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E-Visor Reports: Market Watch

 
Friday, January 08, 2021
Moderate losses were posted in the market yesterday with the greatest being in soybeans. Improved weather in South America and the first really poor export report of the marketing year weighed on soybeans. The question in the complex now is if this is a sign of rationing or simply a pause in buying. Soybean harvest is already underway in South America and even if crop sizes are reduced, exports will soon be taking place. Many buyers already have a large amount of new crop soybeans booked from South America, mainly from Brazil. It is not surprising the main buyer of these is China who has been the largest buyer of US soybeans as well. Thoughts are once China shifts is demand to Brazil we will see our sales drop off considerably. While likely, the volume we currently have sold means any additional selling can be at a minimal level and we could still surpass the yearly USDA projection. Trade is also questioning how many soybeans Brazil will want to sell this year if their crop is going to be lowered by drought as the country has over-sold production for the past two years. Given the high value of soybeans to replace sales this year the country may be less willing to repeat this a third time.  

Highlights
* Brazil harvest slow to build
* World crude oil producers may scale back production
* La Nina to persist into spring/early summer
* CME raises margins to reduce volatility
* Both rail and barge movement is down in US
* Higher corn inventory expected in stocks report
* Lower soybeans/wheat stocks than year ago
* Weather turns wetter for SAM 
* Chinee currency highest since June 2018
* US dollar value weakest since April 2014 


Corn
* China corn remains record high 
* China shopping for Brazil corn
* Interior basis remains firm
* Argentina has plenty of corn to export
* EU/UK imports -24% in 2020 
 
Soybeans
* China soy meal a record $528/mt
* Chinese soy oil the highest values in 8 years
* Chinese crush margins well into positive territory
* Complex finally starting to push for acres
* Market waiting for Brazil exports
 
Wheat
* US wheat condition improving
* Global wheat crop estimates rising
* Parts of US have seen winterkill
* Ukraine exports down 5 mmt from year ago
* Winter wheat acres expected to be nearly 2 million higher
 
Livestock
* Nov beef exports a record 277 million pounds
* November pork exports totaled 632.7 million pounds
* 2020 beef exports totaled 851,800 mt, +3% from 2019
* 2020 pork exports at 1.94 mmt, +16% from 2019
* 98,000 mt beef and 158,000 mt pork sales rolled from 2020 to 2021

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