AgriVisor Market Recap

Tuesday, January 14, 2020
Trade was mostly higher to start today with soybeans and wheat leading the way. Soybeans took support from a flash sale announcement of a 120,000 metric ton purchase by an unknown for 2020/21 delivery. Wheat traded sharply higher on news that Russia may be limiting its exports for the remainder of the market year. Corn tried to follow the rest of the market but was limited by overhead technical resistance. 

Russian officials have announced a proposal to limit grain exports through June. Plans are to export no more than another 20 million metric tons of grains through June. This will put Russia’s yearly grain exports at 45 mmt, which is what was projected at the beginning of the marketing year. Russian officials claim that by imposing this limit it would ensure enough reserves to satisfy domestic needs. 

World food values in the month of December increased for the 3rd consecutive month. World food values are now sitting at a five-year high and are being led by vegetable oils. December’s increase in food values from November is being listed at 2.5%. For the year food costs are up 1.8%. Trade is starting to question the impact this rise may start to have on global economies. 

One country that is seeing the highest food inflation is China. According to data from the financial group Rabobank, China’s food and ag economies will continue to weaken throughout 2020. This is mainly from the country’s slowing economy, high debt levels, and that it continues to battle African Swine Fever. 

Brazilian officials have started to adjust their soybean export predictions. Officials in the country now believe soybean exports will be 1.3 million metric tons larger than initially projected. This is from the ongoing interest from China and record production it had a year ago. New crop Brazilian soybean exports have been lowered by 1.7 mmt though as the US and China continue to resolve their trade dispute. 

The USDA has announced it will resurvey crops in the five states that had the most unharvested acres leading into the January WASDE report. The production from these acres were counted as farm-stored grain with a yield that was comparable to fields that were already harvested. This generated doubt even before the reports were released as it is thought production will be less, especially if fields remain unharvested until spring. While the USDA has said they will resurvey these regions, it stopped short of claiming it would adjust production or ending stocks as a result. 

Chinese officials have released their import data for the month of December. For the month China imported 9.54 mmt of soybeans, a 67% increase from the month of November. This was also above the 5.72 mmt that were imported in December 2018. The high number for December is also a result of several cargoes of soybeans that were being held in port finally clearing customs and being approved to unload. For the 2019 calendar year China imported 88.5 mmt of soybeans. This compares to the 88 mmt that were imported in 2018. 

China also released its pork import data. For the month China imported a large 375,000 mt of pork. This compares to the 229,700 mt that were imported in November. In December of 2018 China only imported 95,384 mt of pork showing just how much of an impact African Swine Fever has had on the country’s hog production. Not only does China need pork imports to satisfy current demand, but to start rebuilding government cold storage reserves.