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Morning Commentary

July corn down ¼ at $3.1675

July beans down ¾ at $8.3875

The DOW is up

USD is stronger

Crude oil down $1.80 at $22.76

Good morning,

Corn bears are pointing to what many producers in big production states are calling the best planting conditions they’ve seen in several years. Bulls are pointing to extremely cool temps in the forecast (sub-30 degrees perhaps) and some important areas where producers have already been planting into cold soil temps. Technically, some argue that we are starting to build a bottoming bowl on the charts. Bears, however, still have their eyes set on prices sub-$3.00 and testing of the $2.80 range. The big question is how short do the funds want to get with what might be little meat left on the bone?

Soybean bulls are happy to see a little Chinese buying but technically it feels like the bears are still in control and the price trend of lower-highs and lower-lows remains in effect.

A new report from CoBank’s Knowledge Exchange division says that even if recent closures and slowdowns at meatpacking plants are temporary, the reduction in processing capacity will likely have a lasting impact across the entire industry, from farmers to consumers. “Margins for cattle and hog farmers have fallen to multi-year lows,” says Will Sawyer, lead animal protein economist with CoBank. “As meat plants have closed, farmers are left with few options for their livestock, requiring herds to be culled. Shrinkage in the U.S. livestock herd will likely make the food supply shortage more acute later in the year,” adding that pork and beef production is down approximately 35% compared to this time last year, which makes retail shortages and price inflation nearly a guarantee. The report says declining meat production in April will likely lead to reduced grocery store supplies in May and June. In fact, the report predicts that by Memorial Day, nearly 30% of meat supplies could disappear in grocery stores, which could lead to increases as high as 20% (relative to last year) in pork and beef prices. Although pork processing is projected to increase in the coming weeks, the report notes that hog producers may still be faced with euthanizing as many as seven million pigs (worth $700 million at historical average prices) in the second quarter of 2020.(Source: Successful Farming)

Fast food chain Wendy’s says some menu items are unavailable, and one analyst estimates nearly one in five of Wendy’s restaurants are out of beef. Around 1,000, or 18%, of Wendy’s 5,500 U.S. restaurants are not serving any hamburgers or other meat-based items, according to an analysis of online menus at every location conducted by financial firm Stephens. Wendy’s is “more exposed” to the shortage sparked by the coronavirus pandemic because of its reliance on fresh beef compared with its competitors. The company said supply has been tight because of beef production challenges during the pandemic. The severity of Wendy’s shortages depends on the “geographic nature of processing plant closures,” wrote Stephens analyst James Rutherford. In states such as Ohio, Michigan, and New York, around 30% of Wendy’s are out of fresh meat. Other states, like Arizona, Nevada and Louisiana, aren’t affected. The company is scheduled to report its first-quarter earnings today. (Source: CNN)

 

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