Following the key issues in the US grain and livestock markets, which are impacting or will impact futures trading this week.
Hogs: US hog producers have been hamstrung by the recent large kill pace, partly due to new US processing facilities ramping up daily pork production. The solid daily hog slaughter levels this week suggest packers continue to make good money and will want to continue to move the product out the door. There are also notions China’s frozen pork stocks are getting depleted and will need to be replenished, which could lead to better weekly US pork export sales numbers in the coming weeks. Longer term, US and European hog producers should be concerned regarding China’s likely futures moves to industrialize its pork industry—meaning much larger capacity to kill and process hogs, and possibly significantly reducing pork imports to China.
Corn, Soybeans: It’s still February but corn and soybean futures traders are starting to get at least a bit concerned about a repeat of 2019’s wet, cool corn and soybean planting season that impacted those crops all the way to harvest. The National Weather Service is warning there is a high risk of flooding in the US Midwest again this spring in areas where the ground is already too wet. Some longer-term weather forecasts for the coming weeks are predicting cooler and wetter conditions for the Midwest.
Slack US ag exports depressing US transportation industry: Reports say the Cass Freight Index, a measure of freight volume, saw the biggest one-year drop in over 10 years, in January. Shipment volume fell 9% from a year earlier and expenditures were 8% lower. The January US-China partial trade deal being signed, likely producing more US ag shipments to China, and a de-escalation in the coronavirus outbreak and its impact in the coming months, will likely work to improve the US freight transportation industry as this year progresses.
FOMC minutes Wednesday: Ag traders to closely examine FOMC minutes Wednesday afternoon. Minutes from the Jan. 28-29 Federal Open Market Committee (FOMC) meeting will see attention on potential impacts coronavirus outbreak will have on the U.S. and global economies. Fed Chairman Powell did mention the outbreak at his press conference in late January, but the FOMC minutes may contain more color on the matter.
USDA Ag Outlook conference Thursday and Friday: The annual confab will see a bevy of US government forecasts on the supply and demand situation for US and global agricultural markets. This annual meeting has impacted grain futures markets in past years.
Friday’s weekly USDA export sales report: Delayed by one day due for the US holiday on Monday, US ag futures traders will be looking for better US shipments to China, following the mid-January partial US-China trade deal, in which China promised to purchase substantially more US ag products this year.