Traders Hope for Strong World Demand

Good Morning from Allendale, Inc. with the early morning commentary for April 2, 2020.

Grain Markets look to export sales this morning with hopes for signs of strong world demand as fears of coronavirus slowdowns continue to grip all markets.

Weekly export sales will be released this morning at 7:30 AM CDT. Analysts expect to see corn sales of 700,000 to 1,300,000 tonnes, soybeans 375,000 to 1,000,000, wheat 250,000 to 950,000, soymeal 100,000 to 350,000, and soyoil 8,000 to 45,000 tonnes.

USDA reports February crush came to 181.6 million bushels. That was over the 176.9 trade expectation. That was a large 11.5% over last year. That surprisingly beat the 7.6% over last year NOPA numbers for February.

Brazil’s Ministry of Agriculture reports that 11.644 million tonnes of soybeans were exported in March. That was over the 9.087 from one year ago, but under the 13.1 expectation analysts had been expecting.

Weekly ethanol production fell from 1.005 million barrels per day down to 840,000. This was the lowest weekly number since September 2013. On a year/year basis it went from +3.1% to -15.9%. This is a scary looking number but confirms general trade talk. We are expecting -20% for April, -15% for May and -8% for the remaining three months of the marketing year. All of those estimates will change as needed. We are currently estimating we may miss USDA’s whole-year goal by 285 million bushels. For the April WASDE we see corn for ethanol cut by 150.

Farmers in India are concerned there may be no one to harvest their wheat crop due to the county’s coronavirus lock-down. Last year, India produced 13.5% of the worlds wheat.

Trading activity on China’s commodities markets is skyrocketing as investors increasingly hedge risks, pushing open interest and trading volumes in the futures markets to record and multi-year highs in March following the coronavirus outbreak and volatile global commodity prices. (Reuters)

The National Restaurant Association has asked Congress and the White House for $325 billion in aid. They project industry losses of $225 billion over the next three months.

Hogs traded limit down (3.00) from April 2020 through April 2021 yesterday as end users remain quite concerned about demand into the coming weeks. They will have expanded 4.50 limits today.

Like hogs, every live cattle contract closed down the expanded limit from April 2020 – April 2021 on the same demand concerns. Live cattle will have expanded 4.50 limits, while feeder cattle will see 6.75 limits.

Cash cattle traded in Texas yesterday at $111 and $112. Last week’s average was $119. June futures are implying $89/$90 this summer.

Dressed beef values were sharply lower again with choice down 7.98 and select down 3.83. The Feeder cattle index is 129.82. Pork cut-out values were down 2.99.

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