Share via Email


* Email To: (Separate multiple addresses with a semicolon)
* Your Name:
* Email From: (Your IP Address is 34.239.158.107)
* Email Subject: (personalize your subject)


Email Content:
Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

WEEKLY COMMODITY REPORT

02/01/2019

The following quotations for the months as indicated were posted by the CME at 15H30 on Friday February 1st together with values for the reference months in parentheses, confirming a stagnant market for corn, soybeans and soybean meal consistent with the previous week.

COMMODITY

 

Corn (cents per bushel)

March 378 (380)

May 387 (388)

Soybeans (cents per bushel)

March 917 (923)

May 931 (928)

Soybean meal ($ per ton)

March 312 (314)

May 316 (314)

Changes in the price of corn, soybeans and soybean meal were:-

COMMODITY CHANGE FROM PAST WEEK

Corn: March quotation down 2 cents per Bu. (-0.5percent )

Soybeans: March quotation down 6 cents per Bu (-0.7 percent)

Soybean Meal: March quotation down $2 per ton (-0.6 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

  • For each $10 per ton change in the price of soybean meal:-

The cost of egg production would change by 0.40 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

COMMENTS

Soybean prices previously firmed in response to reports of drought in areas of Brazil. Approximately 20 percent of the crop projected to be 117.2 million metric tons is at risk

There is renewed optimism concerning the outcome of the ongoing negotiations between China and the U.S. initiated at the dinner meeting during the G-20 Summit between the delegations from the U.S. and China led by their respective Presidents. The U.S. has agreed to a three-month delay ending March 31st before raising tariffs from ten percent to twenty-five percent on over $200 billion in annual imports from China. In return China has agreed to purchase an unspecified quantity of agricultural commodities in addition to energy and heavy equipment from the U.S. to offset the negative balance of payments. An initial order of 1.5 million tons was placed in December 2018, the first since June. The USDA announced on January 7th that orders have been placed for an additional 3 million tons to be shipped before September 2019. China has hinted at a six-year agreement to purchase soybeans mainly due to concern over drought in Brazil. Negotiations are apparently in progress in Beijing and Washington without any disclosure of specifics. Despite the pessimistic note sounded by Commerce Secretary Wilbur Ross during the World Economic Meeting in Davos, Switzerland, the President appeared buoyant on February 1 st during a press briefing.

According to the November 8th 2018 WASDE Report #583, (the last issued before the Federal Shutdown), 81.8 million acres of corn will be harvested in 2018 to produce 14.62 Billion bushels. The soybean crop is projected to attain 4.60 Billion bushels from 88.3 million acres harvested. The levels of production for the two commodities are based on revised projections of yield and acreage harvested. Ending stocks were revised based on anticipated domestic use and exports.

See the WASDE posting summarizing the November 8th USDA-WASDE Report #583 under the STATISTICS tab documenting price projections and quantities of commodities to be produced, used and exported from the 2018 harvest. The January 2019 WASDE Report #584 will be delayed by the Government shutdown

Unless shipments of corn and soybeans to China resume in volume, as projected, the financial future for row-crop farmers appears bleak despite the release of two tranches amounting to $12 billion as "short-term" compensation. Farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. Oversupply of ethanol with the current 10 percent addition (= BTU dilution) mandate is evident from the February 1st spot price of $1.27 per gallon that has not changed materially in six weeks compared with a 2018 peak in late March of $1.60. Exports have been constrained by the retaliatory tariffs imposed by China on U.S. ethanol. Some refiners are reducing production and mothballing corn-fermentation plants.

The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. It must be recognized that the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift that keeps on giving. The mandate is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.


 
Copyright 2019 Simon M. Shane