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AgriVisor Morning MarketWatch

 
Monday, January 13, 2020
We will likely see ongoing reaction to last Friday’s USDA data in today’s session. The main take away from the report is that the USDA is still projecting adequate commodity reserves, even though they are tighter than a year ago at this time. Now that the January USDA reports have been released, trade will start to focus more on traditional fundamentals for price discovery. One factor that will quickly gain market attention is spring weather outlooks. Trade is aware of the factors that hindered last year’s planting progress and will monitor forecasts to see if a repeat is possible. Given the increasing chances of an El Nino weather event, a cool, wet spring is not out of the question. We will also start to see more attention placed on South America as harvest starts in those countries. The obvious factor will be yields and what size of crops can be expected. Weather in South America will continue to be an issue to determine if any delays are possible. Weather conditions will also determine how much double cropping we may see which will impact the Brazilian Safrinha crop. There is a lot of current the crop in Brazil that can still be impacted by weather as well. For this week we will finally see the signing of the Phase 1 trade agreement between the US and China. Trade has been waiting for this for months and is hopeful we will now receive the details of Chinese business. The White House has claimed several times this package would add around $40 billion to US exports, but some doubt has been cast over this volume. While it is doubtful, we will see immediate Chinese buying take place, the simple knowing it will develop may be beneficial. China is already the main buyer of US soybeans, so any increase in demand may need to be substantial to impact futures. 

Highlights
* Continued USDA data reaction
* Phase 1 signing this week
* Doubts on whether details will be released
* China continues to book soybeans from Brazil
* US ethanol margins now negative 9 cents
* US farmland values to hold steady in 2020
* Additional MFP payments uncertain
* Egypt to launch commodities exchange
* Gulf basis showing strength
* Trade to start looking to spring weather

Corn
* USDA raises yield to 168 bpa
* NASS raises 2018/19 carryout
* US carryout little changed
* China may not import ethanol 
* Poor export demand continues

Soybeans
* Higher production figures
* No changes to demand
* Uncertainty over Phase 1
* Brazil crops could get larger
* Brazil ups old crop export forecast 

Wheat
* Winter wheat acres 2nd lowest in history
* Domestic/Global stocks tighten
* Wheat reserves still adequate
* Russian precip only 20% of normal
* France shipments at elevated levels

Livestock
* 2020 beef production to decline 75 million pounds
* 2020 pork production to decease 35 million pounds
* China to continue with pork releases
* Very light cash movement
* Strong pork export demand
 

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