Farmers Plan Huge Corn Crop Despite Lower Ethanol Demand

Good Morning from Allendale, Inc. with the early morning commentary for April 1, 2020.

Grain Markets were lower with corn futures sliding on the USDA’s higher-than expected production forecast.  Soybean futures fell for the first time in four sessions and wheat futures pulled back for a third straight session.  Increased export demand limited losses in all three markets as traders hope for more sales to happen in the following weeks.

President Trump warned Americans of a “painful” two weeks ahead in the fight against coronavirus, as the U.S. death toll could stretch into the hundreds of thousands even with strict social distancing measures.  “We want Americans to be prepared for the hard days that lie ahead. We’re going to through a very tough two weeks and then, hopefully, as the experts are predicting … you’re going to be seeing some real light at the end of the tunnel,” the president said.

President Trump signed off on a plan to defer U.S. tariffs on goods from countries with most-favored nation status for three months, to help ease the economic fallout of the coronavirus, a source familiar with the decision said.  The plan would not apply to tariffs on Chinese and European goods subject to Section 301 tariffs or to steel and aluminum subject to Section 232 tariffs.

USDA Prospective plantings and Grain stocks reports showed corn acreage at 96.99 million acres (94.328 million average estimate, 89.70 last year), soybeans at 83.51 million acres (84.86 million average estimate, 76.10 last year), and all-wheat at 44.655 million acres (44.98 million average estimate, 45.158 last year).

Grain Stocks showed corn at 7,953 million bushels (8,125 million bushels average estimate, 8,613 million last year), soybean stocks at 2,253 million bushels (2,241 million bushels average estimate, 2,727 last year) and wheat at 1,412 million bushels (1,432 million bushels average estimate, 1,593 million last year).

Private exporters reported to the USDA export sales of 113,000 metric tons of corn for delivery to Japan during the 2019/2020 marketing year.

China has not approved any new Brazilian meat plants for export this year because of the coronavirus pandemic, said an official at Brazil’s Agriculture Ministry, adding that all approvals were on hold until the crisis eases.  The freeze comes despite the fact Brazil and China implemented a new system in January intended to speed up approvals, said Orlando Leite Ribeiro, international affairs secretary at Brazil’s Ag Ministry.

Brazil’s President Jair Bolsonaro said there can be no more quarantine measures imposed on Brazil than already in place to combat coronavirus because jobs are being destroyed and the poor are suffering disproportionately.  “When the situation is heading toward chaos, with mass unemployment and hunger, it’s fertile ground for some to exploit, seeking a way to reach power and never leave it,” Bolsonaro added.

The JBS beef plant in Souderton, PA will run at reduced levels for the next two weeks after senior management indicated they had flu-like symptoms. This plant runs at an average of 2,500 head per day.  This news should have little impact on the market as it is mostly a cull cow operation.

Wholesale pork prices fell $6.25 last week and is down another $5.01 through yesterday morning as end users prepare for low spring demand ahead.  Previous pork demand research has suggested pork demand is about 78% at-home and 22% away from home.

Dressed beef values were sharply lower with choice down 7.82 and select down 9.18. The Feeder cattle index is 131.10. Pork cut-out values were down 5.67.

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