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AgriVisor Market Recap

 
Friday, October 30, 2020
Trade started out the last day of the month firm but was mixed by mid-session. The majority of the session was spent getting final positions in place ahead of month end and next week’s Presidential Election. Once again, we had sizable declines in the outside markets, and these weighed on commodities as the day progressed. We did have a flash sale on soybeans today of 121,500 metric tons to an unknown buyer. Improved weather conditions around the world limited today’s price potential while support came from the fact none of the spot contracts are currently overbought. 

It has been several days since a confirmed soybean sale has been made to China in the flash reports. Sources in China are reporting this is a result of coverage now being met to last through January. By then it is believed the Brazilian crop will be ready for export, even with slight delays. This has caused China to start booking more of their projected needs from Brazil. The question now is if other buyers will step up to fill this void. This unknown may prevent the USDA from altering its soybean demand projection in the next few supply and demand reports. 

The USDA is also showing hesitation to alter its Chinese corn demand forecast, even though the country has already booked more corn than expected. Initially China had said it would book 7 million metric tons of US corn this year. Currently China has booked well above this level, and claims the corn going into state reserves are not included in their 7 mmt total. This confusion has some thinking China may end up cancelling corn purchases, including the USDA, which is preventing the total corn demand from being upped in balance sheets. 

When it comes to demand all interest this year has been on China, but they are not the only ones to elevate their buying. Another source of demand has been to the European Union as drought has impacted those countries as well. Since July the EU members have increased their soybean imports by 4% from a year ago to 4.47 million metric tons. While this is not as large as what China is buying, it does tighten global reserves. 

Another country that has turned into an importer of commodities recently is Brazil. Brazil has once again exhausted its domestic inventories and is turning to imports to satisfy demand. The most talked about is soybeans with Brazil booking a reported four cargoes for import this week. Brazil is also buying other products for import to help curb inflation and prevent economic issues in the country. 

Economic issues are also driving the commodity market in Argentina. High tax rates in Argentina have prevented many farmers from selling much inventory this year, especially soybeans. As a result, Argentine crushers continue to run out of product. This has brought more buyers to the US for soy products and supported our crush industry as a result. 

Ukrainian officials report that winter wheat planting for the year has concluded. It appears that farmers in the country only seeded 91% of projected acres as drought conditions reduced planting interest. Thoughts are that these acres may end up being seeded to corn next spring. This would be welcomed by the Asian market as they are going to need corn imports and do not want to be tied to just a few locations to source from. 

Several corn producing countries around the world have seen values on that grain rally to record levels. One of the countries is Brazil where corn has rallied 28% in recent months. It is quite likely this will cause additional acres to be planted to corn this production year. One difference between Brazil increasing acres is they do not have to sacrifice them from another crop, which will allow for both corn and soybean production to expand in future years. 

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. 
 

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