News

Morning Commentary

May corn down ¼ at $3.19

May beans down 1 ¼ at $8.4075

The DOW is up

USD is stronger

Crude oil up $.25 at $20.12

Good morning,

Corn prices continue to trade at or near fresh contract lows on weakness in overall demand and mostly cooperative global weather. Bears continue to point towards the massive fallout in ethanol, perhaps a little setback in corn for feed demand, and the big increase in U.S. acres. Weekly ethanol production numbers fell by another -120,000 barrels per day, while at the same time ethanol inventories jumped by another +378,000 barrels to nearly 27.5 million barrels. With U.S. gasoline demand extremely weak and crude oil prices closing sub-$20 for the first time since 2002, the market believes it will take a great deal of time to chew through the excess ethanol supply. Corn used for feed demand is now being debated as more meat and poultry processing plants are being closed and understaffed due to coronavirus complications. As the livestock backs up we are hearing more cases of animals having to be culled. There’s talk in the poultry industry that millions of chickens may need to be depopulated or culled as plants around the country are going offline or reduced to skeleton crews. The short-term trend for May corn is negative. Beyond 315.5, there’s little support until 300. Sustained action over 341.75 is the minimum needed to improve the outlook.

Soybean bears are talking about soybean oil backing up and running out of storage capacity as U.S. restaurants remain closed. There’s also the bearish macro spillover associated with the fallout in crude oil and the weakness in the global economies.  The good news is the monthly NOPA crush report for March showed a whopping 181.4 million bushels of soybeans crushed, which was well above expectations and a new record.

Cargill has reduced production at its Fort Morgan, Colorado beef processing plant as well as its High River, Alberta plant. Fort Morgan idled its second shift after several workers tested positive for COVID-19. Teamsters union leader Steven Vairma said at least one worker has died, six have tested positive for COVID-19 and 150 workers at the plant are under quarantine. The facility employs 2,100 people. Cargill’s High River, Alberta facility, one of Canada’s largest beef packing plants, has reduced production as well, laying off about half its 2,000 employees and shutting down the second production shift. A union rep says slaughter has fallen by about -3,000 head per day. 38 employees at the High River plant have tested positive for COVID-19. (Sources: CBS Denver, Reuters)

Wisconsin’s checkoff promotion group, Dairy Farmers of Wisconsin and the state’s Department of Agriculture, Trade and Consumer Protection are working with Hunger Task Force to get dairy products trapped in the COVID-19 shifted supply chain to a growing number of underfed and unemployed in the state. Hunger Task Force will commit up to a million dollars to the new Wisconsin Dairy Recovery Program.  Milk producers will be paid to supply milk to Kemps, which will bottle thousands of gallons of milk for distribution to free and local partner food banks and pantries through Hunger Relief Federation of Wisconsin. Normally, about half of Wisconsin’s dairy production is consumed through foodservice channels, but with many schools and restaurants closed, fewer products are reaching consumers. (Source: Brownfield Ag)

The Trump administration plans to buy milk and meat from U.S. farmers as part of an initial $15.5 billion effort to help them weather the impact of the coronavirus outbreak, Agriculture Secretary Sonny Perdue said on Wednesday. The decision comes amid rising pressure from the U.S. farm lobby for government purchases as growers and ranchers struggle to get their goods to market because of disruptions caused by the pandemic, forcing some of them to throw out their supplies. “We want to purchase as much of this milk, or other protein products, hams and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid,” Perdue said in an interview. (Source: Reuters)

 

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