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E-Visor Reports: Market Watch

 
Wednesday, November 03, 2021
At times we tend to forget the main function of the commodity market, that being to find a fair value of a product. At the present time there are several economists who believe US corn and soybeans are undervalued in the global market. This is starting to be more of a topic on corn where some believe new crop ending stocks are currently over-estimated and may total no more than 1 billion bu at the end of the marketing year. While this is possible, we may need to see more demand to verify tighter ending stocks than currently predicted at 1.5 billion bu. Ukraine is also offering corn at a discount to the United States which is further limiting how much we can potentially rally at this time. When determining the value of a commodity we also have to take in several other factors, including currency exchange rates and more importantly shipping costs. The bulk of our buyers want to see commodities originate from the Pacific Northwest as shipping costs are lower than at the gulf. The PNW is currently fully booked with soybean and wheat shipments though, and it will be several weeks before enough space is available to load corn. This means US corn needs to be offered at a discount to attract buyers.  

Highlights
* Higher yields expected in Nov WASDE 
* Global inflation excels 
* China calls for reduction to world subsidies
* Russian officials cut production estimates
* US holiday spending expected to be +9.5% this year
* Farmers selling likely over for fall 
* Lower ocean freight may attract buyers
* China raises grain production estimates  
* Favorable ethanol data expected in weekly report
* Average US ethanol margin at 85 cents 

Corn
* Argentine crop estimate rising  
* Ukraine corn values pressured  
* Some analysts predict 1 bbu US carryout  
* Corn oil continues to rally
* US ethanol plants at full capacity
 
Soybeans
* Brazil exports remain elevated
* US crush industry to expand
* Export basis remains very favorable
* Bio-diesel values weaken
* Exports likely over-estimated 

Wheat
* Russian harvest nearly complete 
* Russian crop larger than thought 
* Buyers pass on US offers 
* Argentine crop likely above 20 mmt estimate
* World milling supply very thin

Livestock
* Hog market remains pressured 
* Cash/futures spread in hogs record tight
* Low in hogs expected in Mid-December
* Managed money exiting livestock complex
* Consumer demand remains mixed

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.