AgriVisor Morning MarketWatch

Thursday, October 22, 2020
An underlying factor in today’s market remains weather on the global front. Conditions remain dry in the Black Sea and we are seeing crops sizes ratcheted down as a result. While these are getting smaller, it is no longer surprising to trade, and not getting as much reaction in the market. Even with losses in the Black Sea the global grain supply will remain adequate, especially on wheat, which is also muting reaction. The dry weather in South America is also an ongoing factor, even though planting is taking place in Brazil. These conditions are the ongoing result of the La Nina weather event which is showing signs of strengthening as the fall progresses. There are now indications this even may stay intact through the winter months and possibly into next spring. Other models show it breaking down in mid-winter and moving back towards neutral indications. If the La Nina holds it will be detrimental to Argentine production and a likely impact Brazil also. Drought may also linger in the Black Sea if this remains in place. The United States will not see much of an agricultural impact unless the La Nina is still active next spring. 

* Large Brazil imports unlikely
* Price/Timing not conducive to imports
* Lack of storage concerns across the US noted
* Remainder of harvest may be stretched out
* Brazil economy impacting commodity sales there
* US ethanol production -2.6% last week
* Ethanol stocks down 168,000 barrels
* Shutdowns from Covid again taking place
* US basis expected to remain firm
* Grains remain technically overbought

* Buyers still booking Brazil corn over US
* US corn over valued in global market
* Spot corn values highest in 14 months 
* Very light farmer selling noted
* US processor coverage is minimal
* Plantings ramping up in Brazil
* No changes made to SAM production 
* Total planting 25% behind normal
* US port space limited until SAM harvest 
* Brazil record sold on soybeans
* Wheat spreads at multi-year highs
* France wheat acres to increase
* French production crop at 616 mbu
* US winter wheat acres most in 2 years
* US freeze this weekend
* Cattle on feed tomorrow after the close
* October 1st on feed at 103.3%
* Placements up 2.5% in September
* September marketings up 5.9%
* Cash trade is quite thin this week

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