Morning Comments; Monday, February 10th, 2020
Agrivisor - SETZ - Mon Feb 10, 6:30AM CST

Nearly all of today’s session will be spent with trade getting final positions in place ahead of tomorrow’s monthly supply and demand report. For the most part, only fine tuning of the January data is expected. Average trade guesses are for slight reductions to ending stocks across the board. While this would be positive, the fact remains there is plenty of inventory to satisfy demand. This is especially the case from a global point of view. The most interest in tomorrow’s data may fall on world corn stocks as these have been on a steady decline recently. We will also see attention on the domestic corn production figure to see if any adjustment is made as there remains a large amount of that crop still in the fields. While this is possible, a sizable change is unlikely. There is little doubt there will be something for everyone in this release, same as there always is. Given the recent lack of fresh news in the market, this release could easily receive a large reaction than expected regardless of the data. Aside from this positioning we will continue to see trade try to get a handle on the spreading coronavirus and what it means for global commodity demand. China has stated they fully intend to import as much product as they have said they would in the Phase 1 agreement, but that really seems unlikely. Even if just temporary, we will likely see Chinese demand fall this year. The US may see more of a decline on soybean demand as Brazil has a sizable advantage over the US on pricing, especially when tariffs are figured in. China’s demand will be heavily tested over the next few weeks as more Brazilian soybeans become available. The commodity the US stands to see the most demand hold on is corn as we are the cheapest source of product in the global market. It is not out of the question the US could dominate the world corn market for several months as any exports out of South America are questionable this year given the over-selling that was done a year ago.

Highlights

* WASDE report tomorrow at 11:00 AM CT

* Phase 1 details will not be included

* Ag Outlook Forum Feb 21st and 22nd

* Phase 1 implementation next week

* US may impose more Chinese tariffs if not done

* China wants to spread out import risk

* Chinese tariff reduction offers little support

* Light country movement supports basis

* Favorable SAM weather continues

* Markets on lower end of price ranges

Corn

* Carryout est at 1.86 bbu

* E-15 demand is rising

* Jan ethanol exports at 146 million gallons

* US corn cheapest in global market

* Global market well supplied

Soybeans

* Carryout at 443 mbu

* Lower tariffs to china not a benefit

* Heavy rains have slowed Brazil harvest

* Bargain buyers surface

* Chinese tariff on soybeans equals $2.40/bu

Wheat

* Carryout estimated at 954 mbu

* Buyers pass on US wheat

* China may not include wheat in sales

* Global production estimates rising

* Soil moisture building in Australia

Livestock

* Beef demand over-estimated

* Tyson pork exports to China up 600%

* Increase in US pork exports last week at 80%

* Largest weekly jump in exports since 2015

* Pork production growing faster than demand

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