Tag Archives: Market Commentary

Summary

The market complex as a whole has a much more risk off feeling going into the Wednesday, day trade. The sentiment follows President Trump’s comments on Tuesday night that the death toll could exceed 100,000 as the Covid-19 pandemic continues to ramp up across the country. Equities are seeing some of the heaviest selling with DOW Futures down over 3% or about 740 points at the time of this writing. Energies are also lower with RBOB Unleaded gas futures leading the way down nearly 10% on the May contract at $0.53/gallon. This will continue to constrain ethanol futures and very well be an anchor to corn futures which are down 2-4 cents ahead of the overnight pause. As for soybeans and wheat they are lower in the overnight trade, but now have the USDA reports behind them. Wheat if realized looks to have the lowest acreage in history or rather since record keeping started in 1919. Soybean meal is currently $15 off of it’s recent highs, but this could give it some bullish technical signs to return higher. The US Dollar index may deter some of these moves though as investors once again eye the greenback as a safe haven. The Dollar index is up nearly 1% in the overnight and is nearing it’s resistance level at 100.00. As for the ten year treasury the yield is dropping almost as fast as foreign investment in the US Treasuries. Several US economists report that overseas holding of US assets have dropped roughly 100 billion dollars over the last month to $2.9 trillion.

USDA placed quarterly stocks of US grains 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)
3/1/20 Avg High Low 12/1/19 3/1/19
Corn 7,950 8,162 8,492 7,892 11,389 8,613
Soybeans 2,250 2,237 2,701 2,075 3,252 2,727
Wheat 1,410 1,437 1,572 1,385 1,834 1,593
PROSPECTIVE PLANTINGS
ACREAGE (million acres) USDA USDA
3/31/19 Avg High Low 2018-19 3/29/19
Corn 97.0 94.3 96.4 92.5 89.7 92.8
Soybeans 83.5 84.7 87.0 82.7 76.1 84.6
Cotton 13.7 13.8
Grain Sorghum 5.1
All Wheat   44.7 44.9 46.0 42.3 45.2 45.8
Winter 30.8 30.8 31.7 30.1 31.2 31.5
Spring 11.9 12.6 13.4 12.0 12.7 12.8
Durum 1.29 1.5 2.4 1.1 1.3 1.4

 

Russia’s two week forecast is still showing more dry weather as their wheat crop moves into the joint stage.

Winter wheat conditions improved in Kansas with 50% of the crop considered good to excellent. That is up 2% from last week. 3% of the crop is now in the joint stage. In Oklahoma the winter wheat is rated at 70% good to excellent down 7% from last week. 44% of the crop is now at the joint stage up 17% from last week. Texas winter wheat crop is considered 56% good to excellent up 7% from last week. 28% of the crop is headed out up 1% from last week.

USDA released the latest grain export inspections on Monday. Corn came in at 1,269,074 MT up from last week’s 857,987 MT. Soybeans inspected totaled 413,957 MT vs 587,398 MT last week. All wheat classes totaled 363,881 MT vs 354,466 MT last week.

For a quick recap of last week’s trade watch the Trading Bits and Bytes video here:

VIDEO: Watch the latest adipose of Trading Bits and Bytes with special guest John Payne

Cattle may see lower futures as the afternoon boxed beef for March 31 saw a record drop. Choice fell 7.82 to 243.15 and select fell 9.18 to 228.96. The previous one-day drop in choice cutouts was $7.26 on January 31, 2014. The previous one-day drop on select cutouts was $5.43 on February 02, 2014. The slow erosion of beef cutouts seems to have picked up its pace as food service and retail outlets have limited production across the country. One analyst pointed out that hamburger sales may be picking up as more people cook at home, but that doesn’t replace the sale of higher end cuts in restaurants and food service outlets. For the lean hogs bellies seem to be one of the biggest drags dropping below $40 on Tuesday.

For the bullish side of cattle the Fed Cattle Exchange is expected to be well stocked and could see trade occur. Tuesday also saw a late afternoon rally with June futures closing limit higher. That momentum may carry over into Wednesday.

News of a packing plant in the Eastern US moving to partial production amid concerns of covid-19 doesn’t look to impact the supply chain. The plant will continue fabrication and ground beef processes.

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.

 

Packer margins still look to be strong this week, but cash could be mixed as there was plenty of talk last week about feeders selling cattle out for several weeks. This may line daily production for packers so that they don’t feel they need to be active early in the week.

The Fed Cattle Exchange Auction today 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 Wednesday

Cattle

119,000 hd today 122,000 hd wk ago hd  122,431 hd yr ago

 

Hogs

485,000 hd today  497,000 hd wk ago  482,010 hd yr ago

 

 

Midday Carcass Value Wednesday

Beef

Choice dn 7.30 235.85

Select dn 2.06 226.90

C/S Spread 8.95

Loads 78

Pork

Carcass dn 1.95 63.09

Bellies dn 3.75 34.08

Loads 187

 

Grains Midday

  • Corn dn  4 3/4 – 8 1/2
  • Soybeans dn 1 3/4 -21
  • Chicago Wht dn 14 1/4 – 18 1/4
  • Kansas City Wht dn 12 -17 3/4

Livestock Midday

  • Live Cattle dn 0.85 -4.12
  • Feeder Cattle dn 4.25 – 4.50
  • Lean Hogs dn 2.87 -3.00
  • Class III Milk up 0.04 – 0.48

Pre-Opening Market Broker Commentary

Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Gold believes yesterday’s stocks number gives the first glimpse that the 2019 crop was far from what USDA predicted.


Jerry Stowell, Country Futures,  looks at what may impact the livestock futures today. Stowell has a lot of information to cover from cash to falling cutout prices.


Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Zuzolo looks at how Macro market factors may be driving the commodities today.


John Payne, Daniels Ag Marketing, looks at the grain settlements. Payne is still closely watching the currency markets to try and decide how global grain competitors will move forward.


Jack Fenske, York Commodities, looks at the closing market numbers. Fenske focuses on trends now that the USDA report is out of the way.