As of this week, African swine fever has now spread to every providence in China. It was reported in Hainan earlier this week. The spread of African swine fever is being compared to the PED virus outbreak of 2013 by some. Unlike ASF, the development of effective vaccines to control PED was attainable. According to experts, PED, like ASF is highly infectious and has the ability to decimate herds but PED is not as long-lived as ASF. Therefore, ASF is much harder to control and experts say nothing like it has been seen in modern livestock history.

Chinese officials are finally recognizing the African swine fever’s impact and have stated they believe pork imports will increase by 40 percent. Officials are claiming that nearly 200 million hogs could be lost to the highly contagious disease. According to China’s Agriculture Ministry, 80 percent of the farms are deciding not to replenish their hog supply. Pork consumption accounts for 60 percent of the meat consumed in China, and the continuous spread of the disease is likely to continue to create more demand for U.S. pork.

Yet again, headlines of progress between the U.S. and China trade negotiators are circulating. It has been reported that face-to-face discussions are again set to take place next week in Beijing and possibly again in Washington D.C. the first week of May. Sources close say that final details are likely to be agreed upon in those discussions with a signing ceremony to take place in late May or early June. Trade is becoming less quick to react to these ongoing reports.

Planting progress this week was at 5 percent complete for corn, 7 percent behind the 5-year average. While still early in the planting window, none of the three big “I” states of Illinois, Indiana or Iowa have more than 3 percent complete. Illinois and Iowa are more than 10 percent behind the 5-year average. Another Corn Belt state more than 10 percent behind is Missouri at 14 percent compare to the 5-year average of 33 percent. Soybean planting are in line with the average at just 2 percent.

The market is growing less concerned with delays in planting in recent years as producers have become much more efficient. The record weekly planting pace for corn in Iowa was made in 2015, in the last week of April into the first week of May. That year planting progress increased from 14 percent to 68 percent, a large weekly increase of 54 percent. Nationally, the largest weekly increase was in the 3rd full week of May 2013, when producers seeded 46 percent of the corn acres.

At the close on April 24th, the fund traders are now estimated to be holding around 395,000 short corn contracts. This is relatively close to the entire U.S. corn carryout. Technical indicators are heavily oversold and the low end of chart objectives were reached in Thursday’s session. Trade is now trying to determine if funds will continue to sell. Current price levels show that the corn market is holding no risk premium. Will the extended weather forecasts showing untimely rain for much of the Corn Belt and dryness being reported in parts of Brazil be enough to entice fund traders to cover positions?

While it is not unheard of, it is uncommon for the funds to be net short during March heading into spring and summer. An interesting comparison by FC Stone showed that two recent years the funds were short during this timeframe, 2015 and 2017. In 2015, the funds were net short for 15 consecutive weeks, and in 2017 the funds were net short for 17 consecutive weeks. So far in 2019, the funds have been net short going on 13 consecutive weeks.

For more information, you may contact Mick Hoover at (515)-200-5115, or e-mail at mhoover@maxyieldgrain.com. The opinions and views expressed in this commentary are solely those of Mick Hoover. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.