Wake Up Call
China Struggles to Contain Coronavirus
Good Morning from Allendale, Inc. with the early morning commentary for February 5, 2020.
Grain markets pushed higher on light volume and bargain buying from traders. Most gains were limited due to ongoing concerns about the growing amount of deaths and new cases related to the coronavirus. Traders will continue to watch this deadly virus while also monitoring any Chinese purchases of U.S. ag products.
White House's top economic adviser, Larry Kudlow said China's coronavirus would delay a surge in U.S. exports to China expected from the Phase 1 trade deal set to take effect later this month. He added the virus, which has shut down many Chinese factories and cities and cut off significant travel in and out of China, would not have a catastrophic effect on business supply chains.
Chinese authorities ordered local governments to ensure disruptions to the transportation of animal feed and livestock are kept to a minimum during the coronavirus outbreak. Local authorities should not intercept transports of young animals, livestock, feed or animal products, and the closure of slaughterhouses was forbidden, the Ministry of Agriculture said
China's coronavirus lockdown is being felt across the world, with exporters, miners and manufacturers of everything from coal and timber to meat and fruit facing delays and potential shipment cancellations. The combination of an extended Lunar New Year holiday and the rapid spread of a coronavirus which has killed over 450 people and restricted the movement of millions more has halted logistics channels into China and around the globe.
Ukraine's grain exports are at 36.8 million tonnes (30.4% over last year) so far this season, the Ministry for Development of Economy, Trade and Agriculture said. Wheat exports rose by 4.3 million tonnes to 15.9 million tonnes, 3.9 million tonnes of barley and 16.5 million tonnes of corn, the ministry added. The country harvested a record 75.1 million tonnes of grain in 2019 (70 million tonnes previous year).
Brazilian farmers are estimated to produce 124 million tonnes of soybeans this year (1.9% higher from January's forecast), INTL FC Stone said, citing stronger than expected yields and area increases. Production of second corn, which is planted after soybeans are harvested, was estimated at 71.9 million tonnes, unchanged from January.
Pakistan will buy more palm oil from Malaysia, Prime Minister Imran Khan said, aiming to help offset sales lost from their top buyer, India put curbs on Malaysian imports last month. "That's right, especially since we noticed India threatened Malaysia for supporting the Kashmir cause, threatened to cut palm oil imports," Khan said.
Chinese poultry farmers in the heart of China's coronavirus outbreak are having to euthanize young birds as new rules to contain the disease have paralyzed the transport of feed supply and live animals to slaughterhouses. The ban on the transportation of live poultry, believed to be a potential disease risk, has stopped farmers from getting chickens and eggs to market.
In the past four weeks, cattle slaughter has been 4.1% over last year (based on summer placements, slaughter numbers should be -2% to +1%). On a more bullish note, this week's cattle showlist was 13,900 head under last week.
Dressed beef values were mixed with choice down 0.63 and select up 0.09. The CME Feeder Cattle Index is 141.74. Pork cut-out values were down 1.71.



