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AgriVisor Market Recap

 
Wednesday, April 07, 2021
Trade was firm to starts today’s session but quickly became mixed as the day progressed. Initial support came from rumors that China was shopping for US corn, but these were unfounded, and values set back. A considerable decline in demand for US soybeans was also negative for the market. US weather is being viewed as negative as well, as even though temperatures are forecast to remain cool for the next two weeks, the US should also be dry, allowing for a rapid start to the planting season. Soybeans suffered additional pressure from reports a large fund liquidated their soy oil position. 

The 2021 soybean harvest is Brazil is getting into its later stages. Thoughts are 80% of the crop has now been collected. As a result, analysts feel they have a better indication of crop size, with several raising their projections. The Safrinha planting season is also drawing to a close in Brazil but remains a focal point of the market. Much of the Safrinha crop was seeded outside the window for what is typically optimum yields. There are also concerns the crop will not be fully mature when the worst of the dry season hits Brazil and yield will be further jeopardized. 

We are already starting to see estimates on the next production season in South America with larger crops forecasted. Analysts are already predicting Brazil 2022 crops at 140 million metric tons (mmt) on soybeans and 115 mmt of corn. Argentine crops are projected at 50 mmt for corn and 56 mmt for soybeans. A return to more normal weather patterns is the primary factor in the larger crops, but so is elevated plantings, mainly in Brazil. 

One of these estimates came from the USDA attaché. The attaché believes Brazil will seed 99 million soybean acres next year. It is the groups belief that production from this will total 141 mmt. Brazil exports are forecast at 87 mmt from the attaché compared to this year’s 85 mmt estimate. This will further narrow the window for the US to make sales into the global market. 

Trade is receiving mixed signals on Chinese soybean demand. Buyers in China claim to have needs covered for the next several weeks which is not uncommon for a buyer to state. Soybean exporters believe China has quite a volume of soybean needs to cover though, possibly as much as 4 or 5 million metric tons. Until we know for sure which side of this outlook China is actually on, volatility will likely continue in the soy complex. 

The greatest unknown when it comes to Chinese soybean demand is feed usage. For one, we do not know how many hogs China has lost to African Swine Fever, nor how long it will take the country to rebuild its hog inventory. China has also been feeding more wheat in its rations, which is higher in protein than corn, and requires less supplementing with meal. This has led some sources in China to lower soybean import projections, some as much as 5 million metric tons. 

Ethanol manufacturing data for the week ending April 2nd was released this morning with supportive numbers. A total of 6.825 million barrels of ethanol were produced in the week, 307,000 more than the week before. This was well above last year’s 4.7-million-barrel production when many of the US plants were offline. Ethanol stocks still declined by 472,000 barrels, even though total US gasoline demand was down for the week. This put the US inventory at 20.64 million barrels, down from last year’s 27 million barrels. 

The Census export data for the month of February has also been released with a shift in what we have been accustomed to seeing. Corn exports for the month were a record at 248.4 million bu. Soybean exports totaled 167.5 million bu, and for the first time of the marketing year, they were not a monthly record. This level of soybean demand was still a five-year high for the month. Product exports were also lower for the month with ethanol at just 101.67 million gallons. Soy meal exports were down 10% from January at 1.19 million tons. 

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. 
 

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