Good Morning from Allendale, Inc. with the early morning commentary for March 23, 2020.
Grain Markets were mixed overnight with soybean and wheat futures continuing to push higher on Chinese purchases and expectations of higher demand. Corn futures slid for a second session on expectations of lower ethanol consumption as oil prices drop and the coronavirus spread quickly, curbing demand for corn.
Last week, May corn futures were down 23 cents, May soybeans up 14.50 cents, May wheat up 34 cents, May soymeal was up $23.30 and May soyoil was down 73 points.
One in three Americans are under orders to stay home to slow the spread of the coronavirus pandemic as Ohio, Louisiana and Delaware became the latest states to enact broad restrictions, along with the city of Philadelphia. The three states join New York, California, Illinois, Connecticut and New Jersey, who combined total 101 million citizens, as cases in the U.S. topped 32,000, with over 415 U.S. deaths.
China started purchasing U.S. ag commodities last Friday. They bought 756,000 tonnes of old crop corn, 340,000 tonnes of new crop hard red winter wheat and 110,000 tonnes of old crop soybeans from unknown. Traders will watch closely this week to see if China continues to purchase U.S. ag products and continue to fulfill their part of the Phase One trade agreement.
CFTC Commitments of Traders showed funds new net position short -91,846 corn contracts, short -30,646 soybean contracts, short -5,659 wheat contracts, long +1,363 live cattle contracts and long +22,026 lean hog contracts.
The results of our annual acreage survey were released last week. Our survey expects to see corn acreage at 94.631 million acres, soybeans 83.740 million, and wheat 44.465 million. Implied production is 15.369 billion for corn, 4.163 billion for soybeans, and 1.874 billion for wheat. For more details, check out our survey release video here.
Brazilian dock workers’ union representing about 5,000 autonomous workers last week called on its members to vote today on whether to hold a strike at Latin America’s largest port over concerns about coronavirus risk. “The vote will decide whether or not to strike due to the coronavirus pandemic. The workers are at risk at Latin America’s largest port. Same goes for their families and the community in the Santos area,” said Rodnei Oliveira da Silva, president of Brazil’s dock worker union.
USDA Cattle on Feed report (as of March 1st) showed On Feed at 0.2% over last year at 11.806 million head(expected 0.2% under last year at 11.775 million head), Placements at 7.9% under last year at 1.711 million head (expected 8.8% under last year at 1.694 million head) and Marketing at 5.5% over last year at 1.775 million head (expected 6.2% over last year at 1.787 million head).
Cold storage report (end of February), will be released at 2:00 p.m. today, Allendale is expecting 673 million lbs. of total pork storage (five-year average at 622 million lbs., 574 million lbs. previous month). Beef stocks are estimated at 456 million lbs. (487 million lbs. five-year average, 490 million lbs. previous month).
Dressed beef values were higher with choice up 0.59 and select up 0.10. The Feeder cattle index is 121.38. Pork cut-out values were up 0.56.