Demand Concerns Increase as Coronavirus Spreads

Good Morning from Allendale, Inc. with the early morning commentary for March 16, 2020.

Grain Markets are lower overnight after falling sharply last week after many governments called off and closed many events, businesses, and theme parks as they try to minimize the spreading of the growing Coronavirus across the nation. Traders will continue to monitor how successful these measures are and how quick most countries can get back to normal.

Last week, May corn futures were down 9.50 cents, May soybeans down 43.75 cents, May wheat down 9.50 cents, May soymeal was down $6.10 and May soyoil was down 241 points.

Treasury Secretary Steven Mnuchin said officials will have a better idea this week of the total cost of a coronavirus aid package, but predicted it will likely be “significant but not huge.”  Mnuchin said it was necessary to get relief for the economy and that the government is focused on helping businesses that need liquidity.  “This focuses on employers that are 500 and less people,” Mnuchin said. “That’s a portion of the economy, but it’s the economy that is going to be hit the hardest,” he added.

CFTC Commitments of Traders showed funds new net position short -60,370 corn contracts, short -26,474 soybean contracts, long +16,682 wheat contracts, long +302 live cattle contracts and long +22,637 lean hog contracts.

NOPA Soybean crush report will be released today at 11 a.m. CST.  Analysts estimate crush at only 164.956 million bushels (176.94 mb last month, 154.49 mb last year).  Oil stocks estimated at 2.037 billion lbs. (2.013 billion lbs. last month, 1.752 bil. lbs. last year).

AgriCENSUS said, the U.S. response to the Covid-19 outbreak could see demand for blended gasoline fall about 20%.  This will likely spark a large reduction in demand for ethanol and cut demand for thousands of tons of corn.  Carbon Green Energy says, “at least half of the industry is bleeding red ink right now at close to -6 cent/gal margins (lowest since March 2012).”

Bayer has agreed on draft settlement terms with roughly half a dozen law firms who represent tens of thousands of plaintiffs alleging its Roundup weedkiller causes cancer, the Wall Street Journal reported.  Bayer also said based on average analyst predictions of a settlement worth around $10 billion, the company would not write down the value of the $63 billion Monsanto acquisition.

April lean hog futures fell $9.55 last week, while June futures dropped $8.45, August futures down $8.77 and October futures pulled back $8.55.  The USDA packer survey counted 2.648 million head for this week’s run last Friday (estimated 2.627 million head, 8.0% over last year).

April live cattle futures lost $10.17 last week, June futures were down $10.27, August futures lower $11.80 and October futures dropped $12.25. Feeder cattle futures were hit worse, with April feeders off $17.40, May futures by $16.80 and August by $17.32 this week.

Dressed beef values were mixed with choice up 2.13 and select up 4.10. The Feeder cattle index was at 127.91.  Pork cut-out values were up 0.65.

Post Archives

Allendale Insider

On The Go

Market Movers


Trader Insights

Morning Wake up Calls