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E-Visor Reports: Market Watch

 
Thursday, February 13, 2020
Renewed concerns over the spread of the Coronavirus pressured overnight trade. Now that the market has had time to fully sort through the monthly WASDE data, attention will start to shift to the USDA Outlook Forum numbers that will be released at the end of the month. The obvious highlight will be on acreage estimates for this coming year. Trade continues to project plantings of roughly 95 million corn and 85 million soybean acres. While possible, we will need to see near perfect spring weather conditions for acres to reach this level. In addition to that, we still have several acres of last year’s crops that still need to be harvested. This is especially the case on corn in states such as North Dakota and Michigan. While not major corn producing states, the US will need to see almost every acre possible get planted to reach these projections. Demand will also be key in the Outlook Forum data, both domestically and globally. US ethanol production is likely almost as high as it will get, so to see major increases there is unlikely. The USDA could easily predict higher export numbers on corn as South American production will likely decrease this year. Soybean exports are questionable as China will need time to fully recover from disease outbreaks and Brazil is harvesting another record crop. This means the US will need to remain very competitive on export values to retain its share of the global commodity trade. We will also start to see more attention on weather forecasts ahead of spring planting. Soils across much of the US are saturated to the point where even normal precipitation could cause delays. While these factors will elevate market volatility, the amount of risk premium added to futures may remain minimal at this stage of the year. This is especially true after the production we have seen in recent years with less than perfect growing conditions. 

Highlights
* Spread of Coronavirus not slowing
* SAM weather mostly favorable
* China continues to claim they will adhere to Phase 1
* No word on Phase 2 progress
* 1 week from Outlook forum Data
* Concerns building over Midwest soil moisture abundance
* US/EU trade tensions building
* Chinese pork values up 116% in January
* Food values in China up 20.6%
* Global markets under pressure

Corn
* Country movement slows
* Basis weakens on commercial selling
* Ongoing delays to Safrinha planting
* Supply of high-quality corn a concern
* Hopes remain for Chinese buying

Soybeans
* Record Brazil crop hangs over market
* Chinese uncertainty
* China sourcing all needs from Brazil
* Slow Brazil harvest not a benefit to US
* Favorable weather conditions in Argentina

Wheat
* No Chinese demand
* Domestic mills report adequate coverage
* Coronavirus slows global trade
* Winter crops have favorable conditions
* Currency valuations directing global demand

Livestock
* Slaughter numbers growing on cattle
* Trade hoping for early start to grilling season
* Hog slaughter down
* Weights remain high
* Trade waiting for Chinese buying