Morning Comments; Tuesday, April 28th, 2020
Agrivisor - SETZ - Tue Apr 28, 6:41AM CDT

As expected, a large amount of planting took place across the US last week. As of Sunday night, 27% of the US corn and 8% of the soybean crops were planted. These are both ahead of average. Spring wheat is only 14% seeded, half the average amount. The winter wheat rating declined 3 points on the week to 54% Good/Excellent. Before long we will start to see a shift in interest from planting on this year’s crops to condition. Even though there is little correlation between crop condition and yields, we do see comparisons made almost every year. This is from the fact that a very good looking crop can have a poor yield, and in years such as last, a lower rated crop can produce higher yields. One factor that is impacted by crop conditions is how much risk premium that tends to be added to futures. The market is currently void of nearly any risk premium, so at least some should be added in the next few weeks. How much will depend upon weather outlooks, however. Conditions are benign for much of the Corn Belt at this time, although we continue to see some regions struggle to get crops planted. The real factor in risk premium will be long-range outlooks which are also non-threatening at this time. We may also see risk premium added in regard to the South American crops, mainly in Brazil. We are at the start of the annual dry season in Brazil which is expected to cut corn production. We have already seen analysts lower their Safrinha expectations, and if drought conditions continue, more reduction are likely. For today’s session we will likely see an elevated volume of month end positioning and balancing ahead of first notice day on the May contracts which is Thursday.

Highlights

* Food supply concerns growing

* Over 5,000 US food/meat workers exposed to Covid-19

* Rains forecast for world drought spots

* USMCA to be implemented July 1st, pushed back from June 1st

* Some business getting back to normal this week

* Light May deliveries expected

* No interest in farmer marketing

* Country movement remains light on a whole

* Feed demand estimates may be too high

* Brazilian Real continues to fall

* Countries continue to limit exports

Corn

* Corn 27% planted, 20% is average

* Ukraine corn stocks -24% from year ago

* US corn exports to China +27% this year

* Funds historically short

* EU imposes import tariff

Soybeans

* Crop is 8% planted, average is 4%

* Brazil is quickly exhausting soybean exports

* Soy crop will be 70% exported by end of June

* Meal demand may be overstated

* Chinese imports from Brazil down in March

Wheat

* Winter wheat 54% G/E, -3% from week ago

* Spring crop 14% planted, 29% is average

* Spring wheat planted into cold soils

* Chinese wheat imports +108% this year

* US HRW cheapest in world market; freight costs most expensive

Livestock

* Weekly cattle slaughter -475,000 from year ago

* Yearly hog slaughter -300,000

* Chinese hog values +98% year ago

* More packers halt operations, some resume

* China to start trading own hog futures

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.




 

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Karl Setzer Grain Commentary