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E-Visor Reports: Market Watch

 
Wednesday, December 30, 2020
Late yesterday it was announced the labor strike at Argentine ports had been resolved. The question now is how long it will take to get shipping back to normal. It seems redundant, but the main driving factor of today’s market is demand, especially on soybeans. The United States has seen demand for its soybeans drop considerably from earlier in the marketing year, but usage is still above what the USDA is predicting in balance sheets. This is primarily on exports where the United States has already sold 90% of its yearly projected total with the bulk of the marketing year left to go. The USDA will need to alter its sales estimates higher in future balance sheets updates given our ongoing interest. The concern is the US only has 175 million bu of reserves projected now and very little room for more demand. If we add in the strong crush we have seen in recent months it is not hard to envision a soybean carryout that is under 100 million bu. Even if we see demand shift from the US to South America once harvest begins in that region it is unlikely US sales will decline to a point where further stocks reductions will not take place. Trade is also monitoring demand on the grains, and while elevated, it is not at a point where rationing is needed.  

Highlights
* Labor issues resolved in Argentina
* Vessel back log reported at 162 ships
* Chinese commodity values rally
* Corn in China at $10.00/bu
* Futures not pushing for new crop acres
* Current new crop corn/soy ratio at 2.6:1
* Buyers continue to surface on breaks 
* More attention on global demand than domestic
* Trade looking for verification of Chinese purchases
* Trade dispute between China and Australia intensifies

Corn
* US corn values highest since 2014
* Continue to hear Chinese buying rumors
* Drought has cut South American production
* Crops need more moisture as they mature 
* Market shows more concern on slow loadings
 
Soybeans
* Soy oil at 7 year high
* Soy oil still undervalued to other oilseed products
* Deferred contracts not following spot market
* Market remains overbought
* Canada to increase canola crush
 
Wheat
* Argentina has 1 mmt of wheat to load
* US Plains see moisture 
* Lack of snow cover in Black Sea
* Feed demand is rising
* Russian wheat crop larger than USDA estimate
 
Livestock
* Livestock producers wanted more Covid assistance
* China to continue pork auctions
* Brazilians turning away from meat-based diets
* Winter weather slowing deliveries
* High feed costs affect placements

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