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AgriVisor Morning MarketWatch

 
Thursday, March 04, 2021
The US economy is having a significant impact on the commodity market. The economy has been improving in recent months, but we are now starting to see inflation develop. This has already started in the energy complex but is starting to be noticed in others, including food products. The concern with this transition is if inflation continues it may impact consumer spending, especially on higher end products. This may be noticed in the meat markets first, especially on the higher cuts of beef. This is starting to generate concerns ahead of the start of the US grilling season, same as it did when the initial Covid outbreak took place. The cut back in consumer spending may not be impacted as much this time, however, as the government relief packages have been beneficial. The real question may be if consumers again cut back on their travel and we see a decline in gasoline demand. We are just starting to see profitable margins return to the US ethanol industry and any decline in energy demand will push these back into negative territory. 

Highlights
* US dollar continues to strengthen
* Investors showing less interest in commodities
* Inflation concerns build in US, also in China
* US marketing year half over
* USDA claims farmers will need to expand markets
* Global animal disease clouds feed grain demand
* US foodservice remains slow to rebuild
* US biodiesel production up from last year
* Ethanol plants resuming operations
* Export demand on commodities continues to slow

Corn
* US corn exports +81% from last year
* Forecasts lean towards early corn planting
* Fertilizer demand indicates higher corn acres
* Import buyers showing more interest in new crop 
* Brazil corn supply only 15 days
 
Soybeans
* Large variance in Brazil production estimates
* Estimates range from 130 to 136 mmt
* US exports up 76% from last year
* Global oilseed market under pressure
* Chinese 20/21 imports underestimated
 
Wheat
* Russian export forecast raised
* Global wheat market rallies
* Wheat loadings -4.2% from last year
* US wheat ratings continue to decline
* Poor wheat acres may shift to other crops 
 
Livestock
* Boxed beef values under pressure
* Retail beef $2.00/lb higher than year ago 
* Beef demand remains strong
* China claims hog production is stabilizing
* US beef/pork production questioned

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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