Top 10 Ag Stories of 2020 - 4 (A)

A Year Without Comparison, Part A

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Crude oil prices don't reflect all the market-related events of 2020, but in the first half of the year, oil was at the center of attention as traders awoke to the realization coronavirus was not just a problem in China. (DTN ProphetX chart)

OMAHA (DTN) -- Each year, DTN publishes our choices for the top 10 ag news stories of the year, as selected by DTN analysts, editors and reporters. Today, we continue the countdown with No. 4.

Editor's Note: DTN Lead Analyst Todd Hultman walks us through the tumultuous 2020 marketing year in this two-part package, A Year Without Comparison. This first of the two articles walks us through the beginnings of the pandemic and winter trade issues, which set a bearish tone for the first five months of the year. The second installment is available later today.

A video of Hultman's outlook for 2021 is available to those who registered for the DTN Ag Summit on the Ag Summit digital platform at….

There is still time to register and catch all the DTN Ag Summit content through Jan. 8. at


One of my favorite quotes is from the English writer, G.K. Chesterton, who wrote that life is a trap for logicians. Life, he said, "looks just a little more mathematical and regular than it is ... its wildness lies in wait." (Quote cited at:…)

According to Wikipedia, G.K. died in 1936, but something tells me he wouldn't have been stunned by the roller coaster ride of grain prices we saw in 2020. As past market years have gone, I can't recall another that comes close the level of wildness we saw in 2020.

Oddly, 2020 started with a hint of optimism as rumors swirled that China had agreed to buy large amounts of U.S. ag products in 2020 and 2021. After the phase-one trade agreement was signed and made public on Jan. 15, the optimism quickly dissipated and soybean prices plungedw. Chapter 6 in the agreement explained China was allowed to make purchases based on "commercial considerations," a clause that meant China wasn't obligated to buy anything.

Meanwhile, the World Health Organization (WHO) was talking about a suspicious cluster of pneumonia cases reported in Wuhan, China. According to its own timeline, WHO first declared COVID-19 a public health emergency of international concern on Jan. 30. (See the WHO timeline at:…)

Early on, it was hoped the virus could be isolated and was considered an Asian problem. However, by late February it was clear the virus had spread to other countries and was becoming impossible to contain. On Feb. 24, the Dow Jones Industrials dropped more than 1,000 points, starting a 30-day landslide that would erase 38% from the index's February high.

In the grain sector, corn and soybeans were already under bearish pressure after the uncertainty of the phase-one trade agreement with China. Selling picked up after Saudi Arabia announced it was hiking oil production on March 7.

The Saudi Arabia announcement, plus growing concerns of drastic cuts in oil demand due to the pandemic, were especially difficult for ethanol prices: they fell to a new record low below 83 cents a gallon in late March. U.S. ethanol plants responded in March by shutting down production. By late April, both U.S. gasoline production and ethanol production levels were cut nearly in half.

For U.S. ag, the bearish hits kept coming. On April 12, Smithfield Foods announced it was closing its 20,000-head-per-day pork processing plant in Sioux Falls, South Dakota, after many employees tested positive for coronavirus.

A pork plant of similar size owned by JBS in Worthington, Minnesota, closed the following week; soon many livestock plants were closing, leaving producers scrambling to find a market. For those who could get bids, formula hog prices fell to $43 per hundredweight in April, the lowest in two years. Negotiated hog prices eventually plunged below $30 in June, the lowest in more than a decade.

Producers found themselves holding long lines of hog production in various stages with nowhere to go. Euthanization became an unwelcome choice of last resort for many. Even now, after many months, it is not certain how many hogs were destroyed.

Negotiated cash cattle prices also hit tough times, reaching lows in July near $154 per hundredweight dressed and $96 live. Many producers were unable to even get a price for a time. Far below breakeven prices, cattle were held back and put on weight. In late December, USDA shows cattle slaughter weights up 15 pounds from a year ago as production continues to try to work out from under the spring disruption.

Fortunately, political efforts were made to keep workers safe and get processing plants running again. Slaughter rates eventually returned to year-ago levels, but in the case of cattle, prices have been slow to heal with coronavirus concerns keeping packers cautious about buying.

As bearish as all the above scenarios were, April 20, 2020, will likely stand as the most bearish event in market history when May crude oil prices fell to a low of minus $40.32 a barrel. Falling oil demand in the face of a pandemic, the threat of higher oil production from Saudi Arabia, a lack of available storage capacity in the U.S. and narrowly defined regulations on how and where one could take delivery of oil all conspired to bring about the unthinkable: an oil price that plummeted deeply into negative territory.

The negative oil price did not last long as subsequent contract months stayed in positive territory, but few can deny the April 20 shockwaves felt throughout many markets as traders began to wonder what other commodities might be susceptible to negative prices. We were left scratching our heads and had to wonder just how bad are these markets going to get?


Editor's Note: See Hultman's take on the second half of 2020 and what that sets markets up for 2021 in the article A Year Without Comparison, Part B later today.

A video of Hultman's outlook for 2021 is available to those who registered for the DTN Ag Summit on the our digital Summit platform at…

There is still time to register and catch all the DTN Ag Summit content through Jan. 8. by going to

You can find No. 3 in DTN's top 10 list on Dec. 29.

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Todd Hultman