Weekly Market Recap


Grains

A $19 billion Coronavirus Food Assistance Program for farmers and ranchers was announced this week.  It includes $16 billion in direct payments with a breakdown as follows: $3.9 billion for row crops, $5.1 billion for cattle, $1.6 billion for hogs, $2.9 billion for dairy, $2.1 billion for specialty crops and $500 million for other.  The remaining $3 billion will be used to buy ag products for food banks, non-profits, etc.  A single payment based on 85% of price losses from January 1 through April 15, plus 30% of expected losses from April 15 through the next two quarters, is expected to be made by the end of May or early June.  There were no details announced on how “prices losses” will be determined.  Sign up is hoped to start in early May.

Corn

The Ukraine is considering limiting corn exports for this year according to a Deputy Economy Minister. The Ukraine is the 4th largest corn exporter in the world.

Reuters reported that a major ethanol producer is temporarily idling operations in two plants, Cedar Rapids, IA and Columbus NE.  Anticipated length of shutdown is around 4 months but is also dependent on market conditions. Corn planting is going at a fast pace as ground temps are ignored and growers take advantage of the great conditions.  Basis levels are flat around the country after the pummeling in March. Reuters reports that China could be looking to buy up to 20 MMT of corn from the U.S. Weekly ethanol production was again the lowest since the industry was in its infancy with a decrease of 7,000 bpd to 563,000 bpd.  Ethanol stocks were up 200,000 barrels at 27.7 million barrels, another all-time record.  Gasoline demand was slightly higher on a weekly basis but was still over 43% lower than last year for this week.  The Renewable Fuels Association stated 73 of the 200 US ethanol facilities were idled and 71 had cut rates.

Wheat

Argentina is expected to plant a record amount of wheat this year, over 20 mmt according to the USDA.

KC wheat markets were pressured by rains in the southern plains which curbs dry conditions.  Warm and dry conditions are expected for next week so the recent rains might be short lived.  Spring wheat planting should continue to push on in the midwest as conditions are prime for seeding. 

Soybeans

The Brazil Real continues to hit all time weakness levels vs. the dollar.  This has caused Brazilian farmers to be aggressive sellers due to the currency weakness.  This should push more acres into soybeans for next year as Brazilian farmers forward contract bushels.  Argentina is about half-way complete with their harvest with this year and its one of the quickest since 2013.  With this being the case, crushers should see an ample amount of beans to process and export meal.  Furthering the competition with U.S. bean products.  The U.S. is the residual supplier of the world at this point until after Brazil exports their bushels and we become more competitive in late summer. We saw 3 flash sales in a row from Wednesday through Friday this week with total tonnage over 600,000.

Livestock

Cash cattle prices continue to fall as the cash markets seem to be trying to catch up with plummeting futures market.  At the same time boxed beef value are record high. Packer margins are at $700/head.  I really can’t believe that I’m typing $700/head, something I’ve never seen before.  Packer margins on the pork side have also jumped up sharply from last week going from $39 to $75/head.

Energies

As we approach the end of the month and near the May contract expiration, volatility will likely remain elevated. Crude is currently headed for the third consecutive weekly loss, and the eighth loss in the last nine weeks. Continental Resources, which is the largest crude oil producer in North Dakota, has halted most of its production in the state and has notified some customers it would not supply crude after prices crashed into negative territory earlier this week. According to data from AAA, the average price for retail gasoline is $1.786, which is down about 4 cents from last week and down 32 cents from a month prior.