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AgriVisor Morning MarketWatch

 
Thursday, November 05, 2020
Over the past several weeks we have seen just as much interest on basis levels across the Corn Belt as we have on futures. In fact, basis volatility has actually been building all harvest season, and eliminated any harvest pressure we might have had. It is not uncommon to see buyers across the interior market posting sizable basis incentives for bushels which is creating favorable marketing opportunities given recent futures action. The question now being asked is how long this basis strength may last. The answer depends heavily upon country movement of bushels from both commercial terminals and farm storage alike. Farmers claim to have all the bushels marketed they want at this time and are unlikely to make additional sales until next year. This means most needs will need to be covered with commercial inventory which tends to be more costly for a processor. We also have to monitor how long our current demand for commodities will last. Right now all attention is on ethanol where processing margins have dropped to breakeven at best in many regions. Any indication of slowing ethanol production and we will see a quick reaction in basis values as well, even if just temporary. 

Highlights
* Analysts raise SAM crop estimates
* Funds add longs to already sizable positions
* More countries close non-essential travel
* Few changes predicted to November WASDE 
* Nearly all attention is on soy complex
* US ethanol production -5.5% from year ago
* US weather turns colder, wetter next week
* Census data for Sep shows high exports
* Farm payments deter cash selling

Corn
* Census Sep corn exports at 149.7 mbu
* Global corn rally benefits US values
* Low energy demand weighs on ethanol
* Ethanol stocks well below last year
* US yield estimates mostly unchanged
 
Soybeans
* September exports a record 286 mbu
* Brazil planting just 2% behind normal
* Brazil harvest delays unlikely
* Soy products support futures
* China import forecast questioned
 
Wheat
* Sep exports +25% from year ago
* Sep exports total 105.8 mbu
* Argentine wheat crop condition improving
* Countries continue to up their small grain reserves
* China to keep state reserves at 37 mmt
 
Livestock
* Cattle slaughter is slowing
* Hog slaughter on the rise
* Pork bellies seeing pressure
* Cash cattle trade untested this week
* Exports benefit from weaker dollar

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. 
 

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