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Morning Commentary

May corn down 1 ¾ at $3.47

May beans up 2 ¾ at $8.83

The DOW is down

USD is stronger

Crude oil down $.81 at $21.79

Good morning,

Corn traders are battling it out. Bears point to lower corn prices sparked by the fallout in U.S. ethanol demand and rising U.S. acres.  Bulls want to argue U.S. export potential has improved as other nations will have to work more desperately to contain corona and battle more difficult labor restraints. Bulls also argue that there’s an entire crop season ahead and  U.S.  weather could be a “wild-card”  worth considering. There’s also the uncertainty of continued Chinese buying. Don’t forget we have the USDA’s Prospective Planting and Quarterly Grain Stocks report coming up on Tuesday.  The short term trend for May corn is negative. Sustained action over 357 is needed to improve the outlook. Closing under 341.25 suggests a drop to new lows for the move.

Soybean bulls have banked some profits on the recent bounce and might be waiting to get past Tuesday’s upcoming USDA report before putting more money back in the market. Bulls obviously want to see confirmation of more Chinese buying and proof of logistical hiccups in South America. There’s also been talk as of late that many Argentine and Brazilian producers might more apt to hold make bushels at the farm, not wanting to subject trucks and employees to potential quarantines and at the same time holding the extra bushels back as a possible hedge against rising domestic inflation and a weakening currency.  The trend for May beans is positive. A close over 891 reignites bull trending. A settlement below 862.25 suggests a deeper retrenchment.

Congress finally reached a bipartisan deal on a $2 trillion stimulus package to bolster wide swaths of the economy, including billions of dollars in relief for agriculture. Despite some snags, senators passed 96-0 the massive measure, sending it to the House where passage is expected Friday. The Depression-era financial institution known as the Commodity Credit Corporation would see its spending authority replenished to the tune of $14 billion. The package also sets up a $9.5 billion emergency fund for producers, including fresh fruit and vegetable growers, dairy farmers and cattle ranchers, along with local food systems like farmers markets. More than $285 million has been made available to USDA agencies, including the Animal and Plant Health Inspection Service, Food Safety Inspection Service, Agricultural Marketing Service, and USDA’s rural development branch. The legislation also fixes the “retail glitch” in the 2017 tax law: Restaurants, retailers, and other businesses will now be able to immediately write off renovations to their stores, after they were accidentally left out of the so-called qualified improvement property provision in the Republican tax code rewrite. The change could mean $15 billion tax savings per year for those businesses. (Source: Politico)

USDA’s Farm Service Agency (FSA) said it plans to relax its loan process so farmers hit by COVID-19 will have an easier time getting federal loans. They agency is also extending deadlines for producers to deal with loans, including allowing financially troubled or delinquent farmers to be considered for loan deferral.  Meanwhile, Reuters reports that some North America’s largest farm suppliers are accelerating shipments of fertilizer, seeds, and agricultural chemicals to crop growing regions in effort to avoid sowing disruptions related to the coronavirus.

The U.S. supply of hogs and pigs on March 1, 2020 was 77.6 million head, up +4% from the same time last year but down -1% from December 1, 2019. Breeding inventory, at 6.38 million head, was up slightly from last year, but down -1% from the previous quarter. Market hog inventory, at 71.3 million head, was up +4% from last year, but down -1% from last quarter. The December 2019-February 2020 pig crop, at 34.7 million head, was up +5% from last year. Sows farrowing during this period totaled 3.16 million head, up +2% from previous year. The sows farrowed during this quarter represented 49% of the breeding herd. The average pigs saved per litter was a record high of 11.00 for the December 2019-February 2020 period, compared to 10.70 last year. (Source: USDA)

Wholesale beef prices have jumped to record levels, as shoppers stockpile meat in response to the global coronavirus pandemic. But this run on beef isn’t helping cattle ranchers. On the contrary, cattle prices have plummeted since January, putting many ranchers on the brink of collapse. Ranchers say this illogical price collapse reflects meatpackers’ monopoly power to set cattle prices. Before this shock, the top four beef packers already faced litigation and a Department of Agriculture investigation for alleged collusion and price-fixing. Lawmakers from both parties are calling on the USDA to take more immediate action and for the Department of Justice to open an antitrust investigation of its own. Prices paid to ranchers could fall even further if workers at meatpacking plants fall sick or stay home andc facilities begin to slow production or shut down. Ranchers got a taste of just this kind of slaughter disruption last summer, when a fire took out one of Tyson’s beef processing plants and created a glut of slaughter-ready cattle. Packers made a then-record $415 per head, up from around $150 before the fire, while cattle producers lost an average of $200 per head.

Agriculture Secretary Sonny Perdue today announced the acceptance of more than 3.4 million acres in the general Conservation Reserve Program (CRP) signup recently completed, the first general signup enrollments since 2016. This general signup included offers for State Acres for Wildlife Enhancement (SAFE), and over 95% of SAFE offers submitted were accepted under this general signup representing more than 487,500 acres. While the deadline for general CRP signup was February 28, 2020, signups for continuous CRP, Conservation Reserve Enhancement Program, CRP Grasslands and the Soil Health and Income Protection Program (SHIPP) are ongoing. The CRP Grasslands deadline is May 15, and the SHIPP signup begins March 30, 2020, and ends Aug. 21, 2020.

 

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