AgriVisor Morning MarketWatch

Friday, January 22, 2021
Long liquidation resumed overnight as building economic concerns and improved South American weather forecasts reduced the bullish enthusiasm of traders. Spring weather forecasts are starting to be more of a factor in deferred price discovery. For several years we have not seen much in the way of risk premium in the market as old crop supplies of corn, soybeans, and wheat have all been high enough to absorb minimal losses to production. That has greatly changed, and the United States can now not afford to lose any production, especially on soybeans. The most interest on weather remains the Midwest where drought from last year lingers. The region of interest ranges from western Iowa through northern and central Illinois. This region of the United States suffered from drought last year and is the main reason that current inventories of commodities are as low as they are. Another year of crop loss in this region would devastate the markets and make it nearly impossible to produce enough grain and soybeans to replenish supplies. Trade is also closely watching the Southern US as that region has also been dry which is not uncommon in a La Nina influenced year. How long this pattern lasts will have an impact on US production. 

* Global Covid cases rising
* Most interest is on China
* New global travel restrictions likely
* Covid vaccine rate in US is slower than expected
* Vessel capacity at Brazil ports is rising
* Now a reported 4.5 mmt of vessel space to load
* Global commodities have risen in value
* Firms predict higher US acres
* Acres to come from prevent plant and CRP
* Export sales, ethanol production, and cattle on feed released today

* Export basis becomes mixed 
* Rationing would benefit US exports
* Domestic usage still questioned
* More buyers shopping for needs
* China imported a record 11.3 mmt in 2020
* Nearby export basis weakens
* Rains benefit SAM production
* Buyers shift to 21/22 marketing year
* Wide variance in SAM production
* EU exports up from last year
* Russia will not impose export quota
* Chinese wheat auctions attract buyers
* China sells all 4 mmt offered this week
* Auction value was up 7% from last week
* High corn values push buyers to wheat
* January 1st cattle on feed after the close
* On feed numbers expected at 99% of 2020  
* December placements 97%, marketings 101%
* China hog herd up 37 million from September
* January 1st Chinese hog herd 407 million

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.