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E-Visor Reports: Market Watch

 
Thursday, July 02, 2020
The initial effects of the USDA stocks and data has worn off now and trade is fully engaged in what we will see in the July supply and demand report. Trade is also starting to place more attention on weather outlooks as we approach the key pollination window on corn. While conditions before and after pollination are also important in final yield, pollination can be key in how ears set and develop. In many years this alone has altered final crop sizes. Much of today’s trade activity will focus on weekend positioning. The markets close at 12:05 PM CST today and will be closed at day Friday for the July 4th holiday. Trade will resume Sunday night. This could quite possibly be the first real weather weekend of the growing season, and to see some risk premium added to futures ahead of it would not be surprising. The overall tone of the market is that production, even if reduced, will be enough to cover forecasted demand. Until this mindset changes it will be hard to sustain a long-trending rally in the markets. This is especially the case with funds seemingly comfortable with their current positions, especially the record short one in corn. Now that the calendar has shifted to July, trade will be closely monitoring China for an indication of when they will start taking US purchases. China has been an active buyer of US soybeans for new crop delivery in recent weeks, but this has been met with caution by some analysts. Their opinion is China has been making purchases with little interest in actually taking delivery of all bookings, but rather they were made to appease critics who doubted the phase 1 agreement. Any indication China will cancel soybean purchases will likely cause an unfavorable reaction in the market.

Highlights
* Basis starting to soften
* Rating declines likely next Monday
* Trade starting to position for July WASDE
* Forecasts turning dry for corn pollination
* US ethanol stocks lowest since January 2017
* EU bans travel from US
* US/Canada issues develop on aluminum trade
* Trade starting to doubt Chinese imports
* More states enact travel restrictions
* Markets close at 12:05 CST today
* Markets closed tomorrow for July 4th 

Corn
* Higher feed demand expected
* Other demand may slip on corn
* Commercial long 3rd largest in history
* Argentine harvest 80% complete
* SAM exports rising

Soybeans
* Peak Brazil exports may have passed
* China accounts for 72% of Brazil demand
* Weakness in canola pressures soybeans
* Crush margins continue to fall
* Exports unlikely to reach projections 

Wheat
* Drought building in Argentine crop
* EU harvest to get underway
* EU wheat values at 3-month low
* Ukraine wheat crop -7% this year
* Russia may lift export limits

Livestock
* Packer margins on cattle average $275/head
* Concerns build over new swine flu in China
* China may increase US pork imports
* US retail pork +8.6% in 2020
* Elevated grilling demand on beef

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.