“Pssst, I do not mean to embarrass you, but your bottom may be showing.” While that may be a premature comment, (worked for the Super Bowl) it would appear that markets around the world are taking a collective sigh of relief and have found some stability and even a little rebound after several days of risk-off selling in response to the uncertainty of the coronavirus. I have seen little to suggest that the worst is over as the latest count from China has over 20,000 confirmed cases and more than 420 deaths(2%), but the Chinese government appears to be stepping up efforts to address the outbreak and try to restore a little calm to a sea of panicky waves. This morning all the grain and soybean markets are higher, as are soft commodities, energies, and equities.
Obviously, for some Chinese poultry producers, the effort will have been too little too late. Transportation restrictions have hampered not only the ability to move birds and eggs to market but has also stopped feed from reaching farms, particularly in the Hubei Provence, which was the epicenter of the outbreak. There are reports that birds are being euthanized and eggs just discarded and buried. While there are no “official” estimates as to the size of the problem, Hubei does slaughter around 500 million birds each year. It has undoubtedly been a rough couple of years to be involved in the livestock and feed industries in China. One final note concerning China this morning. Rumors began to circulate that China is already asking for flexibility from the U.S. when it comes to the recently agreed upon import commitments. There is a clause in the Phase One agreement that states, “in the event that a natural disaster or other unforeseeable events” create a problem, the two countries would consult with each other. Undoubtedly, the current situation would appear to call for consultations.
Report from Brazil would seem to imply they are not counting on much softening of demand from China as the beans registered for export are higher than last year. Currently on the docket are close to 7 MMT of beans to be loaded from ports in February. Of course, they could also be counting the chicks here before they hatch. Bean harvest is picking up a little momentum, and AgRural estimates it is now 9% complete. While still off of last year’s record pace of 19%, it is only slightly behind the average pace of 9.8%. In states such as Mato Grosso, where bean harvest is moving along nicely (27%), planting of safrinha corn is underway. Further south in Argentina, bean planting appears to be wrapped up and corn planting 97% complete, and overall weather and crops look good. Soybeans are rated 69.6% good/excellent and corn 59.6%.
Export activity from Ukraine remains brisk. The ag ministry now reports that for the 2019/20 marketing year, total grain exports are up 30.4% over a year ago at 36.8 MMT. Of this, wheat has accounted for 15.9 MMT, corn 16.5, and barley 3.9. The same can be said of France at this time. During the month of January, wheat shipments from that nation reached a 6-year high, and this despite labor strikes that were disrupting transportation in some areas.