AgriVisor Morning MarketWatch

Wednesday, January 19, 2022
The United States has not seen the export interest that was hoped for to start the marketing year. The main reason for this is elevated competition from other suppliers in the global market, mainly South America, Ukraine, and Australia. Even though these sources are still exporting bushels, the price spread between them and the US is starting to narrow. This is mostly being noted on Brazilian soybeans where the price difference has narrowed up to 30 cents for summer delivery. This comes as the size of the Brazilian soybean crop is reduced by crop scouts. As long as production losses in South America continue the spread will narrow. The question is how many buyers will pay elevated values for US offers and how many will shop for alternative grain and oilseed needs. While there are few choices for soybeans, buyers can import distiller grains for animal feed which has been happening in recent weeks. This has been a great benefit for the US ethanol industry. We are also seeing more buyers take feed grain as an alternative to corn which has been happening for the past year. Given the abundance of low quality wheat out of Australia, buyers have plenty to choose from. The most noted of these is China who has been buying feed wheat in larger quantities.  

* Heavier than expected rains in SAM
* SAM crop estimate range expands
* Acreage keeps some estimates elevated
* Country movement remains slow  
* Basis volatility is building  
* Farmers using deferred pay for cash flow
* Economists remain bullish commodities 
* Weather focus shifting to US      
* 67% chance of La Nina into May
* 51% chance of neutral La Nina by June 

* Parana corn rated 32% G/E 
* Brazil corn 3% harvested
* Feed grain exports slowing 
* Some analysts raise Brazil crop est
* Argentine corn crop -5 mmt
* NOPA Dec 21 crush a record 186.44 mbu
* Parana crop rated 29% G/E 
* India yearly soy oil imports +22%    
* China is 57% of US demand  
* Global soy production 2 mmt under usage 

* Australian crop est rising 
* Buyers focused on Australian offers             
* Black Sea weather improves
* High wheat values elevating food costs
* 70% of winter wheat in drought
* YTD cattle slaughter -131,000 head
* YTD hog slaughter -825,000 head
* Weaker grains benefit margins 
* Pork demand is questioned
* USDA tends to underestimate consumption

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