AgriVisor Market Recap

Wednesday, March 25, 2020
Light buying surfaced in the market to start today with support spilling over from the financials. A resolution to the talks surrounding the economic stimulus package also supported today trade. Further strength came from the flash sales of 138,000 metric tons of corn to an unknown buyer and 28,000 mt of soy oil to South Korea. Less than ideal global weather was also favorable, while overbought indicators limited the day’s gains. 

The long-awaited economic stimulus package was final approved by the Senate overnight. This will provide $2 trillion in relief for US consumers and industry to offset losses from the Coronavirus. There is also money in this for Ag, with $14 billion for the Commodity Credit Corporation. Another $9.5 billion is reportedly slated for the livestock industry. 

To nobody’s surprise, ethanol manufacturing for the week ending March 20th slipped from the previous week. A reported 7.03 million barrels of ethanol were produced during the week, 210,000 fewer than the week before. This is still 3.1% more ethanol than what was manufactured this week a year ago. Ethanol stocks decreased a large 458,000 barrels to a total of 24.14 million. This is still a large volume of ethanol for this time of year. 

The renewable fuel industry received supportive news today in that the timeline for President Trump to appeal the decision on blending fuel waivers has passed. Many of the waivers that have been granted over the past three years have been criticized for being given to refiners that were larger than what the plan was initially designed to help. Once these are revoked only a few refiners will be able to maintain their current exemptions. Several refiners have formed complaints on this decision, but it is doubtful they will change the rulings. 

In spite of recent delays, Brazilian soybean loadings are not as far behind as thought. Brazil has already exported 7.2 million metric tons of soybeans this month compared to 5 mmt in February. In March of 2020 Brazil exported 8.5 mmt of soybeans and this month’s total could surpass that. The rains that have slowed loadings have eased up which is allowing port traffic to increase. The current wait time for a vessel to load in Brazil is 10 to 11 days which is equal to the five-year average. 

Global importers are paying close attention to the crush industry in Argentina. Movement of soybeans to crush facilities have been slowed considerably as farmers are unwilling to make deliveries. This is coming from the worries associated with the Coronavirus. In turn, Argentine crushers are not running to capacity, and meal exports will likely be affected in the near future. 

This news comes as China has shown indications of needing to rebuild its soybean and meal reserves. Sources claim China’s soybean reserves are at some of the lowest levels in recent history. This comes as China is staring to rebuild its hog herd following the African Swine Fever outbreak. While this is correct, the onset of the Coronavirus and what it has done to China’s commodity demand on a whole is raising some questions. There are thoughts China’s demand has been lowered enough that soybean stocks have not been drawn down as far as thought. 

Questions are also arising on China’s frozen meat supplies. China has released several tons of meat from its frozen reserves, mainly pork. Speculation is this has cut China’s pork supply to historically low levels. While possible, China did import a huge amount of pork prior to the Lunar New Year, and much of this was not used as expected. While not fully offsetting, this surplus has helped ease the releasing of government reserves.