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AgriVisor Morning MarketWatch

 
Thursday, January 20, 2022
The US commodity market is in a seasonal transition period that occurs nearly every year at this time. The harvest has wrapped up in the United States, but we are not into the next spring season yet. More attention tends to fall on the South American crops as a result as they are being heavily influenced by weather, which is a primary reason why values have rallied in recent weeks. This has also increased market volatility as market direction shifts with every differing forecast, same as it tends to in the United States. We are also seeing a difference in opinion on the South American crop sizes. Even with soybean production losses in some regions of Brazil, others are reporting very good and a few record yields, which is adding to market uncertainty. The markets also tend to focus more on outside influences for price discovery at this time, including technical indicators. Soybeans have traded into overbought territory recently which has capped fresh buying, even with friendly fundamental news. Before long trade will start to once again show more interest in US weather patterns and conditions ahead of the spring planting season though, and traders will transition their focus as well.  

Highlights
* Commodity demand outpacing production
* Drought still impacting SAM logistics
* Parana water level lowest since 1945
* US ethanol margins under pressure  
* Ethanol values -50c in past week  
* Rumors of China making good faith purchases
* Geopolitical tensions supporting Us markets
* Commodities expected to remain strong in 2022      
* Some economists predict values to rally 16% 
* Inflation remains market concern 

Corn
* New crop sales are light 
* EU crop bumped higher
* Planting slow in Argentina 
* China remains absent from buying
* World crop prospects rising 
 
Soybeans
* China sourcing needs from Brazil
* 25% of Arg crush down from Covid 
* Palm Oil production to increase 5% in 2022    
* Paraguay exports -4.4% in 2021  
* Argentina not offering meal for export 

Wheat
* US exports likely overestimated 
* Argentine crop a record 21.8 mmt             
* Drought impacts total No American crop 
* EU production underestimated
* Global values weaken
  
Livestock
* 2021 Chinese pork production was 53 mmt
* China’s pork output back to pre-ASF levels 
* US pork values over-extended  
* Boxed beef showing strength 
* Jan Cattle on Feed tomorrow afternoon

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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