Pardon my French but, “Quand les cochons volent.” No, those are not a string of foul words that would have gotten my mouth washed out with soap by mother, but translated to English would mean, “when pigs fly.” Literally, this is what is happening in France right now as, since January, around 4,000 breeding hogs have been flown from France to China as that latter nation attempts to fast track the rebuilding of its hog herd. I wonder if they fly business class or coach in this circumstance? Granted, part of this is an ongoing effort to improve genetics, but it is no secret that the government wants to try and rebuild their herds a quickly as possible. Some provinces are reportedly offering import subsidies of up to 2,000 yuan per head. France alone expects to ship over 11,000 pigs to China this year, which is more than China imported from all countries the year before the outbreak of ASF. I am a little curious though as to who will get the frequent flyer miles for these flights. Or is this frequent fryer mileage?
There is an old expression that goes, “if I did not have bad luck, I would not have any luck at all.” No doubt, all of us have gone through periods in our lives when we could embrace that feeling, but it would seem that the country of Argentina might need to consider taking it on as a national slogan. This country appears to be in a near-constant state of renegotiating and then nearly defaulting on international debt, and with around $100 billion now outstanding, it is poised for its next financial crisis. I am not going even to get started on the political situation which always seems to be a state of flux as one party or the others promises to lead the people out of the wilderness, but one thing that any politician there understands is that they are very dependent on the export of Ag products. It is literally and figuratively Argentina’s cash cow. Now, one might have suspected, what with the extended trade war between to U.S. and China, the devastation wreaked on China and other Asian nations from African Swine Fever and the fact that their currency is in the tank, that they would be in the driver’s seat. No doubt, the new administration of Alberto Fernandez felt that way when the bumped taxes higher on farm exports again, but it would seem that the coronavirus is at least temporarily, upsetting through plans. As I have noted earlier in the week, domestic travel restrictions and shelter in place orders have severely limited the availability of commodities for processing or delivery, and now the virus has taken a bite out of their cattle trade. Shipments of beef to the European Union have effectively dropped to zero, and while the numbers have not been released as of yet, reportedly shipments to China have dropped off significantly. To add insult to injury this week, the Buenos Aires Grain Exchange trimmed its bean crop estimate by 2.5 MMT to 49.5 MMT.
Corn, wheat, and beans will all post losses this week, but as it stands right now, have basically just returned the combined gains of last week. I recognize that is not exactly a huge note of encouragement to wrap up the week with, but with the calendar now rolled into April, the minds of the trade should be turning to spring work and summer weather, and I would dare say we have no risk premium factored into prices for anything out of the ordinary and the boat is already listing quite heavily to the bear side.