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E-Visor Reports: Market Watch

 
Wednesday, June 24, 2020
A lack of addition selling provided overnight support, while gains were limited as buying was sparse as well. While much of the interest in the current market environment is on production, we are still seeing attention on demand. This is starting to shift more towards new crop and for good reason. Export bookings on corn for the 2020/21 marketing year currently total 104 million bu. While this may not seem like much, it is actually a 14% increase from last year at this time. Buyers are showing doubt over the ability of Brazil to supply as much corn as it did last year given production issues and a building domestic need for the supplier. Trade is still concerned with old crop exports though, as demand is not up to initial expectations. We are also seeing larger new crop soybean demand this year than last year. The US currently has 203.4 mbu of new crop soybean sales on the books. This is a large 77% increase from a year ago. It is not surprising that the majority of these sales are to China, who has bought 55% of the total. China’s current soybean bookings from the US on the 2020/21 marketing year are also 31% larger than the record import year of 2017/18. The obvious question in the market is how long this sales pace may last. Given their recent trend, China is likely only booking enough soybeans to last until the next harvest gets underway in South America. This will come sometime after the first of the year. What is unknown is how many soybeans buyers have to take delivery of from Brazil and Argentina from this year’s harvest. It is quite possible buyers already have a significant amount of their immediate needs covered and just need to take delivery of them. 

Highlights
* China will struggle to reach Phase 1 totals
* Trade tensions further strained between US and China
* Feed demand may increase
* Crop reports highly variable
* Reports indicate 52 pending bio-fuel waiver requests
* Mexico to resume sending workers to Canada
* China asks for Covid-free import certification
* China approves 2 more GMO import licenses
* CME to launch Brazil soybean contract
* Market technicals not supportive

Corn
* Safras claims 108 mmt Brazil crop estimate was for next year
* Corn basis narrowest since March
* Mexico remains main source of corn demand
* China sold 150 mbu from reserves last week
* Global ending stocks to rise

Soybeans
* Argentine harvest complete
* Argentina soy yield 44 bpa
* Argentine offerings under US
* Brazil out of soy by September
* Decline in Palm Oil demand weighs on soy oil

Wheat
* Frost damage in Kansas hurting yields
* Now seeing damage from wind, hail
* High variability in winter wheat yields
* Russian wheat offers under US
* Russian wheat higher in protein than US

Livestock
* US hog numbers continue to rise
* Thursday hog report est +4% from year ago
* Heavy slaughter weights continue
* Weekly hog slaughter +5.4%
* Wholesale values stabilize

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