AgriVisor Market Recap

Thursday, September 17, 2020
Trade was mixed to start today’s session as overnight buying did not initially carry over into the day. Soybeans were quick to uncover buying interest though which propelled the market higher into the close. We did see our string of flash sales continue today which kept futures intact, with China buying 264,000 metric tons of soybeans. We also had sales of 360,500 metric tons of soybeans and 120,000 metric tons of corn to an unknown buyer. Wheat also posted solid advances today, which did benefit corn as well. 

Export sales for the week ending September 10th were released this morning with numbers mostly as expected. Corn sales were in the middle of trade guesses with 63.35 million bu. Soybean bookings totaled 90.3 million bu which were at the top of the estimate range. Of these soybean sales, 54.7 million bu were to China. Wheat sales were at the low end of guesses with 12.34 million bu. 

The United States had mixed numbers when it came to meat exports. Beef sales on the week totaled 14,274 metric tons, an 8% decline on the week. Pork sales remain high though, with 50,568 metric tons being sold for export. Of the pork sold 71% was destined to China. 

Chinese officials have released their low-tariff grain import quotas for 2021. For corn the total is set at 7.2 million metric tons. On wheat the volume is set at 9.64 million metric tons. These totals are set according to WTO requirements though, and the actual import totals can vary significantly. 

One number that trade continues to question from last week’s WASDE report is the global wheat stocks figure. The USDA is predicting wheat ending stocks of 319.4 million metric tons at the end of this marketing year. This is a 2.68 mmt increase from last month and is mostly from the large crop being predicted in Australia. The USDA left wheat production in other areas unchanged though, even with countries starting to raise their production figures. One region being watched the most is the Black Sea, where even with losses, wheat production is forecast to rise year to year. 

China’s economy is showing signs of rebounding which is good for the global market. Retail sales in China are reportedly back to pre-Covid 19 levels as consumers return to their normal habits. This has also increased demand for beef and pork in Chinese restaurants. China has also seen an increase in demand for its products in the global market, especially on the technology front. Thoughts are this will generate increased demand for commodity imports as well. 

Once again, we are hearing of Brazil over-extending its soybean sales. Brazil has been an active soybean exporter even since their program started last January and we are again hearing they have cut their needs short. Reports indicate Brazil has already started to make soybean imports as a result and taken in 400,000 metric tons to help cover domestic needs. This action may keep China as a buyer of soybeans for longer than initially suspected. 

Long-range weather maps have been released for the US. Through January the bulk of the United States is expected to see above normal temperatures. Precipitation estimates are mixed with northern parts of the US seeing wetter conditions and the south seeing dry conditions. These are not uncommon weather patterns in a La Nina influenced year. The question now is if these will persist and possibly set the US up for a dry start to next year’s planting season. 

A farm-based survey indicates the United States will see higher soybean and winter wheat plantings next year and nearly steady corn acres. Soybean plantings next spring are being predicted at 87.9 million, a 4.9% increase from this year. Winter wheat seedings are forecast to expand 2.3% to 31.3 million acres. Corn acres are expected to hold nearly steady at 91.8 million. These numbers will change several times though, with futures values and weather being key factors in actual plantings. 

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.