Morning Comments; Monday, January 27th, 2020
Agrivisor - SETZ - Mon Jan 27, 6:41AM CST

Many of the factors that affected trade last week will again have an influence this week. These will include demand, technical indicators, and of course the advancing South American harvest. China is on its Lunar New Year break, so we do not expect to see them in the market this week. We will hear updates on the spread of the Coronavirus in China though and how it may impact commodity demand. This is also expected to be a factor for the financial markets. The disease has now spread to the US which opens a whole new realm of concerns. We did see an increase in corn demand last week and hopes are this will carry over into this week, especially if values set back. There remain concerns on the quality of US corn in the global market and this is a factor that will only become more discussed in the future. The real question with quality is how bad it may get when there is no more old crop to blend in. South American harvest and weather will remain a factor for trade this week. For one trade will be anxious to see if better than expected yields continue as harvest advances. We will also start to get an indication of possible double cropping, as planting of the Safrinha corn crop begins almost as soon as the soybean harvest does. Weather and market economics will greatly impact the number of corn acres actually planted. Month end positioning will be a factor for trade this week, even though neither the grains nor soybeans go into delivery. We will see fund balancing as always though, and this will impact futures. The cash market will also be closely monitored this week as we are at a stage where country movement tends to increase ahead of the spring planting season in the US.

Highlights

* Coronavirus economic concerns build in world markets

* Most pressure from virus is on equities

* Minimal Chinese purchases last week

* China may start buying after Lunar New Year

* Month end positioning to increase

* Above normal temperatures for US continue

* Analysts predict large increase to US acres

* US pushes India to up imports

* US dollar strengthens

Corn

* US quality a concern

* So Africa crop +13% from last year

* US ethanol stocks +2.6% from last year

* US corn competitive with Argentina

* Yearly exports -37% from last year

Soybeans

* Market over-looking dry soils in SAM

* Country movement down

* Exports +2.8% on the year

* Brazil yields remain high

* US exports to slow

Wheat

* Sales +13.2% from year ago

* Global production lowered 1 mmt

* Bullish fresh news declines

* China rumored to buy Australian wheat

* Large EU crop to pressure export sales

Livestock

* Beef exports last week 27,800 mt

* Pork exports 30,300 mt; China only books 3,000 mt

* Jan 1st Cattle on Feed 102% of 2019 at 11.96 million

* December placements 103% year ago at 1.828 million

* December marketings 105% at 1.834 million

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