Grain Markets Mixed as Coronavirus Fears Remain

Good Morning from Allendale, Inc. with the early morning commentary for March 4, 2020.

Grain markets are mixed as global stimulus packages calm additional concerns about the impact of the coronavirus. Traders will continue to monitor increases in export demand as well as the containment of the coronavirus.

U.S. Federal Reserve cut interest rates yesterday in an effort to protect the U.S. economy from the impact of the coronavirus, but the emergency move failed to comfort U.S. financial markets.  “The virus and the measures that are being taken to contain it will surely weigh on economic activity, both here and abroad, for some time,” Fed Chair Jerome Powell said.

Argentina plans to raise taxes on soybean, soyoil and soymeal exports to 33% from the current 30%, the Agriculture Ministry said.  This is in response to the government’s move to increase revenue ahead of a planned sovereign bond restructuring.

Brazil is expected to harvest a record 124.2 million tonnes of soybeans this season, INTL FCStone estimated.  This is an increase of 200,000 tonnes above the prior forecast.  INTL FCStone also said Mato Grosso farmers will harvest around 34.5 million tonnes of soybeans this season (1 million tonnes above the last projection and 2 million more than last year).

China is planning to ramp up gasoline exports in March and April as its refiners get rid of excess stock after the coronavirus outbreak hit domestic fuel sales.  Industry sources and FGE estimates show Chinese gasoline exports are expected to rise roughly 465,000 to 530,000 barrels per day in March, this would be larger than the all-time high of 520,000 bpd seen in November 2019.

Ukraine will sell its only state-run grain company DPZKU, the Ukrainian government said.  Last season, DPZKU exported a total of 2.44 million tonnes of grain (including 921,000 tonnes to China).  Under a $1.5 billion Chinese loan-for-grains deal signed in 2012, DPZKU is meant to supply 5 million tonnes of grain to Chinese trading firm CCEC each year. (Reuters)

Platinum demand from the auto industry will rise this year for the first time since 2016, but it will not offset a decline in investment buying, leaving the global market in surplus again, an industry group said.  The World Platinum Investment Council (WPIC) said the surplus would rise to 119,000 ounces in 2020 (65,000 ounces last year), this was not including any impact on demand from the coronavirus outbreak.

China’s ag ministry said it had detected the African swine fever virus in wild boars in the Hubei province.  The ministry said seven wild boars had been found dead from ASF in central China.

April live cattle futures traded as high as +$2.50 today and June futures were up +$1.90, but final trades had April futures – $0.15 and June futures – $0.70.  Given the fact wholesale beef has shown gains in the past two days these closing prices were disappointing.

Dressed beef values were higher with choice up 0.09 and select up 1.54.  The Feeder cattle index was at 134.00.  Pork cut-out values were down 0.50.

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