Morning Commentary

May corn down 2 at $3.24

May beans down 1 ½ at $8.4555

The DOW is down

USD is stronger

Crude oil down $.50 at $19.61

Good morning,

Corn bulls continue to struggle as “demand” remains heavily debated. Many inside the trade are now thinking the fallout in ethanol could reduce corn demand by -500 million bushels from the previous estimate. On top of all the recent bearish ethanol headlines, Valero filed a report earlier this week with the SEC saying it has idling eight of its ethanol plants and reducing production at its six other plants. There’s also talk that improved weather forecasts could allow for more U.S. new-crop planted acres. The short-term trend for May corn is negative. How the market performs at 325.5 will dictate short term direction. Sustained action over 344.75 is the minimum needed to improve the outlook.

Soybean meal will be trying to bounce off fresh contract lows. The problem is meal is still flowing out of Argentina, and Chinese demand continues to waiver, with import data showing multi-year lows for March Chinese soybean imports. At the same time, global meat demand has been getting rocked. There was talk circulating inside the trade that meat demand here at home is down over -30% in the past 30-days as restaurants are closed and family budgets have tightened. The trend for May beans is negative. An inability to recover above 847.5 leaves the market vulnerable for a drop to 820. Closing over 873.5 is the minimum needed to provide fresh trending targets.

U.S. pork producers are under immense financial pressure and the Covid-19 pandemic has compounded the situation, the National Pork Producers Council (NPPC) explained in a letter to Congress on Tuesday. “The financial situation of U.S. hog farmers is perilous, and their livelihoods are at stake…If the problems in the sector are left unchecked, without rapid government intervention, the situation will spiral out of control,” NPPC explained. Dr. Dermot Hayes, an economist with Iowa State University, and Dr. Steve Meyer, a pork industry economist with Kerns & Associates, estimate that hog farmers will lose nearly $37 per hog, or almost $5 billion collectively, for each hog marketed for the rest of the year. NPPC is calling on the USDA to purchase over $1 billion in pork products to supplement agency food bank programs. Additionally, NPPC asks for “equitable direct payments to producers without eligibility restrictions.”

China brought in 35.56 billion yuan ($5.05 billion) worth of farm goods from the United States in the first three months of 2020, up +110% from last year, according to customs data. China brought in 7.81 million metric tons of soybeans from the U.S. in the first quarter of 2020, worth 21.88 billion yuan, up +210% from last year, according to data from the General Administration of Customs. Shipments of U.S. pork to China during the first quarter were 168,000 metric tons, up +640% from the previous year. The value of the cargoes increased by 17 times to 3.04 billion yuan. Imports of U.S. cotton were at 124,000 metric tons, up +43.5% from last year. The fiber shipments were worth 1.59 billion yuan, up +17%. (Source: Reuters)


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