Morning Comments; Friday, February 28th, 2020
Agrivisor - SETZ - Fri Feb 28, 6:19AM CST

The main focus of today’s session will be month end positioning. All of the spot contracts are now in delivery which has caused shifting of fund positions over the past few weeks. There is little doubt this will continue today. Once the calendar turns to March, we tend to see a shift in market attention. Until now most of the attention in the market has been on old crop production and demand. As we start to approach the spring planting season this shifts to more of a focus on new crop production and demand. While planting is still weeks away for much of the Corn Belt, this change in focus can have an impact on commodity futures. For one, this has historically brought about more attention to spring weather outlooks. In turn this has also elevated the amount of risk premium we see in the market in case adverse weather conditions develop. Given the size of last year’s crop with the poor weather we had this may be muted this year, and for years to come for that matter. Even without risk premium being added trade will focus more on spring weather outlooks mainly to see if any disruptions will take place to fieldwork such as last year. The USDA is projecting lofty plantings on corn and soybeans and the US will need near perfect weather conditions to achieve these. We also need to remember that a larger amount of spring tillage will need to be done this year given the wet fall last year, not to mention we still have fields that need to be harvested in some regions. We also tend to see an increase in country movement of farm stored inventory at this stage of the year. This movement, or lack thereof, can easily have as much of an impact on the cash market over the next few weeks as futures. To see elevated volatility on a whole at this time of the year is not surprising.

Highlights

* Coronavirus continues to spread

* World commodity market well supplied

* FND on March contracts

* Trade positioning for March 10th WASDE

* Disruptions to trade may be temporary

* US/India trade deal possible

* Overall SAM weather is favorable

* Fewer ethanol waivers to be granted

* Markets becoming oversold

Corn

* Producers holding corn off market

* Interior basis starting to firm

* Gulf basis steady

* South Korea shows more interest in US

* No Chinese trade

Soybeans

* Trade waits for Chinese buyers

* SAM harvest delays

* Canadian transit issues limit canola exports

* Buyers back away from US

* Brazil soy 20c/bu under US

Wheat

* Large Black Sea crops

* Buyers pass in US offerings

* Global wheat market under pressure

* Sparse fresh news

* Kenya opens up for US import

Livestock

* Beef exports at 17,754 mt last week

* Beef sales equal to last week

* Yearly beef sales +42% from year ago

* Pork exports at 38,922 mt

* YTD pork exports twice last year at 302,000 mt

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