Coronavirus continues to wreak havoc in financial markets as well as prices of agricultural commodities. It seems commodities take a step higher, only to give back gains in the next session. With cases of, and deaths from, the virus reported in the United States, concern and fear will have an impact on some food demand due to stockpiling. According to Michael Alvery, a senior research analyst for investment banking firm Piper Sandler & Co., “we expect categories like canned soup, peanut butter, canned meat, cookies, crackers, pasta, pasta sauce, protein shakes, frozen food and canned vegetables to benefit the most from stockpiling.” Sales could increase 3 to 7 percent for The Kellogg Company, The Campbell Soup Company, Post Holdings, Hormel Foods, Tyson Foods, General Mills, and others.
Fed cattle have defied the odds in recent months, holding on to steady prices or an occasional loss of $1.00/cwt. compared to the previous week. Ed Czerwien of CZ Cattle Market Analytics says feedlot cattle trades were mostly $4.00 to $5.00 lower for the week ending February 27. One Iowa-based cattle buyer I spoke with this week says fed cattle prices are weak again, and mentioned cash feeder cattle, especially heavier steers and heifers (800-900 lbs) are weak. Black Swan events aside, lower cattle supplies by August 1 should give cattle feeders better prices in the late summer, fall and fourth quarter. Live Cattle futures have been following the financial markets, working lower as the stock market shows weakness.
Higher cash hog prices are expected later this year according to Rabobank, but large hog inventories and weaker prices mean packers could “back off the harvest in coming weeks.” A smaller (but still large) supply of hogs and good export demand are reasons for Rabobank’s optimism for the third and fourth quarter of 2020. Domestic demand for pork has been steady. Even with trade disagreements, pork exports have been able to help offset the high supply. December pork exports were a record 239,000 metric tons and 36 percent higher than December 2018. Coronavirus is still disrupting the pork community, as the amount of pork in cold storage is growing since some buyers are not ready or willing to take delivery until the coronavirus is controlled in their country.
The Purdue Ag Economy Barometer hit an all-time high in February. Purdue University uses surveys to measure farmer sentiment and assign a number value. February’s reading was 154, up 12 points from January. One survey question asked if USMCA and the China Phase One agreements relieved concerns about the effect of tariffs on their farm’s income. Over 75 percent of respondents said the agreements either “somewhat” (69 percent) or “completely (7 percent) relieved concerns. On China trade specifically, 80 percent expect an outcome that is ultimately positive for U.S. agriculture.
The Protecting America’s Food and Agriculture Act of 2019 has been signed by President Trump. The Act, as mentioned in a previous Weekly Market Update, strengthens the United States defense against foreign animal disease and pests by hiring more agents and canine teams for border inspections.
Speculation regarding March 20’s Cattle on Feed report has begun. Some estimates put cattle on feed even, to less than 1 percent above a year ago. Most estimates put placements below a year ago, and marketings higher by around 5 percent.
The Wisconsin all milk price for January was $19.40/cwt. That’s $1.90 lower than December 2019, and $3.20 up from January 2019.
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