What do you mean I cannot control everything?

Published on: 08:57AM Mar 31, 2020

We appear to have very little feature in the grain/soy sphere as we collectively twiddle our thumbs waiting for the release of the USDA data later this morning.  This is not to say that newswires are not full of stories concerning the most recent events, but at their core, we find little more than a rehashing of coronavirus inspired disruptions or concerns of disruption.  Of course, all of this breeds uncertainty for the future on just about every level, and that can translate to more risk-off sentiment in markets but at the same time a panicky hoarding, me-first type of mentality at the personal level.  Let’s face it; humans like to believe they are in control of their world, and when events occur that remind them, that is largely a myth; it brings out of sorts of frailties in our nature.

The announcement by Russia that they will be capping exports of grains evidently brought a sense of urgency to some in the export market as wheat at Black Sea ports jumped $10 to $15 per tonne.  Domestic prices for wheat and other grains appear to have cooled off but the fact that the government has now announced they intend to see 1 MMT of grains from state stockpiles would seem to suggest they are at least trying to make an effort to reassure their citizens that there is nothing to be concerned about.  It is also worth mentioning that Putin has agreed to hold talks with the Trump administration concerning the plight of crude oil.

Obvious concerns over rising food prices have crept into Ukraine as well.  Bakers and millers in that country have been asking the government to limit grain exports in an effort to hold prices for bread and other products stable, and the some of the largest grain traders there have announced they have agreed to a government plan to limit wheat exports to 20.2 MMT for the balance of the 2019/20 season.

Domestically, we have the first official “slowdown” of production at a livestock slaughter/processing facility.  JBS announced that after members of the senior management team at the plant in Pennsylvania fell ill with flu-like symptoms, they were sent home for monitoring, and the facility was going to operate at reduced capacity.  Of course, this is not the first to report cases of at least suspected Covid-19 and has raised concerns of possible shutdowns, which in turn would be backing up animals in feedlots and other livestock operations.

As I reported yesterday, bean harvest in Brazil is now 77% complete, which was an increase of only 7% last week but still keeping pace with historical averages.  Dr. Cordonnier pointed out this week that due to the fact that the Real has pressed down to record lows, Brazilian farmers are receiving record domestic prices for their crops as that value is based on the value of the U.S. Dollar.  While I am not trying to rub salt in the wounds for U.S. farmers, it would appear that our counterparts in that nation are enjoying a banner, if not a record year for profitability. Bean harvest in Argentina has gotten underway, and nearly 5% of the crop is now out.  Corn harvest is 16% complete, which was an increase of just 2% as operations moved over to beans.  The most significant issues in Argentina continue to be at the export level.  Not only has there been a problem with moving beans to the facilities because of travel restrictions, but the government has also been inspecting crew members of incoming ships to avoid bring in Covid-19 from the outside.  As of Friday, there were at least 21 ships at the port of Rosario that have been delayed.

Once again, here are pre-report trade estimates for today. For Prospective planting, the average trade estimate for corn acreage stands at 94.33 million, beans at 84.87 million, and wheat at 44.98.  For the quarterly grain stock estimates, the average for corn stands at 8.125 billion bushels, 2.241 billion for beans, and 1.432 billion wheat.