E-Visor Reports: Market Watch

Tuesday, February 04, 2020
Coronavirus remains the primary topic in today’s trade. There are now nearly 20,000 cases in China with deaths of over 360. This has started to have more of an economic impact on the world market as Chinese demand is being heavily questioned. Vessel counts are starting to rise in and just outside of Chinese ports as unloading restrictions are enacted. There is no timeline as to when this will improve. China has also reached out to the United States to ask for an adjustment to the Phase 1 agreement, mainly the volume of imports that were stated. At this point it is highly unlikely we will see China import the volume of commodities it would take to reach the dollar value that was reported. The real deciding factor will be how long it takes to contain the outbreak, with some predictions that the worst is yet to come. It is believed that economic losses from Coronavirus could reach $200 billion globally before it is under control. To make matters worse, China is also dealing with an outbreak of Bird Flu that is being termed as “highly pathogenic” and will greatly impact poultry production in the country. Poultry demand has been on the rise in China following the African Swine Fever outbreak, and this will just tighten the country’s meat reserves. Once China does get these outbreaks under control, to see elevated commodity imports would not come as a surprise. The real question is where China will source needs from. China has announced a stimulus package to help negate losses from the virus, which gave the market its overnight strength. Aside from the Coronavirus, trade will continue to monitor Brazil’s harvest. Rains are expected to slow progress in many states, although the leading state of Mato Grasso is seeing active harvest. The real focus is on yields which continue to run above expectations. Commodities on a whole have seen elevated selling pressure in recent weeks and are now approaching or well into oversold ranges. While negative, this has started to generate demand. Several flash sales have been announced on corn recently which will likely give us an elevated weekly sales total this week. We are also seeing buyers surface for soybeans as delays do take place in South America. This may not be enough support to generate a reversal in the markets, but it should be enough to cause a period of consolidation.  

* China to offer stimulus to offset virus losses
* China likely to miss Phase 1 projections
* Coronavirus impact already greater than SARS 
* Virus preventing vessel unloading
* 3rd tranche of MFP payments this week 
* Brazil harvest delays continue 
* Stats Canada grain stocks tomorrow
* Brazil sees $1.8 billion trade deficit in January
* Brazil had $5.6 billion surplus in December
* Technical buying has surfaced in the markets 

* Global demand rising
* Safrinha planting starting to progress
* Safrinha planting in Mato Grasso at 22%
* Nov ethanol production equal to Oct at 1.3 bil gallons
* Nov 2018 ethanol production was 1.36 bil gallons

* Brazil harvest is 9% complete
* Year ago Brazil harvest was 19%
* Chinese demand to fall
* Global Palm Oil stocks decline
* US soy oil stocks lowest since Sep 2011

* Global production concerns ease
* Russia, Ukraine crop estimates rise
* Russia crop +5 mmt year ago
* Black Sea wheat supply growing
* Funds remain net buyers

* Bird Flu advancing in China
* New strain of bird flu “highly pathogenic”
* Chinese import uncertainty
* Economic concern weighs on demand
* Hogs see spec buying after 15% decline