News

Morning Commentary

July corn down 3 ½ at $4.1225

July beans down 5 ¾ at $8.505

The DOW is up

USD is stronger

Crude oil up $.18 at $54.17

Good morning,

Corn  bulls are happy to see some resolution with Mexico. Global demand has been somewhat suspect, so deeper problems with one of the top buyers of U.S. corn would not be considered a tailwind. Most traders in the market are still talking about U.S. weather and planting delays. This afternoon we will get the first look at overall crop condition estimates form the USDA. The over/under seems to be around 50% of the crop being rated “Good-to-Excellent”. Last year at this time, we had over +90% of the corn crop emerged and 77% rated “Good-to-Excellent”. Perhaps more importantly and telling is the fact, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, and South Dakota were all +95% emerged last year. Illinois was rated 82% GD/EX last year; Indiana 75%; Iowa 81%; 90%; Nebraska 86%; Ohio 87%; Wisconsin 91%.

Soybean  traders are eager to see how much of the U.S. crop is still unplanted? Last week the USDA estimated 39% of the crop was planted. There’s some talk that we could now be +60% planted. This time last year the USDA estimated that 83% of the U.S. soybean crop was emerged and 93% planted. In fact, this time last year, Arkansas, Illinois, Indiana, Iowa, Louisiana, Minnesota, Mississippi, Nebraska, North Dakota and South Dakota were all +95% planted.

China is the biggest producer and consumer of pork in the world. There’s now some questions being asked about future pork demand and if the African Swine Fever virus could have long-term implications altering the worlds dietary demand? Before the recent outbreak, China was home to +400 million pigs and pork, which has always been the most popular meat. It was estimated that the average Chinese adult was consuming +67 funds of pork per year, which is almost three times the amount of poultry being consumed. Since the virus was first identified back in August of 2018, China has culled more than +1 million pigs and dietary habits are quickly changing. Something we need to keep in mind, African Swine Fever is something the world has been dealing with and battling for many years. Historically, outbreaks have been reported in Africa, Asia, parts of Europe, South America, and the Caribbean in both domestic and wild pigs. In fact, some of these countries are still trying to eradicate the disease after many many years of battling the problem. Though scientist and bio experts across the globe are working tirelessly, at the moment, there are no approved vaccinations against ASF, which can be spread by live or dead pigs, domestic or wild, and via pork products. Furthermore, transmission can also occur via contaminated feed and fomites (non-living objects) such as shoes, clothes, vehicles, knives, equipment, etc. due to the high environmental resistance of the ASF virus. I’d suggest with the growing exposure and spread of the virus there has to be a fairly large number of cases still not reported. Interestingly, I believe this is one reason why pork prices in China are staying somewhat suppressed. Keep in mind, over a million pigs being culled and taken out of the supply chain. In other words, I think people in China might be somewhat skeptical of pork, especially if they believe cases are being unreported. This seems to be causing a sizable shift in overall pork demand. Now, consider what happens if the virus widens and strengthens its grip. Moving forward, I’m keeping my eyes on the huge uncontrolled herds of ferrel hogs that are increasingly running free around the borders of China. The virus has already jumped borders into Vietnam, Hong Kong, Mongolia, Cambodia, and North Korea. Experts at the UN’s Food and Agriculture Organization (FAO) worry it could still spread further into Myanmar, the Philippines, and Laos, which will make this one of the worst animal virus outbreaks ever on record. There’s also more eyes on the explosive wild ferrel hog population here in the U.S. and in Canada. What would happen to overall pork demand should a case show up in North America? (Source: Bloomberg, Reuters, The Financial Times, Wall Street Journal) 

 

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