Traders Still Weigh Supply & Demand

Good Morning from Allendale, Inc. with the early morning commentary for April 17, 2020.

Grain Markets were mixed overnight as traders continue to weigh the adjustments to supply and demand in the face of the coronavirus. Outside markets are finding support on the hopes of a virus treatment which could spill over into ag markets.

Corn export sales of 969,541 tonnes were reported, 906,618 of that old crop on yesterday’s weekly report. That was within the 750,000 – 1,550,000 tonne expectation. Soybean export sales of 304,708 tonnes were reported, 244,708 for old and 60,000 for new. This was under the 375,000 – 900,000 trade expectation. Wheat sales came to 597,683 tonnes, 178,316 for old and 419,367 for new. The trade expectation was 250,000 – 650,000 tonnes.

Strategie Grains increased its projection of EU soft wheat stocks at the end of the 2019/20 season on June 30 to 13.7 million tonnes from 12.5 million estimated in March.

Oil refiners have asked the Trump administration to reduce the requirement that they blend ethanol into their gasoline arguing it is a cost the industry can’t afford. At the same time, the corn industry is asking for the requirements to be expanded to help farmers.

U.S. stock futures surged on Thursday night after a report said a Gilead Sciences drug was showing effectiveness in treating the coronavirus. The move pointed to a jump for the stock market on Friday. (CNBC)

Producers report to us they have deliveries to Tyson’s Waterloo, IA plant being turned away. This is likely due to expected lower labor supplies than a plant shutdown.

We continue to hear from producers the concern of higher weights as packers limit deliveries. So far, that is not in the numbers. Whole-US weights as of 4/4 are still +0.5% yr/yr. IA/S MN weights last week were -0.6% yr/yr.

Weekly pork export sales from 4/3 – 4/9 totaled 45,675 tonnes (16,492 was China). This strong sale was 14% over last year. US beef export sales from 4/3 – 4/9 totaled 20,232 metric tonnes. Though the best sale in four weeks, it was 30% under last year. YTD sales are 12.0% over last year.

The weekly Actual Slaughter report today covered the week ended April 4. Dressed steer weights fell 2 lbs. in this week to 889. Heifer weights were unchanged at 825. On a year/year basis steer weights fell from +3.0% to +2.8%. However, heifer weights rose from +2.4% to +2.6%.

Dressed beef values were higher with choice up 5.34 and select up 3.76. The Feeder cattle index is 114.56. Pork cut-out values were down 3.76.

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