AgriVisor Morning MarketWatch

Thursday, January 27, 2022
For the past several months we have witnessed the commodities and equities track each other for market movement. The primary cause of this has been the increased interest in commodities by the managed money crowd. Managed money investors have started to carry more commodities in their portfolios which has been beneficial for corn, soybean, and wheat values at times. This has also caused an increase in market volatility with futures rallying then selling off with no traditional fundamental reason. The question now is how long this may last. Some financial market analysts believe we are going to start seeing a divergence between commodities and equities as the calendar year progresses. One of the primary reasons for this is that equities can rally without becoming overbought compared to other countries. If commodities rally the United States can lose interest in the global market when values top other sources. An easing of panic buying in regard to the Covid pandemic may also limit commodity buying if equities continue their rally. The unknown in all of this is what will happen if inflationary buying takes place in commodities, which could actually support that market while the financials suffer.  

* World food values at pre-pandemic highs
* Demand for US sorghum rising
* Russian economy faltering
* Russian currency lowest in 14 months  
* Lunar New Year in China starts Feb 1st   
* Politics affecting Chinese imports from Ukraine
* Rains slow Brazilian harvest
* Brazil rains favor Safrinha planting       
* Weekly ethanol production -126,000 barrels
* Ethanol stocks +884,000 barrels

* Ukraine grain exports +28% on the year
* Little feed demand in export line up
* 22% of Argentine corn G/E 
* Country movement is building 
* Brazil weather favorable for Safrinha 
* Brazil harvest ahead of last year 
* China shopping for late summer US offers
* Light farm sales in Brazil     
* US farmers selling also slow  
* Harvest pressure from Brazil is building     

* Canadian exports -41% on the year
* Weekly US sales rising
* Russian yearly sales -21%  
* Russian again lowers export tax 
* Chinese buying stalls
* Feeder cattle supply tightens  
* Heifers account for 38% of feedlot inventory    
* US hog slaughter -10% on the year  
* Hog weights -2 pounds
* US pork production -15%  

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.