We’ve made it to Friday and for the commodities markets they are battered and bruised. For energies there have been records set on both the highs and the lows. On Wednesday the latest data from the department of energy showed that US gasoline demand dropped 6.659 million gallons a day. That’s about 27% lower than the previous year and is the slowest gasoline movement the US has seen since 1994. Then on Thursday crude oil rallied to it’s biggest one day gain on record. May WTI crude futures moved up over $5.00/barrel or almost 25%. The entire energy sector rallied around a Tweet from the President. President Trump on Thursday talked with leaders in Russia and Saudi Arabia about the oil price war. President Trump said in a Tweet that the two countries would end their price war in “a few days”. President Trump is also expected to meet with top oil executives to learn how to help the industry recover from the combined hits of Covid-19 and the OPEC price war. With an uptick in crude and unleaded gas ethanol futures were given a little breath to move higher. You can see the full weekly ethanol numbers below. Still the demand destruction has been done and there are fewer cars on the road currently. So corn reacted mixed to the higher energies.
Overall grains are in the red for the week. The May corn contract lost 15 1/4 cents going into Friday or about 4.4%. May Soybeans dropped 27 1/4 cents or about 3.1%. Wheat was able to see modest gains on Friday. Kansas City wheat on the May contract closed down 14 3/4 or 3.0% on Thursday. Chicago wheat closed 22 or 3.9% lower as well.
Wheat was supported by the announcement from the Russian Ag Ministry that they did impose a grain export quota of 7 MMT through June. This was followed with Kazakhstan imposing a grain export quota on wheat of 200,000 MT and 70,000 MT of flour. Bulls were also supported domestically with a cold front bringing freezing temps across part of the northern great plains.
We will get the first look at the winter wheat crop condition as a whole this coming Monday with the first NASS crop progress report.
Currencies are another volatile market across the world. Emerging currencies are struggling the most. The Brazilian Real hit an all time low against the dollar Thursday at 5.28BR:1USD. John Payne with Daniels Ag Marketing is closely watching the emerging currency markets. He see’s the Real as running away from Brazil and setting them up for financial collapse. In his Thursday afternoon commentary Payne pointed out that it may be good for US producers, but not great for the global economy. As for the US Dollar it broke back above the $100 mark on Thursday and was nearing 101 on Friday afternoon.
Thursday’s USDA net export sales for the week ending in March 26 showed decreases for corn and wheat. An increase for soybeans. Corn net sales were 1,075,400 MT, down 41% from the previous week and 13% lower than the 4 week average. Top buyers included Mexico (314,600 MT, including 57,000 MT switched from unknown destinations), Japan (239,000, MT, including 30,800 MT switched from unknown destinations and decreases of 12,400 MT), unknown destinations (170,800 MT), South Korea (136,100 MT, including decreases of 700 MT),
Soybean net sales were 957,400 MT for 2019/2020 were up 6 percent from the previous week and 75 percent from the prior 4-week average. Increases primarily for Mexico (388,000 MT, including 47,500 MT switched from unknown destinations and decreases of 2,300 MT), China (131,000 MT), Bangladesh (108,300 MT, switched from unknown destinations and decreases of 300 MT), Indonesia (97,800 MT, including 68,000 MT switched from unknown destinations and decreases of 2,100 MT).
Wheat net sales were 72,900 metric tons for 2019/2020–a marketing-year low–were down 90 percent from the previous week and 86 percent from the prior 4-week average. Increases primarily for Mexico (84,900 MT), the Philippines (60,000 MT), Malaysia (42,900 MT, switched from unknown destinations), Chile (40,000 MT)
Brazilian ag consultant agency Agroconsult lowered their estimate of the country’s soybean crop to 123.5 MMT vs. 124.3 MMT previously and USDA’s 126.0 MMT.
According to EIA data on Wednesday ethanol production dropped sharply down 16.4%, or 165,000 barrels per day (b/d), to 840,000 b/d, the lowest level in six and a half years. The weekly decline was the largest since the EIA began reporting ethanol production statistics in 2010.
Ethanol stocks rose 6.5% to a record 25.7 million barrels, eclipsing the previous high set four weeks prior. Inventories shifted higher across all regions except the Midwest (PADD 2). A majority of the stocks build took place in the Gulf Coast (PADD 3), where inventories grew by roughly one-quarter.
On Tuesday released it’s USDA quarterly stocks of US grains and perspective planting reports. The stocks number showed lower than many analysts estimates. Then on the acres cotton and corn both took quite a few acres. Full report below
Corn stocks in all positions on March 1, 2020 totaled 7.95 billion bushels, down 8 percent from March 1, 2019. Of the total stocks, 4.45 billion bushels were stored on farms, down 13 percent from a year earlier. Off-farm stocks, at 3.50 billion bushels, are up slightly from a year ago. The December 2019 – February 2020 indicated disappearance is 3.45 billion bushels, compared with 3.32 billion bushels during the same period last year. Soybeans stored in all positions on March 1, 2020 totaled 2.25 billion bushels, down 17 percent from March 1, 2019. Soybean stocks stored on farms are estimated at 1.01 billion bushels, down 20 percent from a year ago. Off-farm stocks, at 1.24 billion bushels, are down 15 percent from last March. Indicated disappearance for the December 2019 – February 2020 quarter totaled 1.00 billion bushels, down 1 percent from the same period a year earlier. All wheat stored in all positions on March 1, 2020 totaled 1.41 billion bushels, down 11 percent from a year ago. On-farm stocks are estimated at 339 million bushels, down 8 percent from last March. Off-farm stocks, at 1.07 billion bushels, are down 12 percent from a year ago. The December 2019 – February 2020 indicated disappearance is 428 million bushels, 3 percent above the same period a year earlier.
Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, up 8 percent or 7.29 million acres from last year. Compared with last year, planted acreage is expected to be up or unchanged in 38 of the 48 estimating States. Soybean planted area for 2020 is estimated at 83.5 million acres, up 10 percent from last year. Compared with last year, planted acreage is expected to be up or unchanged in 22 of the 29 estimating States. All wheat planted area for 2020 is estimated at 44.7 million acres, down 1 percent from 2019. This represents the lowest all wheat planted area since records began in 1919. The 2020 winter wheat planted area, at 30.8 million acres, is down 1 percent from last year and down slightly from the previous estimate. Of this total, about 21.7 million acres are Hard Red Winter, 5.69 million acres are Soft Red Winter, and 3.42 million acres are White Winter. Area expected to be planted to
other spring wheat for 2020 is estimated at 12.6 million acres, down 1 percent from 2019. Of this total, about 11.9 million acres are Hard Red Spring wheat. Durum planted area for 2020 is expected to total 1.29 million acres, down 4 percent from the previous year. All cotton planted area for 2020 is estimated at 13.7 million acres, down less than 1 percent from last year. Upland area is estimated at 13.5 million acres, down less than 1 percent from 2019. American Pima area is estimated at 228,000 acres, down 1 percent from 2019
|QUARTERLY STOCKS (million bushels)|
|ACREAGE (million acres)||USDA||USDA|
Livestock are in a bear market. Tuesday brought a glimmer of hope with live cattle closing the limit $3 higher. That only expanded limits for them to move lower on Wednesday, Thursday and Friday. On Friday there were some differed contracts that made small gains for the day. Boxed beef prices dropped like a rock at the beginning of the week. Choice was down over $7 for several days. Making it the biggest drop in the choice cutout since January 2014. Analysts point to this signaling the end of the panic rush that cleared supermarket shelves just a few weeks ago. Now prices are trying to find a happy medium between increased home consumption of lower priced cuts and the loss of food retail across the country that often consumed large amounts of more expensive cuts like steaks. The pork cutout also feels the pain as bellies dropped to near $30 on Thursday. With unemployment rising and Friday’s non-farm payroll dropping over 700,000 jobs consumers shopping habits may also change.
The good news is and the little light that might help feed the bulls we are going into the summer grilling season and with over half the country on stay at home orders there could be strong feelings of wanting to get out and grill. Covid-19 is also not helping at the end of the supply chain. On Monday JBS limited production in a small Pennsylvania plant and on Thursday the Denver Posts report that JBS’s Greeley CO plant has more than 800 employees not reporting for work due to Covid-19 concerns. On Friday Grand Islands Mayor raised concern about employees at the JBS plant in Grand Island with Covid-19. Zack Ireland, general manager at JBS said he wanted to set the record straight, and said no workers are required to come to work sick.
The latest export sales were up for beef and pork.
Beef net export sales were 18,200 MT reported for 2020 were up 26 percent from the previous week and 10 percent from the prior 4-week average. Increases primarily for Japan (8,500 MT, including decreases of 700 MT), South Korea (5,700 MT, including decreases of 300 MT), Hong Kong (1,300 MT, including decreases of 100 MT). Physical exports were 17,000 MT were up 1 percent from the previous week and 3 percent from the prior 4-week average. The destinations were primarily to Japan (6,800 MT), South Korea (4,100 MT), Taiwan (1,600 MT), Mexico (1,200 MT), and Canada (1,000 MT).
Pork net export sales were 38,200 MT reported for 2020 were down 1 percent from the previous week, but up 88 percent from the prior 4-week average. Increases were primarily for China (18,900 MT), Mexico (8,500 MT), Japan (4,000 MT), South Korea (2,200 MT), and Canada (1,600 MT). Exports of 40,200 MT were down 17 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to China (16,200 MT), Mexico (9,400 MT), Japan (5,100 MT), South Korea (2,700 MT), and Canada (2,200 MT).
The latest retail meat report from USDA shows that at the grocery store the 15 cut average for beef is $5.20/lb across the country. That is $0.12 cheaper than last week and $0.06 cheaper than last year. The 4 cut average for pork is at $3.47/lb up $0.10 from last week and $0.48 higher than a year ago. The 3 cut average for chicken across the country is at $1.84/lb up $0.26 from last week and $0.10 higher than a year ago.
Friday brought another quiet day of cash in the country. It appears that Wednesday was the only somewhat active day of trade. Live cattle in the South traded at $112, roughly $7 lower than last week’s weighted averages. A few deals are also being reported in parts of Nebraska at $112, these are set for delayed delivery (week of 4/20/20). Some asking price remain firm around $120 in the South, and $190 in the North. Packers have throttled back slightly on production in the daily kill runs, but they still could be short bought and cash next week could have a higher basis.
The Fed Cattle Exchange Auction on Wednesday listed a total of 4,696 head, consisting of 33 lots. A total of 832 head sold. 1-9 day delivery 2,079 head total, 662 head sold with a weighted average price of $113.00. 1-17 day delivery 2,617 head total, 170 head sold with a weighted average price of $112.06. The breakdown looks like this: Kansas had 13 lots, totaling 1,799 head, of which 318 head sold with at $113.00, 151 head sold at $113.00 but the offer was passed; Nebraska had nine lots totaling 1,211 head, of which 91 head sold at $111.25; Colorado had five lots totaling 695 head, of which none sold; Texas had four lots totaling 824 head, of which 344 head sold at $113.00, 480 head sold at $112.00 to $125.00, but the offer was passed; Oklahoma had two lots totaling 167 head, of which 79 head sold at $113.00.
Slaughter numbers Friday
114,000 hd today 120,000 hd wk ago hd 106,894 hd yr ago
68,000 hd Sat. 70,000 hd wk ago 37,182 yr ago
490,000 hd today 492,000 hd wk ago 420,286 hd yr ago
130,000 hd Sat. 272,000 hd wk ago 141,306 hd yr ago
Midday Carcass Value Friday
Choice dn 0.69 231.95
Select dn 1.11 221.01
C/S Spread 10.94
Carcass up 1.51 60.72
Bellies up 0.99 33.50
- Corn dn 2 3/4 up 1
- Soybeans dn 1 – 4 1/2
- Chicago Wht up 2 3/4 – 7 1/2
- Kansas City Wht up 5 3/4 – 8
- Live Cattle dn 4.50 up 1.70
- Feeder Cattle dn 3.55 up 0.75
- Lean Hogs dn 4.50 up 1.05
- Class III Milk dn 0.25 – 0.73
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Gold believes Russia may be curbing exports given a pulled wheat tender from Egypt.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. The pre-open bid and ask are looking lower for lean hogs.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Zuzolo looks at how the demand bear is in control.
John Payne, Daniels Ag Marketing, looks at the grain settlements.
Jack Fenske, York Commodities, looks at the closing market numbers. Fenske see’s a possibly meaningful low in cattle next week. So far he is cautiously trading the markets on the option side.