Morning Comments; Friday, FEbruary 7th, 2020
Agrivisor - SETZ - Fri Feb 07, 6:35AM CST

This week’s trade has been one of the more lethargic in recent times. Plenty of fresh news was released during the week, but not enough to entice fresh buying interest. That is what has plagued the market; the lack of buying interest. We have not seen much for fresh selling which has prevented sizable losses. We are also at the bottom end of recent ranges which is preventing additional selling. We are seeing a build in technical strength which should start to bring fresh buying interest. Trade remains hesitant to extend its buying right now though given the uncertainty surrounding the coronavirus. While China has stated they expected to maintain their import purchases, not everyone is so positive. Even the US is stating to see China reduce its imports would be understandable. The lack of flash sales this week has been concerning, especially after the demand we had on corn from a week ago. To see soybean sales dwindle is not that surprising given the increase in harvest activity in South America. We have seen harvest delays this week in Brazil, but enough is being done to satisfy export demand. No sales have shifted from South America to the US which indicates there is no urgency in getting purchases delivered. This is also a result of the coronavirus in China that has limited their ability to unload vessels. In all reality, the combination of the virus outbreak and slow harvest in Brazil are both happening at the perfect time. Trade is starting to position itself for the upcoming WASDE report. Few changes are forecast for domestic numbers, with most analysts expecting to see slight decline to ending stocks across the board. The real interest will likely fall on the global numbers, especially South American production on corn and soybeans. For wheat we will likely see attention on Black Sea wheat. While this data will receive attention, trade remains focused on actual yield data and demand for price discovery.

Highlights

* Analysts raise SAM crop estimates

* China lowers tariffs on US soybeans, pork

* Lower tariffs unlikely to raise demand

* Ukraine production profitability declines

* Rains slow Brazil harvest

* US ethanol margins improve

* US farm income to decline this year

* Direct farm payments to decrease 36.7%

* Phase 1 data will not be in Feb WASDE

* US acreage estimates questioned

Corn

* North Dakota has 51% corn to harvest

* SAM production estimates rising

* China to release corn reserves

* Safrinha plantings up 5% this year

* Russia to increase plantings 7%

Soybeans

* Brazil production estimates rising

* Mato Grasso yield at 57 bpa

* China buys Brazil soy for March/April

* Brazil soy at a discount to US, tariffs increase spread

* April/May price spread is at 40 cents/bu

Wheat

* Beneficial rains for US Plains

* Global market has stabilized

* US movement is mixed

* US exports are slowing

* China in market for French wheat

Livestock

* Dec pork exports a record 681 mil pounds

* China pork in Dec a record 222 mil pounds

* 2019 pork exports a record 6.321 bil pounds

* US beef exports in Dec -2.3% from Dec 2018

* Beef exports in 2019 -4.2% from 2018

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