Good Morning from Allendale, Inc. with the early morning commentary for February 14, 2020.
Grain markets remain unsettled by new cases of the coronavirus amid warnings by world health leaders that that the virus is still susceptible to spread outside of China. Markets will close at their usual time today, but will not reopen until Monday night at 7:00 PM CST in honor of President’s Day.
New cases of the deadly coronavirus were recorded at 4,823 in the hardest hit Chinese province of Hubei. The death toll unfortunately rose as well by 116 according to Chinese government reports.
Strategie Grains estimates that the EU soft wheat harvest will fall from 139.8 million tonnes to 138.6 million, they note that the reduction will be more than offset by a bumper crop in Russia barring a weather event.
Weekly export sales were reported at 969,000 tonnes, in line with the analyst estimate of 700,000 to 1,300,000. Soybeans came in at 651,000 at the lower end of the 600,000 to 1,000,000 estimate. Wheat was reported at 687,000 tonnes near the upper end of the 300,000 to 700,000 tonne estimate.
Soybean exports to China fell to their lowest in nearly 10 months as the coronavirus outbreak has raised concerns about demand. USDA showed that exporters shipped just 69,009 tonnes of soybeans, about one cargo, to China in the week ended Feb. 6. That was the lowest since U.S. exporters shipped 67,113 tonnes in the week ended April 18, 2019. (Reuters) The market continues to look for Phase 1 purchases soon, with some speculating they may come as soon as next week.
FranceAgriMer estimates that 65% of the French Soft Wheat crop is in good to excellent condition as of Monday. 67% of the Durum Wheat crop was rated GTE.
Ships carrying refrigerated cargo containers of chicken from the United States to China are being diverted to ports in Hong Kong, South Korea, Taiwan and Vietnam due to the coronavirus outbreak, according to a U.S. poultry export trade group. The virus, which is causing havoc in the global container shipping trade, is keeping consumers and workers at home in China, delaying purchases at stores and restaurants and slowing the unloading of products at ports. (Reuters)
Hog slaughter in the past six weeks averaged 6.2% over last year. Last week was +7.2%. There was a mild snow disruption yesterday via the 490,000 head run estimated by USDA. However, that will likely be made up on tomorrow. This week’s run, which we currently estimate at 2.609 million head, will be the smallest non-holiday run of the year. In addition, it would be only 4.5% over last year.
We noted the weekly Iowa/Minnesota hog weight report showed a decline from +0.5% year/year as of 2/1 to now -0.1% as of 2/8. Yesterday’s Actual Slaughter report showed no change in the +0.5% from 1/31 to 2/1.
Much of the cattle trade continues to question when this market will find some stability. Futures are implying cash at $119/$120 in the next two weeks. This week’s trade so far was $119/$120. April futures are pricing in $120. Summer futures are pricing in cash at $109 – $111. We are now trading cash cattle at prices under last year.
Beef export sales covering 1/31 – 2/6 had sales of 17,492 tonnes were noted for the latest week. That is just below the past four weeks of 17,838 – 27,797 tonnes (no sales were reported last year due to the government shutdown).
Dressed beef values were mixed with choice up .14 and select down 1.51. Pork cut-out values were down .86.