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AgriVisor Morning MarketWatch

 
Thursday, October 28, 2021
Market attention is starting to shift away from the United States as harvest starts to wrap up and focus more on South American where the growing season is underway. For the most part, weather conditions in South America are much more favorable than last year, especially in central and southern Brazil and Argentina, although Argentina is starting to show drier soils developing. Even with localized weather issues, trade is expecting to see larger crops in Brazil than last year. It is a different story in Argentina though where crop forecasts are mixed. The corn crop is expected to be much larger than a year ago in Argentina, but a smaller soybean crop is being predicted. This is not from weather, but from a shift in acreage. Argentine farmers are still facing huge export taxes on soybeans and soy products and are shifting acres in protest. In fact, Argentine soybean acres this year are expected to be the least amount in the past 15 years. The question this raises is if Argentina will still be able to supply the world with as much meal and oil as it does now, as currently Argentina is the world’s leader in these two exports.  

Highlights
* Input worries slow country sales
* Weather also slowing new crop deliveries
* US/China trade tensions build
* World Covid cases rising
* Supply chain issues to linger for several months 
* High input costs likely to last
* Average US ethanol margins at 70c/gallon
* Weekly ethanol production 2nd highest on record
* US ethanol production the highest in 3 years
* Consumer confidence improving 

Corn
* French corn pace half of normal  
* Overall demand likely underestimated  
* Exports and ethanol use above expected pace  
* Feed demand remains questionable
* Importers shopping for cheaper SAM product 
 
Soybeans
* Mexico to ease import tax on 500,000 mt 
* China expected to buy on breaks
* Global crush margins keep rising 
* US meal sales +19% on the year
* Cumulative meal sales 2nd largest on record 

Wheat
* Argentine crop est a record 19.2 mmt
* Canadian exports to decline 37% this year 
* Models indicate Plains’ drought may worsen 
* PNW soil conditions do improve
* Buyers pass on US offers

Livestock
* Cattle feeding margins pressured 
* Margins may remain negative most of winter 
* Hog margins show more promise
* Hog slaughter pace highest in 5 months 
* Hog weights continue to rise 

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