Morning Comments; Tuesday, January 21st, 2020
Agrivisor - SETZ - Tue Jan 21, 6:28AM CST

The market is once again in a period where little fresh news is available. We are past the January USDA reports, and aside from the February WASDE report, the next batch of news will come from the USDA Outlook Forum at the end of February. The real attention will be placed on the March quarterly stocks and planting intentions reports though. While these are several weeks away, we will start to see estimates released in the not so distant future. Ahead of that, most attention will be on the start of the South American harvest. Private analysts continue to raise their Brazilian soybean crop estimates, with some now approaching 125 million metric tons. While this is only a slight increase from the current USDA estimate it would be a large 10 mmt increase on the year. Some analysts are skeptic of this number given the adverse weather that has impacted parts of Brazil this growing season. This is the same debate that took place in the United States last year though and production was well above expectations as well. The real interest in Brazil will be what we see for double cropping as that will greatly affect what the country can export on corn. Even with a large corn crop Brazil may not export as much as last year given the shortage it created domestically. For the immediate market, trade will continue to monitor the developments with Chinese trade and if demand starts to increase as hoped. Doubt over the benefit of the Phase 1 agreement working is growing, with some economists calling the projected Chinese import levels unrealistic. The reality is if we could simply see trade volumes get back to pre-trade war levels it would be a win for the US. The next trade issue that needs to be resolved is with the EU and that is where attention will start to shift.

Highlights

* Fresh news becoming sparse

* Phase 1 to be implemented in next 30 days

* Phase 2 talks reportedly underway already

* US ethanol margins negative 11 cents

* Chinese economy shows concerns

* GDP is 6% in China, slowest growth since 1990

* Dry weather continues in Argentina

* Russia/China building trade relations

* EU to challenge Phase 1 with WTO

Corn

* No guarantee of corn to China

* EU crop estimate increases

* Global corn stocks shrinking

* US to see additional acres

* Low wheat supply to benefit corn demand

Soybeans

* Chinese tariffs remain in tact

* Estimates rising on Brazilian crop

* Rains may delay start of Brazil harvest

* Soybeans fall to one month low

* Fewer Argentina acres

Wheat

* EU export forecast raised 2.3 mmt

* Trade monitoring Black Sea supply

* French plantings -10% in 2020

* Floods a concern in France

* US needs to remain price competitive

Livestock

* Bird flu spreading through Asia

* Chinese pork production a 16-year low

* China produced 42.55 mmt pork in 2019

* Chinese hogs at end of Dec -27.5% from 2018

* Russia to trade beef into China

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

Market Commentary provided by:

Karl Setzer Grain Commentary