Demand Hopes Reenter Market

Good Morning from Allendale, Inc. with the early morning commentary for March 5, 2020.

Grain markets continue to monitor the coronavirus situation as some demand hopes begin to reenter the market place. Traders are eager to see if another sale to China will be reported this morning.

US Acreage numbers will be updated later this month in USDA’s prospective plantings report. To help prepare for that report we are conducting our annual acreage survey, and we could use your numbers. Please take a moment to tell us your planting intentions, and register for the free results webinar too. Thank you!

Average estimates for next week’s USDA Supply and Demand report were complied by Reuters yesterday. Analysts expect 2019/20 corn ending stocks at 1.888 billion bushels, soybeans 0.426 bb, and wheat stocks at .944 bb. None of these numbers are close to USDA’s February numbers.

World ending stock numbers are expected to show corn stocks of 297.25 million tonnes, soybeans 99.33 MT, and wheat 288.47 MT. South American production numbers are expected to rise minimally.

Weekly export sales will be released this morning at 7:30 AM CST. Traders expect to see corn sales of 700,000 to 1,300,000 tonnes, soybeans 500,000 to 1,025,000, wheat 375,000 to 675,000, soymeal 225,000 to 400,000, and soyoil 8,000 to 30,000.

China’s National Health Commission said there were 139 additional cases and 31 new deaths as of Wednesday — all of the fatalities occurred in Hubei province, the epicenter of the outbreak. South Korea reports 438 new cases and 3 additional deaths, bringing the nationwide total number of infections to  5,766. (CNBC)

The U.S. EPA has decided to scale back the program which allowed exemptions to small oil refineries from the country’s biofuel regulations. This comes after a judge raised questions about the program. At the same time, the EPA is also considering a cap or other restriction on the price RINs.

AgriPac, an Argentine farm consultancy, predicts that soybean acreage could fall by 2.47 million acres, wiping as much as 3 million tonnes of production from the country. The comment is in response to the government’s increase in soy export tax from 30% to 33%.

Weekly ethanol production at 1.079 million barrels per day was a strong number. It is the fourth largest production of the year. It was also 5.4% over last year. Year to date production numbers are now +0.1%. Given the stronger pace in place since mid-November we’ll meet USDA’s +0.9% goal for the year.

U.S. Agriculture Secretary Sonny Perdue on Wednesday predicted China will come into the U.S. market for soybeans in late spring and summer, after Beijing in January promised to buy more American farm goods as part of an interim trade deal. Further, China can attain this year’s grain targets despite a coronavirus outbreak, their agriculture officials said on Thursday, adding that a recovery of the pig herd was also on track. (Reuters)

The US hog supply issues are starting to moderate. Kills are now +5%, down from the +6% they were in January and early February. Hog weights are now even with last year. They were +0.5%.

Cash cattle traded $2 lower yesterday with action at $113. That comes on top of last week’s $5 break. In total, this market has lost $11/$12 from the $124/$125 peak posted in the first week of the year.

Dressed beef values were mixed with choice up 0.20 and select down 1.19.  The Feeder cattle index was at 133.75.  Pork cut-out values were down 0.31.

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