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AgriVisor Morning MarketWatch

 
Tuesday, December 08, 2020
Wetter South American weather forecasts and a lack of buying interest weighed on overnight trade, especially the soy complex. Demand is starting to become more of a focal point in today’s markets and price discovery. Demand has been strong to start the marketing year, but a noticeable slow-down has started to take place. After becoming almost a daily occurrence we have not seen much for flash sales in recent weeks, and almost no sales to China. While cumulative sales are still at a record pace the slowing interest of late indicates either price rationing is working, or buyers simply have their immediate needs covered. This is being monitored the most in soybeans.  Soybean commitments this year are well ahead of last year with the majority of the marketing season left to go. This would indicate demand estimates are too low. We have started to see more interest on South American potential as the harvest in that region of the world approaches and buyers start to weigh current coverage and needs until then. The US only needs to average 7 million bu in sales per week to meet its yearly estimate though, which is easily achievable. Trade is also interested in corn and wheat balance sheets and demand estimates, but there is much more inventory to work with on the grains than soybeans. 

Highlights
* Equity markets pressured overnight, dollar rallies
* Wetter outlook for Brazil, Argentina into late December
* Buyers not as eager on corrections
* Lack of stimulus in Covid relief a concern
* Trade is monitoring US drought
* Dry conditions expanding into Central US
* La Nina to dictate weather for several weeks
* Political tensions strain China/Australian trade
* Ukraine grain exports -13.5% from year ago
* WASDE report on Thursday

Corn
* Chinese corn purchases total 7.8 mmt
* Unknown corn sales reach 6.2 mmt
* Analysts believe most unknown corn is to China
* Total corn sales 1 bbu ahead of last year
* US carryout likely to decline
 
Soybeans
* Chinese soybean imports +72% from year ago
* Chinese crushers claim to have over-booked needs
* Canadian canola crop smallest in 5 years
* Brazil firm lowers crop estimate 4.5 mmt
* US only needs 277 mbu in sales rest of year
 
Wheat
* Drought continues in Southern Plains
* Black Sea also remains dry
* Argentine farmers not making sales
* Argentine govt needs sales for revenue
* US sales 74 mbu ahead of last year
 
Livestock
* Consumer confidence weighs on demand
* China suspends purchases from some Australian packers
* Trade tensions favor US exports
* China hog herd to build 
* Economic concerns weigh on meat demand

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