Traders Remain Cautious As Markets Rebound 

Good Morning from Allendale, Inc. with the early morning commentary for April 8, 2020.

Grain Markets were mixed with corn and soybean futures settling higher as increased energy prices provided support and hopes for higher demand.  Wheat futures pulled back for a 2nd straight session as improved crop ratings raised expectations of a strong domestic crop with ample world supplies.  Expect trading volumes to be light as we head into this month’s WASDE report being released tomorrow morning.


USDA Monthly Supply and Demand report estimates show U.S. corn ending stocks at an average of 2,004 million bushels (1.892 million bushels last report), U.S. soybean ending stocks at 430 million bushels (425 million bushels last report), and U.S. wheat ending stocks at 940 million bushels (940 million bushels last report).  This report will be released tomorrow at 11 a.m. CST.

USDA World Crop Ending Stocks estimates show world corn ending stocks at an average of 298.50 million tonnes (297.34 million tonnes last report), world soybean ending stocks at 101.10 million tonnes (102.44 million tonnes last report), and world wheat ending stocks at 287.37 million tonnes (287.14 million tonnes last report).

The USDA said it would resurvey farmers in Michigan, Minnesota, South Dakota and Wisconsin who reported unharvested 2019 corn and/or soybean acreage and publish adjustments in its May 12th crop production report, if necessary.  The USDA added that producers in a fifth state where harvests were delayed, North Dakota, would be contacted at a later date.

Cargill closed their meat plant facility in Hazleton, PA. until further notice, the company said, causing more disruption to food supply for grocery stores that have seen demand surge while battling the coronavirus.  “Our goal is to keep our 900 employees at this case-ready protein facility healthy and minimize risk within the Hazleton community, which has been greatly impacted by COVID-19,” Cargill said.  “Our facility will re-open as soon as is it is safe to do so,” they added.

Four workers at an ADM corn processing facility in Clinton, Iowa, have tested positive for coronavirus, the company said.  The employees and those they have come in contact with have been quarantined and the facility is being deep cleaned to prevent further spread, ADM said.  ADM’s Clinton corn plant is located on a larger ADM complex along the Mississippi River that also loads grain barges serving export terminals near the Gulf of Mexico in Louisiana. (Reuters)

Saudi Arabia, Russia and allied oil producers will agree to deep cuts to their crude output at talks this later week only if the U.S. and several others join in with curbs to help prop up prices after being hammered by the coronavirus crisis.  However, the U.S. Department of Energy stated the U.S. output is already falling without government action and is in-line with the White House’s insistence that it would not intervene in the private markets.  “With regards to media reports that OPEC+ will require the U.S. to make cuts in order to come to an agreement: The EIA report today demonstrates that there are already projected cuts of 2 million barrels per day, without any intervention from the federal government,” the U.S. Department of Energy said.

The U.S. 10th Circuit Court of Appeals rejected a request for rehearing from oil refining companies seeking to challenge the court’s January ruling on biofuel waivers granted by the EPA.  The court’s ruling effectively forces the EPA to dramatically reduce the number of waivers the agency can grant in the future to refiners exempting them from their obligations under the U.S. Renewable Fuel Standard, this is a major blow to the refining industry.

Cash cattle prices declined from last week’s $111 – $113 trade to $105 trade yesterday in Texas.  This trade price would imply prices are 17% under last year.  Yesterday’s locked limit-up trade left the market with upside hope heading into today.  Option settlements imply live cattle futures will be +$0.30, while feeder cattle futures will be +$3.85.

The Lean Hog Index price stands at $55.52 (as of this Monday). April lean hog futures imply the index will drop to $44.12 as of April 15th.  April through August lean hog futures settled limit up yesterday.

Dressed beef values were mixed with choice down 2.17 and select up 2.72. The Feeder cattle index is 117.05.  Pork cut-out values were down 2.96.

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