Markets Remain Stable After USDA Report

Good Morning from Allendale, Inc. with the early morning commentary for February 12, 2020.

Grain markets are lower with Chicago wheat falling yet again as WASDE report numbers were recognized by the USDA to be close to trade expectations, but still showing global supplies to be ample.  Now traders will continue to watch the severity of the Coronavirus and how soon China starts to make U.S. ag product purchases.

China reported the lowest number of new coronavirus cases yesterday, increasing the likelihood of a prediction from China’s senior medical adviser that the outbreak could be over by April.  However, some International experts remain alarmed by how quick the virus is spreading, which has now killed over 1,100 people (with only two deaths outside of China).

USDA Monthly Supply and Demand report showed 2019/20 corn ending stocks the same as last month at 1.892 billion bushels (2.221 billion bu. last year), soybean ending stocks were lower 50 million bushels to 425 million bushels (475 last report, 909 last year), and wheat was lowered to 940 million bushels (965 last report, 1.080 billion bu. last year).

USDA 2019/20 world ending stocks showed corn at 296.8 million tonnes (297.8 last report, 320.5 last year), soybean world ending stocks at 98.9 million tonnes (96.7 last report, 111.2 last year) and wheat world ending stocks at 288.0 million tonnes (288.1 last report, 278.3 last year).

USDA cut corn export demand by 50 million bushels and increased ethanol demand 50 million bushels.  Traders will be keeping track of ethanol and export reports going forward, since the USDA expects exports to be slower than last year’s pace and ethanol demand to be slightly above last year’s pace.

FranceAgriMer left its estimate on French soft wheat stocks little changed at 2.4 million tonnes, while it raised its estimate of soft wheat exports outside of the EU to 12.6 million tonnes, up from its previous estimate of 12.4.


The coronavirus outbreak could reduce Chinese purchases of U.S. ag products this year under the Phase 1 trade deal, White House national security adviser Robert O’Brien said.  “We expect the Phase 1 deal will allow China to import more food and open those markets to American farmers, but certainly as we watch this coronavirus outbreak unfold in China it could have an impact on how big, at least in this current year, the purchases are,” O’Brien added.

Changyong Rhee, director of IMF’s Asia and Pacific Department said China’s growth rate has been moderating even before the coronavirus outbreak because of “desirable” steps by its government to deleverage its economy.  China will likely rely more on stimulus measures this year to keep its economy afloat, though the direct boost to growth will be smaller than past fiscal measures that focused on big infrastructure spending, he added.  (Reuters)

February lean hog futures expire this Friday and will be market to the index.  It looks like the index value is catching up to the futures sell-off in February which has been taking place the last couple weeks.  Iowa/Minnesota hog prices were quoted $1.19 lower at $47.84 (5-day average is at $49.62).

April live cattle futures dropped a $1.50 to session lows.  April cattle have fallen $11 over the past 8 weeks.  Cash trading at $120 in Kansas and Colorado, this is $1 off last week’s pace.

Dressed beef values were mixed with choice down 1.08 and select up 0.83.  The CME Feeder Cattle Index is 140.67.  Pork cut-out values were down 1.37.

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