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AgriVisor Morning MarketWatch

 
Wednesday, October 27, 2021
A major benefit for commodity values in the domestic market are the high margins processors are receiving. When we look at margins most interest focuses on soybean crush and ethanol manufacturing, but there are other margins that are positive as well. In fact, nearly all processing options for corn, soybeans, and wheat are showing sizable returns. As a result, buyers continue to push for coverage, even with historically high futures values. This comes on the heels of US farmers showing a willingness to store as much inventory as possible this year in hopes of higher returns later in the season. This is especially the case on corn where country sales have been limited for the past several weeks. Corn buyers are being forced to push basis values at a time when they are usually fading bids to discourage movement. This has generated some country movement, but deliveries still pale in comparison to historical trends. Soybean incentives are not as great as they are for corn, but as deliveries of that commodity decline, buyers will start to push those bids as well. Now is also a time when we start to see offers from the country such as free storage and deferred pricing contracts. These can be used to generate cash flow if needed until sales are made.  

Highlights
* Global economy remains unsteady
* World banks cut interest rates
* Most economic concern remains on China
* Markets monitoring US earning reports
* US jobless claims are improving 
* PNW vessel wait up to 10 days
* Importers to relax GMO regulations
* US harvest activity slowed from rains
* Positive weekly ethanol data expected
* FND on Nov contracts is Friday

Corn
* Country sales remain slow  
* Gulf demand lower than hoped 
* Ethanol demand on the rise  
* Global production is rising
* Argentine rains favor plantings 
 
Soybeans
* Canola $3.00/bu premium to soybeans 
* PNW soy basis at record values
* Interior basis values soften 
* Crude oil supports biodiesel
* Open interest is declining 

Wheat
* North American production to rebound
* Egypt imports expected to rise 
* Global wheat competitive with US 
* US double cropping questioned 
* Russian exports -29% from high taxes

Livestock
* US beef exports +16.6% from last year 
* US yearly pork exports -3% 
* Boxed beef stabilizes
* Cattle slaughter margin at $528.00/head 
* Chinese hog herd contraction to continue

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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