AgriVisor Morning MarketWatch

Thursday, November 11, 2021
Now that the monthly WASDE data is behind us we are seeing trade shift its focus back to immediate market factors. Unfortunately, these are not that supportive at this time. Trade is showing more concern with US soybean demand as buyers continue to source needs from South America, even at a higher cost than soybeans from the US are being offered at. The main one of these is China who is reportedly booking soybeans from December through June from Brazil. As this shift in demand continues trade is becoming much less concerned with the stocks to use ratio on soybeans and fully expects the US cushion of reserves to inflate. There is now talk US ending stocks for 2021/22 will top 500 million bu which would remove all need for rationing. Trade is a little more optimistic on corn reserves as demand is just over USDA projections and ending stocks may decline slightly going forward. The obvious unknown is how much of a decline we may see. Some models show US corn reserves dropping to 1 billion bu this year which seems unlikely at this time. The real uncertainty is on wheat though, as ending stocks of that grain are most likely to contract moving forward. 

* China unlikely to reach Phase 1 obligations 
* US may penalize China if missed
* US now focused on 22/23 Chinese imports
* Bids for US ethanol soften
* Domestic usage supporting corn/soy basis
* Export basis values weaken
* Refineries continue to ask for blender exemptions 
* US ethanol production drop 6.1% last week
* Ethanol stocks increase 157,000 barrels
* Favorable export numbers expected  

* So Korea concerned with US quality
* Argentine officials put crop at 55 mmt
* High energy costs slow Ukraine harvest
* Ukraine may cut plantings 10-15% due to costs
* CONAB puts crop at 116.7 mmt
* Argentine crop est 44 mmt
* CONAB predicts 142 mmt Brazil crop
* Negative feed margins limit Chinese demand
* US window for exports closing
* Brazil harvest just weeks away

* Farmer selling is up 
* Currency valuations impact global trade 
* Argentine crop at 20 mmt
* US wheat production to rebound next year
* Global wheat values weak

* US hog liquidation slowing
* US hog expansion will be slow
* Brazil beef exports -50% from last year
* China continues to promote domestic pork usage
* US consumers push back on high costs

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