E-Visor Reports: Market Watch

Monday, November 16, 2020
Now that the initial shock of the November WASDE report has worn off, trade is starting to look forward to the next data release in December. Typically the December release receives little attention as only demand is altered in that data. This December update is likely to receive more attention though as US ending stocks were reduced more than expected in the November report. The most attention will fall on soybeans as ending stocks are already at a minimal level and any alteration to demand to cause a further reduction will be met with additional price rationing. There are doubts over how much of a reduction will be seen, if any, as the USDA tends to keep ending stocks are a minimal level even if demand indicates otherwise. We may see more changes to the corn balance sheets as the ending stocks on that grain are more adequate, as is the level on wheat. Trade may look past the December release and focus on the January numbers though as that report will give us the final production changes for the remainder of the marketing year. Trade will again monitor soybeans demand this week for signs of rationing taking place. We will also closely monitor South American weather as rains are in need for many areas. 

* This week’s weather critical for SAM
* Low water levels causing some logistic issues in US
* Lack of freezing is a benefit for barge movement
* Large volume of fall fertilizer being applied
* China enters new trade pact with other Asian countries
* Brazilian inflation impacts commodity markets
* Ethanol production at highest level since Covid outbreak began
* Concerns build over new closures due to Covid
* Shut downs will alter commodity demand

* Average US corn basis -22 Dec futures
* Drought slows Argentine planting
* Argentine planting 10% behind normal
* Window for US sales widens
* Funds not buying corn
* NOPA crush estimate at 177 mbu
* Crush would be record for October
* Global market needs large SAM crop
* Slow germination in Brazil a concern
* Average US basis -43 Nov futures 
* Buyers show restraint in purchases
* Nearly all buyers going to Australia
* Russian exports likely higher than thought
* Low US wheat rating a concern
* Argentine crop to be smallest in 5 years
* Cash cattle driving futures
* Feeder cattle rally more than fats
* High feed costs weigh on margins
* Low livestock margins a global issue
* Rising meat cost to limit demand

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