Morning Comments; Wednesday, February 12th, 2020
Agrivisor - SETZ - Wed Feb 12, 5:42AM CST

While the US has plenty of commodities on hard, this does not mean they are in areas where needed. This continues to cause a divergence in the cash market with wide variance in basis values. To see swings on corn basis of a dollar from region to region this year are quite common. This is easily a factor that could take place the remainder of the marketing year. We are now at a stage where we will start to see a shift in market attitude. All attention over the past few months has been on demand, and while this will still remain a vital market topic, we will soon start to see more interest on production. This will start to evolve over the next few weeks and really change once we get to the start of the planting season. This normally leads to an increase in risk premium in the market, but given benign weather outlooks, ample old crop reserves, and the fact sizable crops were grown last year with less than optimum conditions any risk premium may be limited this year.

Highlights

* WASDE report contains few surprises

* Market attention back to SAM harvest

* Coronavirus applies more pressure to Chinese markets

* US corn remains cheapest in global market

* Trade waiting for Chinese business

* Tariff reductions on Friday may spur buying

* Brazil harvest gaining momentum

* Chinese consumer index up 5.4% from year ago

* China bypasses US in global market

* US dollar weighs on commodity interest

Corn

* US carryout at 1.89 bbu

* Global corn carryout 296.8 mmt

* CONAB Brazil corn crop 100.5 mmt

* Brazil harvest ahead of year ago

* Yields in Brazil better than year ago

Soybeans

* US carryout at 425 mbu

* World carryout 98.9 mmt

* CONAB predicts 123.5 mmt Brazil crop

* Privates and USDA at 125 mmt

* Argentine weather perfect for development

Wheat

* US carryout 940 mbu

* US carryout lowest in past 5 years

* Global carryout 288 mmt

* China continues to buy French wheat

* Russian stocks -4% from year ago

Livestock

* Pork demand slows

* Yearly demand still +44%

* China has resurfaced as a buyer

* Beef demand has slowed also

* Yearly beef demand on beef still +25%

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