E-Visor Reports: Market Watch

Thursday, January 14, 2021
Two-sided trade developed overnight as the market tries to rebalance positions following this week’s WASDE data. Now that the initial shock of the low carryout levels has worn off, trade is back to monitoring immediate factors, including reports of falling domestic demand. More attention in the market is falling on the upcoming spring planting season. Planting is several weeks away for much of the Corn Belt, but we are starting to see more interest on potential acres. It is believed that Us farmers will plant and additional six million corn acres this year which are desperately needed to replenish domestic reserves. While this is possible, there are several factors that need to take place to see an increase of that volume. For one, prices need to rally enough to make soybeans a more favorable crop than corn. The current price spread is not to a point where that is likely. Another is favorable springtime weather forecasts as many of the additional soybean acres are expected to come from those that were not planted last year. Even if we do see plantings this high, we will also need to see high yields to build reserves. We will likely see elevated risk premium in the soy complex much of the growing season as a result of these factors.  

* Trade still debating US acreage, yields
* Many believe USDA yield estimates are still too high
* China taking 45% of corn, 58% of soybean shipments
* Average US basis -18 on corn, -44 on soybeans 
* Global food inflation a concern
* Importers stocking up due to Covid worries
* US ethanol production -14% from last year
* Mexico voices concerns over US trade barriers
* President elect Biden wants more Covid relief
* Payments may be directed to city/state governments 

* More non-traditional buyers show interest 
* Gulf basis starts to improve
* Ethanol margins still erode
* Argentine corn 15% G/E, was 55% year ago
* Argentine exports remain uncertain
* China shifting interest to next fall
* Argentine exports remain limited
* Rationing still needed
* Brazil harvest slower than usual
* Malaysia Palm Oil exports +25% in Dec
* Chinese auction demand is rising
* Global wheat feeding continues to rise
* Argentine yields higher than expected
* BAGE raises total crop estimate
* World wheat values more competitive
* Cash trade quiet on cattle
* Most trades down $3.00 from last week
* Hog slaughter remains high
* Last week’s slaughter a record 2.85 million hogs
* Boxed beef turns mixed

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