Supply Worries Strengthen Grain Prices

Good Morning from Allendale, Inc. with the early morning commentary for March 25, 2020.

Grain Markets were mixed overnight as traders remain concerned about the disruption in supply due to the effects of the coronavirus pandemic.

U.S. Congress said they were close to a deal on a $2 trillion stimulus package to limit the coronavirus pandemic’s economic toll, but a vote on the bill looked increasingly unlikely as talks continued on.  “If the words all magically came together, we could vote early this evening. But my guess is that it’ll probably be sometime tomorrow morning,” Democratic Senator Patrick Leahy.

The $2 trillion stimulus proposal includes a $500 billion fund to help industries hit the hardest, approximately $500 billion to send direct payments of up to $3,000 to millions of U.S. families, as well as $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $75 billion for hospitals.

China said it encourages local governments to temporarily stockpile poultry and aquaculture products in a bid to support the farming sectors after the coronavirus has cut production and supplies.  The lockdowns on people and goods to contain the outbreak has disrupted logistics and production in their farming sector while threatening the output of meat.

The results of our annual acreage survey were released last week. Our survey expects to see corn acreage at 94.631 million acres, soybeans 83.740 million, and wheat 44.465 million. Implied production is 15.369 billion for corn, 4.163 billion for soybeans, and 1.874 billion for wheat. For more details, check out our survey release video here.

China’s soybean imports from the U.S. in the first two months of this year were 6 times more from the same period last year, customs data showed.  China brought in 6.101 million tonnes of U.S. soybeans in January and February (1.044 million tonnes in the same months last year).

Quarterly USDA Hogs and Pigs report will be released tomorrow 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 ran plants last week with a kill of 11.5% over last year at 2.790 million head.  This week’s run is estimated to show kill at 2.748 million head (8.7% over last year).

Cash cattle trades yesterday were noted from $115 – $120 ($111 average price last week). April futures settled limit up and should open higher tomorrow, currently implying $107/$108 cash in April.

Dressed beef values were mixed with choice down 1.01 and select up 0.34. The Feeder cattle index is 118.23.  Pork cut-out values were down 1.46.

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