Coronavirus Infects Commodity Markets

Published on: 07:46AM Jan 27, 2020

Good Morning from Allendale, Inc. with the early morning commentary for January 27, 2020.

Grain markets slid sharply overnight as rising concerns over China’s Coronavirus outbreak triggered broad-based selling.  The number of deaths in China from this virus have climbed from 56 to 76 overnight, health commission officials said, with four deaths elsewhere.   The total number of confirmed cases in China had risen 30% to 2,744.  Traders and farmers continue to wait for signs of increased Chinese buying of U.S. farm goods after completion on the Phase One deal.

Weekly export sales showed corn sales of 1,008,800 tonnes (estimated 700,000 to 1,200,000 tonnes), soybeans at 910,700 tonnes (estimated 700,000 to 1,300,000 tonnes), wheat at 741,900 tonnes (estimated 300,000 to 800,000), soymeal at 641,900 tonnes (estimated 200,000 to 450,000), and soyoil at 55,600 tonnes (estimated 5,000 to 26,000).

This week, we'll release our latest price outlooks, trade strategies, and fundamental outlooks for grains and livestock! The outlooks will be complete with a year ahead weather outlook for the world's major growing areas with Drew Lerner of World Weather, Inc. All events are in a webinar format - right on your computer or phone! Drew will kick it off January 28th with his 2020 weather outlook. He'll be followed by our grain and oilseed outlooks on the 29th, and our livestock outlooks on the 30th. Get registered today!

The U.S. wants India to buy at least another $5-6 billion worth of American farm goods if New Delhi wants to win reinstatement of a key U.S. trade concession and seal a wider pact, according to Reuters.  President Trump removed India from its Generalized System of Preferences (GSP) program last year that allowed zero tariffs on $5.6 billion of exports to the U.S.  In retaliation, India hit the U.S. with higher tariffs on more than two dozen U.S. products.

Private exporters reported to the USDA export sales of 142,428 metric tons of U.S. corn for delivery to unknown destinations during this marketing year.  This is the second export sales announcement in as many days.

CFTC Commitments of Traders showed funds new net position short -67,804 corn contracts, short -13,735 soybean contracts, long +41,671 wheat contracts, long +90,253 live cattle contracts and long +11,566 lean hog contracts.

U.S. appeals court has ruled that the EPA must reconsider three of the biofuel waivers it recently granted to small oil refineries, arguing the agency's justification for approving the exemptions was flawed.  The decision from the U.S. Court of Appeals came after a coalition of biofuel industry groups had challenged the 2016 exemptions for Holly Frontier's Woods Cross and Cheyenne refineries, and CVR Energy's Wynewood refinery.

U.S. hog producers increased animal inventory over the previous year during every quarter in 2019 by an average of 4%. Those numbers were all record-high except for the Dec. 1 count (which has a much longer period of record).  The population of all hogs and pigs on Dec. 1 was 77.3 million head (second only to 1943).

Cattle on Feed report (end of December) numbers were released and seen overall as neutral. On Feed was seen at 102.3% over last year (average estimate of 102.2%) at 11.828 million head, Placements at 103.5% over last year (average estimate of 103.2%) at 1.828 million head and Marketing at 105.3% over last year (average estimate of 105.2%) at 1.834 million head.

Dressed beef values were lower with choice down 0.83 and select down 0.50.  The CME Feeder Cattle Index is 144.84.  Pork cut-out values were down 1.46.