Canada and other countries fully go into effect, President Trump said. “If our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada and others fully kick in, that aid will be provided by the federal government,” Trump tweeted.
Weekly export sales showed corn sales of 1,250,100 tonnes (expected 700,000 to 1,200,000 tonnes), soybeans at 497,700 tonnes (expected 600,000 to 1,200,000), wheat at 406,400 tonnes (expected 400,000 to 700,000), soymeal at 169,400 tonnes (expected 200,000 to 400,000), and soyoil at 42,000 tonnes (expected 15,000 to 45,000).
CFTC Commitments of Traders showed funds new net position short -61,461 corn contracts, short -89,763 soybean contracts, long +64,715 wheat contracts, long +32,067 live cattle contracts and long +13,020 lean hog contracts.
French President Macron promised to protect European farm subsidies, secure compensation for wine producers hit by U.S. tariffs and defend fishermen in talks with Britain. Macron added that France would continue to oppose cuts to agricultural subsidies, this coming a day after discussions broke down on a new European Union budget without Britain. (Reuters)
USDA Cattle on Feed report showed On Feed (as of Feb. 1) at 2.1% above last year (2.3% above on previous month, average estimates of 2.4% above last year) at 11.928 million head, January placements were 0.6% below last year (3.5% above on previous month, average estimates of 1.4% above last year), and January Marketings at 1.1% above last year (5.3% above on previous month, average estimates of 0.7% above last year).
Allendale expects cold storage report to show 659 million pounds of total pork stocks for the end of January. Beef stocks are estimated at 492 million pounds. The USDA cold storage report will be released today at 3 p.m. CST.
2020 pork production is forecasted at 28.89 billion pounds by USDA, this figure is 4.5% over last year’s record. Allendale sees 2020 at 28.688 billion. The increase will be primarily driven by higher slaughter hog numbers and carcass weights are forecast to increase slightly in 2020.
Pork export sales for last week were reported at 23,747 tonnes. The U.S. has sold 694,023 tonnes so far this season (107% over last year – double last year). China’s buying was minimal at 1,073 tonnes (lowest since late December). Allendale believes Chinese buying will increase, but not until March.
Dressed beef values were higher with choice up 0.59 and select up 0.10. The Feeder cattle index was at 142.08. Pork cut-out values were up 0.56.