Good Morning from Allendale, Inc. with the early morning commentary for April 3, 2020.
Grain Market traders hope to end the week on a positive note as volatility has rocked markets again this week. Outside markets will continue to influence commodities as traders try to adapt in a coronavirus world which gives no certainty. USDA will be out with their latest Supply and Demand numbers next week and we’d expect some pre-trading of report expectations.
Allendale released estimates for next Thursday USDA Supply and Demand report. We estimate corn ending stocks at 2,067 million bushels, soybeans 440 million bushels, and wheat at 950 million bushels. All are increases over last year.
The Buenos Aires Grains Exchange estimates Argentina’s 2019/20 soybean crop at 49.5 million tonnes, a drop from their earlier estimate of 52 million tonnes. They cite poor weather disappointing yields for the drop. USDA’s estimate is currently at 54.0 million tonnes.
Russia’s government has approved an ag ministry proposal to limit the country’s grain exports to 7 million tonnes from now through June as they seek to limit potential shortages which could arise from coronavirus complications. Rich Nelson reminds us, however, that last year in this same time frame they only exported 4.012 million tonnes.
Weekly export sales reported 1,095,757 metric tonnes of corn, 1,075,436 of that old crop. That was within the 700,000 – 1,300,000 trade expectation, but none of it went to China. Soybeans came in at 1,071,414 tonnes (131,000 to China). Estimates ranged from 375,000 to 1 million tonnes. Wheat export sales were 258,802 metric tonnes (0 to China), within the 250,000 – 950,000 estimate range, but not by much.
Brazilian mills are turning to wheat suppliers outside of Argentina, including the United States, as they seek to avoid shortages during the coronavirus pandemic. A mill association has also asked the government to drop Russian wheat restrictions and eliminate the 10% tariff on most of the world’s wheat.
Sanderson Farms is reducing chicken production in Georgia as it ordered 400+ slaughterhouse workers to stay home as a precaution against infection by coronavirus.
New contract lows were posted from June through December live cattle. April and June settled at -4.50 expanded limit down. April, May and August feeder futures closed down their expanded limits, -6.75. A gap lower open, and race to new contract lows pushed the April through August hog contracts to close at the expanded limit, -4.50.
The average steer carcass fell from 4.5% over last year to 3.7% over for the week of 3/21. That helps but this is still far too much. The average heifer carcass went from +3.7% year/year to now +4.0%. The average market hog, barrows and gilts, saw no change in its 213 lb. carcass for the week of 3/21. Year over year weights were also unchanged at +0.5%.
Pork export sales of 38,152 metric tonnes were noted this past week. This would be 285% over last year’s numbers for this week. China was a big buyer this week of 18,938 metric tonnes. Beef export sales of 18,231 metric tonnes were also reported, 11% under last year. Year to date sales are still strong at 14.9% over last year.
Dressed beef values were lower with choice down 2.53 and select down 3.01. The Feeder cattle index is 126.09. Pork cut-out values were down 2.84.