E-Visor Reports: Market Watch

Wednesday, July 15, 2020
One of the most predominant factors in price discovery right now remains weather. This is not just in the US, but on the global front. Many regions of the US have been subjected to abnormally high temperatures recently, but this has been cyclical. Heat builds for a few days, then cool fronts move through and bring rains, and then heat builds again. By all means, these are actually quite favorable for crop development. This is also why we have seen limitations to how much fund buying and short covering we are seeing in the market, even with localized trouble spots. This is not just in the United States, but globally. One region of the world that is getting more attention is South America, mainly Argentina. Forecasters have upped their chances of a La Nina building to 55% recently. They also feel there is a 50% chance this event will last into 2021. Historically these events bring drought to South America, which is what Argentine farmers have already been struggling with. This has already led to Argentine officials lowering their wheat production outlook. The question now is if the event will linger on as expected and impact this fall’s plantings. Farmers in South America do have a longer window to plant in than the United States, but history indicates the earlier crops are planted the higher they yield, and the more double cropping that takes place, especially in Brazil. For today’s session, attention will fall on the weekly ethanol manufacturing report. Last week we saw production again rise, but so did the ethanol stocks figure. If this trend continues, we will likely start to see plants again idled, especially those already struggling with low margins. Trade will also keep an eye on the flash sales report to see if China continues its buying spree. 

* Weather remains mostly favorable
* US/China trade tensions increase
* China buying likely to avoid future tariffs
* Covid cases continue to rise
* Businesses slow to open, some re-closing
* Very little US corn/soybeans rated poorly
* Flooding rains in China
* Russian crops down from drought
* Market again searching for fresh news
* Next big release likely the August 12th WASDE

* Argentine harvest 82% complete
* Argentine crop held at 50 mmt
* Brazil Safrinha crop 30% complete
* China continues to sell corn from reserves
* Declines to ethanol demand expected

* New crop demand +18% from last year
* China remains main buyer of new crop soybeans
* Chinese crush margins on the rise
* Export loadings indicate lower demand
* YTD exports lowest since 2012/13

* SRW exports -29% from last year
* Wheat sales canceled in recent weeks
* Just 41% of Argentine crops has adequate moisture
* Last year Argentine crop had 99% adequate moisture
* Australia starting to report localized drought

* Limited cash trade
* Chinese meat imports remain high
* China continues to fight ASF
* Flooding causes rise in Chinese ASF
* Brazil meat packers doing little to prevent Covid-19

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.