Closing Comments; Tuesday, February 11th, 2020
Agrivisor - SETZ - Tue Feb 11, 2:35PM CST

Very few changes were made to corn on the domestic side of the February WASDE report. This left carryout unchanged at 1.89 billion bu. Soybean ending stocks decreased by 50 million bu as an increase in exports was forecast. This will give the US a projected 425 mbu carryout. Wheat ending stocks were also lowered to 965 million bu due to smaller winter crop.

Changes to the global numbers mirrored the domestic ones. World corn ending stocks decreased 1 million metric ton to a 296.8 million metric ton total. Soybean ending stocks were bumped up to 98.9 mmt due to a larger Brazilian crop being predicted. Global wheat reserves were steady at 288 mmt.

The USDA did make changes to its Brazilian crop estimates that brought them in-line with private estimates. The Brazilian corn crop is now forecast at 101 mmt by the USDA which is relatively unchanged from the January estimate. The USDA is projecting a 125 mmt soybean crop for Brazil which is up from the 123 mmt forecast a month ago. Argentine estimates were unchanged at 50 mmt on corn and 53 mmt on soybeans.

The USDA did increase China’s soybean import forecast. The country is now expected to import 88 mmt of soybeans in the 2019/20 marketing year, up 3 mmt from the previous estimate. This compares to the 82.4 mmt of soybeans imported in the 2018/19 year when African Swine Fever was at its peak. The total is still well below the 94 mmt of soybeans China imported in 2017/18.

Not to be left out, the Brazilian firm CONAB updated its production forecasts today as well. CONAB projects a soybean crop in Brazil of 123.2 million metric tons, up slightly from their previous forecast. This would be the 7th record soybean crop in Brazil out of the past 10 years. CONAB puts the country’s corn crop at 100.5 mmt compared to last year’s 100 mmt. This is dependent upon a large Safrinha crop though, which some analysts are questioning.

Trade is still closely monitoring the Coronavirus outbreak. Cases are now approaching 45,000 with just over 1,000 deaths being confirmed. The economic fallout from the virus remains unknown, although most economists believe it will be worse than the SARS outbreak. Officials in China hope to have the virus under control in the next two weeks.

Pork values in China continue to hold at historically high levels. Pork values in the country were up 116% in January 2020 from a year ago. This pushed food values in the country up 20.6% from a year ago as well. These elevated food costs are starting to have more of an impact on the country’s economy.

Spring weather outlooks are starting to gain market attention. More snow is being forecast for the Midwest where soils remain saturated and have been all fall and winter. The concern is that under these conditions even normal precipitation this spring could generate planting delays. While early, this is not weather that would be considered conducive to the high acreage numbers being predicted, especially on corn.

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.




 

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Karl Setzer Grain Commentary