Morning Comments; Tuesday, April 21st, 2020
Agrivisor - SETZ - Tue Apr 21, 6:36AM CDT

The proverbial elephant in the room when it comes to commodity trade right now is the Coronavirus, mainly what we may see for long-term market effect. The greatest unknown is how long we may see stay in place orders across the United States that have closed many businesses that lessened commodity demand. The main ones of these are restaurants which have lowered demand for food products across the board. The closing of US schools has also lowered food demand. While we are still seeing some food business, it pales in comparison to what was taking place prior to the Coronavirus outbreak. This has also reduced energy demand and caused many ethanol plants across the US to close. This demand destruction we have seen is not just in the United States, but around the globe. While all of this is known, the unknown is how long these conditions may last. Several states have announced they are considering the easing of travel restrictions, which is seen as a positive sign. The unknown in this entire situation, however, is consumer attitude. Even if businesses do reopen, it will not be like flipping a switch when it comes to consumer demand. To see it takes several weeks for consumers to be as confident with social mingling after the Coronavirus starts to be contained, and possibly even years. To see the current situation last until a vaccine is developed would not come as a surprise. This uncertainty is the leading reason why we are seeing a hesitation to buying activity in today’s market, which will be needed to recover losses. This uncertainty in consumer demand is also the primary reason the market has not reacted to the possibility of smaller US crops if current weather persists in some regions of the Corn Belt.

Highlights

* World market running out of crude oil storage capacity

* Gasoline/ethanol spread back to 30 cents/gallon

* US economy dependent upon Cobid-19 vaccine

* President Trump to suspend US immigration

* 2/3 of Safrinha area in Brazil dry for past 30 days

* Dry season just starting in Brazil

* Weather favorable for planting in Corn Belt

* EU suffers “catastrophic” losses to wheat

* Brazil sugar industry suffering sale issues as US corn

* More countries to limit commodity exports

* Global food security becoming market concern

Corn

* US corn 7% planted

* Weather continues to stress SAM

* Chinese corn highest values since 2016

* More ethanol closures likely

* Ag Rural lowers Safrinha crop to 67.9 mmt

Soybeans

* Soybeans 2% planted

* Privates est Arg crop 2.5 mmt under USDA

* US crushers filling on soy meal, slowing operations

* Brazil crop 80% sold

* Brazil loadings up 43% year ago

Wheat

* Winter wheat 57% Good/Excellent

* Spring wheat 7% planted

* Strong US dollar hurts exports

* Ukraine exports +47% last week

* Russian exports suspended by mid-May

Livestock

* Yearly beef exports at 244,968 mt

* Yearly beef exports +26% last year

* China yearly imports on pork at 235,000 mt

* China accounts for 39% of US pork exports

* Chinese pork production -29% in 1st quarter

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

Market Commentary provided by:

Karl Setzer Grain Commentary