Good Morning from Allendale, Inc. with the early morning commentary for April 15, 2020.
Grain Markets attempted to rebound higher overnight after demand concerns from meat processing plants closures and lower energy prices continued to weigh on the grains. Traders remain optimistic higher prices will return soon if the Trump administration eases coronavirus lockdowns in the next few weeks.
Brazilian crop progress report showed Brazilian soybean harvest at 88% complete (82% last week, 89% last year and 85% average). Brazilian 1st corn crop harvest progress at 72% complete (68% last week, 69% last year and 71% average). Brazilian safrinha corn crop planting progress at 99% complete (97% last week, 100% last year and 99% average).
Egypt, the world’s largest wheat buyer, bought 120,000 tonnes of Russian wheat in a tender, which was sharply less than anticipated. Trade was expecting a much larger purchase after the supply minister said they would look to import 800,000 tonnes of the grain during its own local wheat harvesting season following presidential orders.
Oil prices saw minimal impact from a global deal for record output cuts last week, which shows oil producers have a mountain to climb if they are to restore market balance as the coronavirus has shut down demand and has sent oil stockpiles soaring, industry experts said. The Saudi energy minister said the effective global oil supply cuts would amount to around 19.5 million barrels per day, taking into account the reduction pact agreed by OPEC+, pledges by other G20 nations and oil purchases into reserves.
March NOPA soybean crush report will be released today with crush likely to be its third largest ever at 175.163 million bushels (166.288 mb last month, 170.01 million bushels last year). Soyoil stocks likely at 2.067 billion lbs. (1.922 billion lbs. last month, 1.761 billion lbs. last year).
China’s exports and imports eased in March as factories resumed production, but shipments are set to shrink sharply over coming months as the coronavirus crisis slows down several other economies and puts the brakes on a quick recovery. UBS Economist, Tao Wang predicted exports into China would decline by 20% on-year in the second quarter and 12% for the whole of 2020.
Cargill has reduced production at one of Canada’s largest beef-packing plants, the company said after several dozen workers became infected with the coronavirus. The union said the plant, which produces patties for McDonald’s, is now slaughtering 1,500 head of cattle per day, down from around 4,500 per day.
The National Pork Producers Council, which represents U.S. hog farmers, called on the Trump administration to purchase over $1 billion in pork to help food banks facing higher demand during the coronavirus outbreak. The council added, the U.S. hog farmers are expected to lose $5 billion this year after coronavirus has disrupted demand.
Cash cattle prices saw light trading at $152 dressed ($168 average last week). A $152 dressed price is the equivalent of a $96 live price. USDA’s daily slaughter estimate showed a rebound to 99,000 head (18% under average kill numbers). Last week’s packer margin runs saw gross margins around $406 per head.
April and May lean hog future prices posted new contract lows yesterday, while back month contracts held their prices. USDA’s daily slaughter estimate was at 450,000 head (8% under average kill numbers). National pork producers council estimates hog producers will lose $37 per head through the remainder of the year.
Dressed beef values were higher with choice up 0.81 and select up 4.37. The Feeder cattle index is 114.49. Pork cut-out values were up 0.20.