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AgriVisor Morning MarketWatch

 
Tuesday, February 23, 2021
Fund attitude remains a driving factor of price discovery. Funds have been holding onto their long position for several months and show little signs of liquidating it at the present time. The main reason for the holding of this position is the current stocks to use on corn and soybeans and the need for rationing. The likelihood of this situation carrying over into our next marketing year is adding to the attitude to remain long. This does not mean we will not see selling at times, but that a total liquidation is unlikely. A factor that could change this opinion is the possibility of large crops in the United States this year. If trade starts to become more comfortable with the US production numbers this year we may start to see funds liquidate their long position. This is unlikely to happen for several months however, and possibly not until we get into our next harvest. We need to remember that funds can be financially driven however, and any change in the outside markets may be a factor in how long funds remain long as well. Funds are not showing as much interest in the wheat complex as that crop is not seeing the tight balance sheets corn and soybeans are.  

Highlights
* Doubt cast over US new crop balance sheets
* Argentine crop ratings declines
* US will need above trend yields this year
* Record US plantings doubted 
* US barge traffic remains slow
* Gulf demand slowing
* US ethanol production at a 20-week low
* China to promote self-reliance on commodities
* China hog herd back to 2017 levels by June
* President Biden asked to ease Chinese trade sanctions

Corn
* Delays in Safrinha planting continue
* Safrinha could suffer freeze damage if not planted soon
* US basis remains firm
* Argentine harvest slow to start as well
* US forecast looks favorable for planting
 
Soybeans
* Processors pushing for deliveries
* Chinese demand a record this year
* Previous Chinese buying record was 36 mmt in 16/17 
* SAM soy quality remains a concern
* Futures continue to favor soy plantings
 
Wheat
* US acres may be higher than expected
* Snow cover benefits US fields
* Russia may be out of exportable wheat
* March 15th deadline for insurance nears
* Tax uncertainty to limit Russian sales 
 
Livestock
* Global beef trade has risen in 8 of 9 years
* 2021 beef trade projected at a record 20.5 bil pounds
* China to account for 31% of beef imports
* Ten years ago China was 1% of global trade
* US is leading supplier of world beef needs

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