Fundamentals Creep Back as Report Estimates Enter Market

Good Morning from Allendale, Inc. with the early morning commentary for March 26, 2020.

Grain Markets are lower overnight with wheat down the hardest on profit taking after a couple of strong days. While outside markets are focused squarely on coronavirus and economic stimulus, some ag traders are beginning to look to next week’s USDA reports and signs of demand.

Average estimates for next Tuesday’s Prospective Plantings and Grains stocks reports have been released by newswires.  The Bloomberg poll shows corn acreage at 94.1 million, soybeans 85.0, and all-wheat 45.0. USDA’s Feb Ag Forum numbers were 94 million for corn, 85 million for soybeans and 45 million for all-wheat, so almost no change is expected.

Grain Stocks are estimated at 8,134 million bushels of corn, 2,228 million bushels of soybeans, and 1,430 million bushels of wheat. The reports will be released on Tuesday the 31st at 11:00 AM CDT.

Supply disruptions in Argentina, the world’s No. 3 corn and soybean exporter and No. 1 supplier of soymeal livestock feed, could shift global commodity trade flows as importers turn to rival suppliers like Brazil or the United States. More than 70 municipalities in Argentina are enforcing anti-coronavirus measures by controlling the movement of farm produce through their jurisdictions. (Reuters)

Weekly export sales report is expected to show corn sales of 900,000 to 1,900,000 tonnes, soybeans 400,000 to 900,000 tonnes, wheat 350,000 to 950,000 tonnes, soymeal 100,000 to 350,000 tonnes, and soy oil 8,000 to 35,000 tonnes.

Ethanol production for the week of 03/14 – 3/20 fell to 1.005 million barrels per day. Down from 1.035 the previous week. It was the lowest production week since October, but still 3.1% over last year. Ethanol stocks fell from 24.598 million barrels to 24.140. We went from +0.8 last year to now a 1.3% decline vs. last year.

The coronavirus economic stimulus bill, which passed the Senate late last night, adds $14 billion to the USDA’s Commodity Credit Corp and also add $9.5 billion for farmers hurt by the spread of the pandemic

The World Trade Organization’s Director – General said the virus “projections predict an economic downturn and job losses worse than the 2008 recession.

Cash cattle traded yesterday from $118 – $120.50 on the weekly Fed Cattle Exchange. Live based non-FCE trades were noted at $120. This is a strong increase from last week’s $110.

Quarterly USDA Hogs and Pigs report will be released today at 2 p.m.  Bloomberg survey of seven analysts showed a March 1 All Hogs and Pigs estimate of +3.5% year/year.  Kept for Marketing (on March 1) at +3.7% year/year and the breeding herd growth is expected at +1.4% year/year.

Pork packers really hit production hard last week with a run 11.5% over last year. Based on a 270,000 head Saturday expectation this week’s will also be stout at 8.5% over last year.

Dressed beef values were lower with choice down 1.01 and select down 2.39. The Feeder cattle index is 123.44.  Pork cut-out values were down 3.02.

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