Menu
 

AgriVisor Market Recap

 
Wednesday, November 04, 2020
Trade was mixed for much of today’s session with grains under pressure and soybeans on the plus side. Soybeans took their support from elevated positioning for next week’s WASDE report and the possibility ending stocks may dip below 200 million bu. News of US soybeans being loaded out to Brazil was also supportive. All contracts were pressured by the lack of flash sales, giving trade the indication buyers may have immediate needs covered. This is especially the case for China who has been absent from flash sales since mid-October. Buyers expanded their interest to the grains late in the session and allowed corn to post moderate advances into the close. 

South American weather remains a major factor in price discovery. Immediate conditions in Argentina and Brazil remain dry but this is forecast to change next week. Forecast models indicate Brazil could receive up to five inches of rain next week, greatly benefiting newly planted fields. Argentina is expected to remain hot and dry though, keeping pressure on yield potential. 

While there remains a considerable amount of uncertainty in the entire commodity market, the most centers on the soy complex. Even though they are currently improving there is a chance of adverse weather conditions still cutting South American production. There is also a chance of more demand on the US crop than trade is predicting. The greatest of these remains Chinese demand which many analysts claim is higher than trade is predicting. The combination of these factors is helping keep soybean values elevated, especially in the near by contracts. 

Harvest is now is its later stages across the United States. The question now is if farmers will have enough storage for their remaining bushels, especially on corn. So far farmers have been able to store much of their corn crop as they marketed more soybeans than normal right out of the field. The question now is when farmers may market more cash inventory and the answer is likely sometime after the first of the year. Even then sales may be limited due to the high volume of deferred pay terminals across the US are reporting. This may keep the cash supply of commodities tight, but at the same time, open windows of opportunity for needed sales. 

This willingness of farmers to hold inventory is being closely monitored by cash buyers. For one they want to see what it will take to finally encourage movement when needed. Another is what long term storage may mean for quality. For the most part very few issues were noted with this year’s crops which should make them easier to store. That does not mean there will not be issues later in the year though, especially if weather conditions become unstable. 

A question in the market now is how much soybean inventory China needs to book from the United States prior to the South American harvest. Sources in China claim most of their needs to cover this gap are now covered, and buyers will only need to secure another 70 million bu for immediate needs. If China books soybeans for storage this total may expand to 100 million bu. While an increase, this is less than what soybean traders were hoping for just a few short weeks ago. 

Trade is also debating how many soybeans China will be importing next year. The USDA has released a soybean import figure of 100 million metric tons for China. The attaché in China claims this will be smaller though and may only total 95 mmt. This is because China is not processing all of the soybeans it has purchased and reserves are filling faster than the rate of consumption. While this is not a significant amount, it does change the entire feel of the global soy complex. 

Ethanol production for the week ending October 30th rose 2.1% from the week before. Data indicates 6.73 million barrels of ethanol were produced during the week, 140,000 more barrels than the prior week. This was still a 5.5% decline on the year. US ethanol stocks grew a minimal 7,500 barrels and now stand at 19.675 million. This compares to the 21.87 million that were in storage a year ago. 

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation. 
 

  SYMBOL IN EVEN SQUARE