If you were to gauge what has been occurring in the grain and soy markets only by where we stand for the week, you would wonder what all the fuss has been about. As it stands at this moment, for the week corn is 2-cents higher, Chicago wheat is 40-cents higher, and nearby beans are up 20-cents. In fact, when viewed from the spot combination chart for these three commodities, we are on track to record the highest weekly close in over a month.
I had the opportunity to sit in on a conference call yesterday that was discussing Global Food Security and the challenges many are confronting due to the coronavirus. As you might suspect, some of the most immediate issues have surfaced because of supply-chain problems, but there is a growing concern with labor, not only because of the regular employees who are ill or on lockdown, but also because of restriction on travel for migrant workers. Much like the United States, Europe depends on these workers for the harvest of vegetables and fruits, and numbers of people have been severely restricted. Of course, we are already aware that the herd mentality has already become a hoard mentality around the globe for more than just toilet paper, and people have loaded up on staples such a flour, buckwheat in Russia, canned goods and many fresh products. Note that domestically, fresh eggs hit a record high this week and the best performing commodity thus far in 2020 has been Frozen Concentrated Orange Juice, which has rallied over 25% since the beginning of the year as people want that extra vitamin C boost. The Russian Ag Ministry is now proposing export quotas, and Vietnam, the third-largest exporter of rice in the world, has already begun restricting sales. The reality for many of these storable bulk commodities such as wheat and rice is that there is no shortage. The International Grains Council just updated their production and stocks estimates and pushed wheat to a record carryout and boosted rice production and inventories as well. One can only imagine that unless we experience some cataclysmic weather event this year, we will reach a point where demand for non-perishable commodities will drop off a cliff.
The weather appears to finally have improved enough in France to allow farmers to make decent progress with early spring crops. For each of the past few weeks, planting of spring barley increased a few percentage points, but during the last week, farmers were able to sow 32% more, bringing the total to 72%. This still lags last year’s pace of 97%.
Next week will bring us the Prospective Planting report, and quarterly grains stocks and either could produce fireworks. The average trade estimate for corn acreage stands at 94.33 million, beans at 84.87 million and wheat at 44.98. For the quarterly grain stock estimates, the average for corn stands at 8.125 billion bushels, 2.241 billion for beans, and 1.432 billion wheat.
Finally this week, it is worth point out that even though equity markets are under pressure this morning, we are on track to post a higher week. If we finished right now, the Dow Industrial would be up a little over 2,400 points, the S&P 500 up 250 points, but the US Dollar would have lost 350 points.