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AgriVisor Morning MarketWatch

 
Tuesday, December 01, 2020
Now that the calendar has turned to December, we will start to see a shift in market focus. For one we will see elevated positioning for quarter and year end. We have seen buying in the market recently, so to see some selling pressure ahead of this would not come as a surprise. That said, speculative fund participation in the recent rally has not been at an elevated level so heavy selling and long liquidation is unlikely. It is difficult to predict exactly what a speculator will do however, so anything is possible. We will also start to see more interest in the December supply and demand report that will be released on the 10th. Normally the December report gets little attention as only demand is altered, but this year has been anything but normal. Given the already low soybean ending stocks estimate, any reduction from this point forward will receive market interest. The question is how much more soybean ending stocks can be reduced given the already minimal soybean ending stocks estimate. We will also continue to monitor South American weather as the crops start to mature and more rainfall will be needed to achieve the high production numbers being projected.  

Highlights
* Key reversal in all contracts yesterday
* No follow-through selling to verify
* 90% of Brazil/Argentina dry in past 30 days
* Drought stress to continue
* Consumer confidence unsteady ahead of holidays
* Energy product demand lowest in past 5 years
* November best month for DOW in 33 years
* USDA may be underestimating global production
* Dec WASDE report the 10th 
* Stats Canada production report on Thursday

Corn
* Brazil corn planting ahead of schedule
* Brazil corn $60/mt above 3-year average
* US exports likely underestimated
* US corn remains cheapest in global market
* Energy rally benefits renewable fuel margins
 
Soybeans
* Brazil planting ahead of normal pace
* Large replants expected in Brazil
* Mkt looking for Chinese purchase verification
* Wide variance on SAM crops
* Even low end is higher than last year
 
Wheat
* Winter wheat 46% G/E; +3%
* Russia may raise export quota
* Australian crop up 10% from previous estimates
* Wheat becoming over-priced as feed grain
* Kansas wheat rating similar to 2012 
 
Livestock
* More reports of bird flu
* Wholesale beef shows signs of topping
* Starting to see exports slow
* Covid closures hurting retail demand
* Slaughter numbers rising

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