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E-Visor Reports: Market Watch

 
Thursday, November 12, 2020
Now that trade has time to digest the monthly WASDE report we will start to see attention shift back to other fundamentals for price discovery, with South American production being a key one. While planting has progressed in South America, weather conditions remain less than ideal. The greatest concern is the ongoing drought conditions in Southern Brazil and Argentina from the La Nina event. Forecasts indicate this event will remain in place through the end of the year which will start to impact yields even more. The question is how much this will impact production at a time when South America has already depleted much of its corn and soybean reserves. This means not only do these countries need to produce large enough crops to satisfy export demand but to build cushions for domestic needs as well. This will likely keep buyers coming to the US for needs as well. The commodity being monitored the most in this development is soybeans. US soybean ending stocks are already expected to drop to a minimal level this year and any additional demand could cause shortages. As a result, price rationing has already developed in the market. 

Highlights
* US harvest most complete, pressure has lifted
* Russia may limit grain exports
* Russian limits not that large, may not matter
* Covid vaccine news continues to offer support
* Energy market supports renewable fuels
* Commodity spreads widen back out
* Gulf basis weakens
* Global market needs large SAM crops
* Open Interest indicates fresh buying

Corn
* Lack of competition benefits US exports
* Starting to see new crop demand
* US has 29.4 mbu sales for 21/22
* Technical buying stalls in corn
* Feed demand remains questionable
 
Soybeans
* Brazil expected to import 1 mmt this year
* Analysts doubt reductions to Brazil exports
* Argentine planting half of normal pace
* Brazil planting at normal pace
* Emergence now a concern in SAM 
 
Wheat
* Wheat at highest values since February 2019
* US over-priced in global market
* Australia undercuts global market
* 1st time market favors Australia in 4 years
* Russian export limits a non-event
 
Livestock
* Boxed beef values become mixed
* Hog slaughter equal to last year
* Cattle slaughter just under last year
* Trade remains concerned with economy
* Mexico ups US meat imports

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