Menu
 

AgriVisor Market Recap

 
Tuesday, December 15, 2020
Trade was rather quiet to start today’s session with corn and soybeans under pressure and wheat back on the positive side. Fresh news was rather sparse today which limited market activity. We are also starting to see positioning develop ahead of year end which is curbing trade interest. South American weather models were mixed today as rain events are forecast for Argentina and Brazil, but their paths are uncertain. A weaker US dollar was beneficial today while more interest was shown in the equity markets which tempered advances. 

When it comes to global wheat trade an area being closely monitored is the Black Sea. Russia is indicating it will heavily tariff wheat exports from February through June to limit selling. Ukraine is also at 70% of their export quota for the year and likely to reduce their sales. This will push buyers to the United States and Australia for needs. The US may benefit the most from this, especially with China and Australia in the midst of an escalating trade dispute. 

Of these, most attention is being placed on Ukraine grain values. Grain prices in Ukraine have started to stabilize in recent weeks as demand has started to slow. Corn values in Ukraine are down $4.00 per metric ton from their recent high. US corn is still cheaper, but this decline narrows the spread, especially into the Asian market where Ukraine has been a competitor for the United States. 

Another focal point of the global market is China and their soybean purchases. There have been several reports of China buying commodities in recent days, even though nothing has been verified in the daily updates. Trade will be closely monitoring the weekly numbers this week to see if this business is confirmed there. US sales of soybeans are approaching 90% of the yearly projected total and any indication they will surpass this will definitely receive a market reaction. 

There is more doubt being cast over the soybean carryout numbers that is currently being used in US balance sheets. Most analysts believe it is closer to 100 million bu than the current 175 mbu being published. This would put soybean ending stocks just above the tightest level in recent history of 92 mbu set in the 2013/14 marketing year. China has indicated its soybean reserves are building and buyers are shifting their interest to South America for summer needs which is preventing the USDA from cutting its forecast at this time. 

Pork production in China continues to rebound from the African Swine Fever outbreak. Officials in China claim the country’s hog production is back to 90% of its previous level. It is also believed that China’s hog production will be fully recovered by mid-2021. The question is what this will mean for China’s pork imports, especially with the country still auctioning off its government reserves. 

China has also announced its newly formed hog futures contract will start trading in early 2021. The official statement is that the hog contract will begin trading on the Dalian exchange on January 8th. The addition of this contract will give both farmers and processors in the country a means to limit price risk. This will be China’s 1st livestock contract on the Dalian. 

The National Oilseed Processors Association, or NOPA, soybean crush report for November was released today. A record 181 million bu of soybeans were crushed in the month making it the 3rd largest monthly processing total on record. This was also the most soybeans that NOPA members crushed in the month of November. Soy meal exports were also a record and totaled 1.08 million pounds. Soy oil stock in the month grew to a four-month high at 1.56 billion pounds. NOPA members account for 95% of the United States’ crush capacity. 

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