News Source: SETZ

Closing Comments; Friday, September 25th, 2020

Trade was on both sides of unchanged today as funds started to balance out positions ahead of month end and next week’s USDA reports. Futures did rebound from yesterday’s sell-off, especially soybeans. Soybeans also took support from ongoing dry conditions in Brazil and a flash sale of 100,000 metric tons of meal, although there were no sales listed to China as hoped. A strengthening US dollar and elevated harvest pressure also capped today’s recovery.

Basis values across the interior market are starting to show their seasonal volatility build. Typically, the start of harvest and inflow of new crop bushels starts to pressure basis values. Basis may not deteriorate this year as much as normal though as buyers want to keep as much grain moving as possible. One reason for this is that in recent years it has proven difficult to encourage movement once the grain is in on-farm storage. Another reason is the recent announcement of additional subsidy payments that farmers may use for cash flow instead of selling grain.

Gulf basis is also volatile, with considerably better bids being posted than a year ago, mainly on soybeans. At the present time soybean bids at the US Gulf are averaging $1.45 over Chicago futures. A year ago soybean bids were just 45 cents over futures. This strength in soybean basis is a result of the Chinese demand we have seen in recent months.

How long we see this strength in soybean basis depends heavily upon China. China is now thought to have needs covered until the South American harvest gets underway and their exports start up. China has also been buying soybeans to place in reserves, but following the recent rally, this is starting to become uneconomical. If China slows their buying it will greatly alter the recent opinions on soy complex balance sheets.

Even with recent purchases from the US, China is still booking more soybeans from Brazil. For the month of August China imported a reported 8.15 million metric tons of Brazilian soybeans. This was a 22% increase from a year ago. China’s imports of US soybeans for the month only totaled 116,370 metric tons, a 90% decrease from August 2019.

Sources in Brazil are starting to increase their new crop soybean export forecasts. It is now believed that Brazil will export 82 million metric tons of soybeans in 2021, a 1.2% increase from 2020. Soy meal exports are also expected to increase year to year by 4.7%. This would put sales at 17.8 million tons. These volumes are based on a 131.7 million metric ton soybean crop, which would be a 7 million ton increase from this year’s production. Anything less and exports will be adjusted as well.

South American soybean production on a whole is expected to increase this year. Combined soybean production in South America is now projected at 200 million metric tons, a 9 million metric tons increase on the year. It is believed that production this high will be able to cover the rise we are seeing in Chinese imports, leaving US sales little changed on the year. These numbers all depend upon weather though which has not been ideal up to this point.

One country the United States is not seeing as much competition from in the global grain market as it did a year ago is Ukraine. Ukraine is three months into its export year and has only shipped out 10.77 million metric tons of inventory. During the same period a year ago Ukraine had shipped 12.2 million metric tons of grain. The biggest decline is on corn where exports only total 619,000 metric tons compared to the 1.93 million metric tons of a year ago.

The quarterly hog and pig inventory report came in mostly as expected. As of September 1st the US had a total of 79.1 million hogs, a 1% increase from a year ago. Breeding stocks declined slightly to 6.33 million head while market hogs were modestly higher at 72.77 million.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Friday, September 25th, 2020

Futures were hit hard yesterday as the long streak of flash sales to China came to an end. This does not mean that China is totally done buying, and in fact there will be considerable interest in today’s flash sales report to see if the break attracted buyers. If not, we could see the whole mindset of the soy complex change, even if just temporarily. This lack of sales combined with elevated harvest pressure to weigh on futures, especially with technicals breaking down. The majority of today’s session will be spent with traders starting to shore up positions ahead of next week. Several factors will influence trade next week, with month end and quarter end being primary ones. We will also receive the quarterly stocks data, giving us grain inventory totals as of September 1st. In effect, these will be the old crop ending stocks figures on corn and soybeans. It would not be surprising to see elevated market activity today as some analysts will shore up positions now and simply exit the market until this data is released. We may also see some pre-hedging today as country terminals position themselves for the upcoming weekend harvest activity.

Highlights

* Flash sale streak ends

* Harvest pressure builds

* Yields starting to increase

* Weekend frost/freeze in Upper Plains

* Chinese grain harvest picks up speed

* Ethanol production increases Brazil corn plantings

* Brazil ethanol now 15-20 cents above US

* Month/quarter end positioning on the rise

* More interest on Sep 30th reports

* Trade starting to thin, volatility will rise

Corn

* Marketing year exports +74% last year

* China emerging as a top corn buyer

* Buyers cutting feed wheat to use corn

* Chinese corn yield losses at 10 mmt

* Brazil exports remain light

Soybeans

* Marketing year exports +1.4 mmt year ago

* Brazil ups export forecast 1.2% from this year

* Argentine drought to reduce plantings

* Soybean open interest corrects from record high

* Hedge pressure building

Wheat

* Yearly loadings +7.6% on the year

* Global wheat supply building

* Parts of Argentina see 50% yield reduction

* Argentine losses canceled by larger Australian crop

* Rains move through Black Sea countries

Livestock

* Cattle on feed report after the close

* On feed +3.5%, placements +6%, from August

* Weekly beef sales +26% week ago at 18,010 mt

* Weekly pork sales -25% on the week at 37,788 mt

* Sep 1st hog inventory +1% at 70.1 million head

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Thursday, September 24th, 2020

Corn and soybeans were under pressure today while wheat posted a slight rebound. The most negativity came from an increase in harvest activity and the accompanying hedge pressure. Technical weakness was also a source of pressure, although it also provided support on the downside. A firming US dollar weighed on commodities as well. Losses were held in check by strong weekly export sales, even though we did not see any flash sales announced this morning. Wheat futures managed to close on the positive side today, taking support from freeze concerns in the Upper Plains.

Even with recent rains, drought conditions are persisting in Argentina. This is mostly in the country’s wheat belt where 12% of the crop is reporting extreme drought conditions. Many portions of this region claim wheat production will be less than 50% of normal. Some regions are even stating they will see wheat abandonment due to dry soils. Dry conditions are also causing some farmers in Argentina to shift fields from soybeans to later maturing corn.

As a result of these conditions, The Buenos Aries Grain Exchange lowered their Argentine crop estimates compared to a year ago. Total production in Argentina is expected to decline this year by 6.1%. The country’s corn crop is now estimated at 47 million metric tons compared to last years 50 mmt. Wheat production is pegged at 17.5 mmt, down from last year’s 18.8 mmt crop. Soybean production is also forecast to decrease from 49.6 mmt in 2019 to a current 46.5 mmt estimate.

Even with these declines, The International Grains Council is not changing their South American production estimates. The IGC is now estimating a global corn crop of 1.16 million metric tons this year, 6 million metric tons less than in August. The IGC sites smaller crops in the US and China as the cause of the decline. Even with this decrease, world corn production is still expected to be a record. The council also believes world wheat production will be a record at 763 mmt.

Weather is also becoming much more of a topic in Brazil. Soybean planting is underway in Brazil but is progressing slower than normal given the drought that impacted the country last year is still holding on in some regions. While this is not to a stage where any production is being jeopardized, a slow planting pace opens the window for a later harvest, and the possibility of elevated US soybean sales. We are just in front of the rainy season in Brazil, which normally gets underway in early October.

These weather conditions are not uncommon in La Nina influenced years. While drought takes place in South America in such events, trade is starting to look at possible happenings in the United States in such years. It is not uncommon to see drought in the Southern Plains in La Nina events. The last time this happened was in 2017.

Export sales for the week ending September 17th favored corn and soybeans over wheat. Corn sales totaled 84.2 million bu and soybeans came in at 117.4 million bu, both well above trade guesses. Wheat fell in the middle of the estimate range with 12.9 million bu. It is no surprise that China was again listed as the primary buyer.

Meat sales for the week were also mixed. The US sold 18,010 metric tons of beef last week, a 26% increase from the week before. Pork sales on the week reached 37,788 metric tons, which was down 25% from the prior week.

Livestock trade is now positioned for tomorrow’s monthly cattle on feed report. The September 1st on feed number is projected to come in 3.5% higher than the numbers from a year ago. Placements in the month of August are pegged at 106% of last year’s, continuing the trend of high numbers of cattle moving into lots. This is not necessarily from high cattle numbers but from poor pastures in the US Plains. August marketings are expected to be on the light side at just 96.7% of August 2019.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Thursday, September 24th, 2020

While it seems early, we are starting to see the market position itself for the upcoming US election. Traders tend to shore up positions ahead of this event due to the possibility of a new administration. This can bring significant changes to foreign policy and become a factor in commodity demand. It is not uncommon to see trade pacts made and dissolved when a new President takes office. While the election is more than a month away and a new administration would not take office until early January, the market is going to start preparations now. Any potential change in a US President can also cause the value of the US dollar to fluctuate. We have already seen wide swings in the US dollar in recent months and the possibility of a new President will only add to volatility. At the same time, if President Trump wins re-election it may have limited impact on the markets as trade feels more comfortable with knowing current trade policy. The greatest unknown in the political front has been and will continue to be relations with China. For today’s session, trade will focus on harvest weather outlooks and progress and the weekly export sales totals.

Highlights

* Dredging taking place on Lower Mississippi River

* Dredging to allow for deeper draft on barges

* Planting slows in Brazil due to dry soils

* Quick ship basis offers shrinking

* Political developments impacting trade

* US dollar firms

* US ethanol margins improve

* Harvest forecast remains favorable

* Additional Covid stimulus uncertain

* Covid still impacting commodity demand

Corn

* Rapid Delta harvest limits storm damage

* China corn purchases up 43% on the year

* Ukraine corn exports -4% year to year

* Corn use in feed rations rising

* Argentine farmers may shift soy acres to corn

Soybeans

* Brazil to see record expansion this year

* Drought to reduce Argentine plantings

* Canola harvest pressure in Canada

* Global oilseed market under pressure

* Argentine crush -20% in August

Wheat

* Russia undercuts global bids

* Russian sales ramping up

* Winter wheat acres to rise

* US harvest pressure lifting

* Wheat over-valued vs. corn

Livestock

* Quarterly hog and pig report today

* Hog numbers expected at 100% of year ago

* Cattle on feed report tomorrow

* Sep 1st on feed 103.5% last year

* August placements 106%, marketings 96.7%

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Wednesday, September 23rd, 2020

Trade was weaker to start today as fresh buying interest by the funds is becoming sparse. That said, the same funds are hesitant to sell in today’s environment, which is giving us support. Soybeans took additional support today from flash sales of 132,000 metric tons to China and 126,000 metric tons to an unknown. Less than expected rainfall in Brazil and a slower planting pace also supported soybean futures. The grains struggled today as our recent rally has made us over-priced in the global market.

China’s grain imports for the month of August increased considerably from a year ago. For the month China imported 1.02 million metric tons of corn, a 340% increase on the year. Yearly Chinese corn imports now stand at 5.59 million metric tons, a 50% yearly increase. Wheat imports in August totaled 700,000 metric tons, an incredible 740% more than in August of 2019. For the year China has imported 5 million metric tons of wheat, a 137% yearly gain.

China is also showing considerable increases in its pork imports. The country took in 350,000 metric tons of pork in August 2020, twice the volume of August 2019. This was a slight reduction from the 430,000 metric tons that were imported in July, however. Calendar year Chinese pork imports now stand at 2.91 million metric tons, a 133% increase from a year ago. Even with these imports, China’s domestic pork values have risen 53% from last year.

Although we have recently seen elevated demand, trade has been slow to react in the corn complex, and some are questioning why. The main reason is that even with elevated demand we have yet to surpass the corn usage estimate being used in balance sheets. It is quite likely that until we see ending stocks on corn dip below 2 billion bu the futures market will be slow to react.

The same question is being asked in the soy complex, but an ending stock reduction in that commodity is more likely. To become bullish corn balance sheets need to shrink by 500 million bu which is quite a change. Soybean balance sheets only have to contract another 150 million bu and trade will start to become more nervous on inventory. This could easily be done with a 2 bushel per acre lower yield than currently being expected.

Sources in Argentina have released crush data for the country, indicating a reduction in processing is taking place. For the month of August, Argentine soybean crushing was down 20% from the same month a year ago. This is from 50% of the Argentine crush industry being idled at the present time. Soybean movement in the country is down 12% on the year which is causing this reduction. This is a result of the government’s higher taxes on soybeans and an unwillingness to make farm gate sales. For the year, it is believed Argentine crush will be down 9.5%.

Ethanol manufacturing for the week ending September 18th was down 2.2% from the previous week. For the week US processors manufactured 6.34 million barrels of ethanol, a 140,000-barrel decrease from the week before. Even with this decline ethanol stocks increased by 199,000 barrels to a 20 million bu total. This compares to the 22.5 million that were in storage this week a year ago.

The spread between US and Brazilian ethanol in the global market is widening back out. After narrowing to just 2 cents, the spread is again back at 20 cents per gallon. This has been a great benefit for US ethanol exports in recent weeks. Industry hopes are this spread will hold and exports will start to negate the losses being seen in domestic usage. Energy demand on a whole continues to struggle with a lack of travel following the Covid outbreak.

The August cold storage report contained mixed numbers for the livestock complex. Beef in cold storage on August 31st totaled 460.2 million pounds, up 20 million from July, but 10 million fewer pounds than a year ago. Total pork in storage came in at 467.8 million pounds, 7 million more than in July, but a large 139.1 million decrease on the year. Pork bellies saw the greatest decline with an inventory of 30.53 million pounds. This was 12 million less than July and a large 15.2 million pound decrease on the year.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Wednesday, September 23rd, 2020

Our rally on corn, soybeans, and wheat are starting to show signs of stalling as new buying is not quick to develop. The longer it does take this to happen, the greater our chance of seeing profit taking and a market reversal. Now that harvest is getting underway in the US, we are seeing more interest on yields. It is not surprising to see yields that are all over the place given the high variability we have seen to growing conditions this year. Places with favorable conditions all growing season are obviously seeing the best yields. One thing that is being noted is corn on corn acres showing lower yields. We need to remember that harvest is just getting underway and these reports will change significantly. Another factor with this year’s crops that is already getting attention is crop quality, mainly on corn. While early, test weight is already becoming a topic of discussion. Reports are increasing that while better than a year ago, corn test weight is again on the light side. This is especially the case in areas where precipitation was limited during the growing season. Same as with yields there is plenty of time for this to improve as harvest progresses and it likely will. Until it does however, we will see analysts start to show more doubt over projected production. The greatest concern with this is what it may mean for demand as some terminals in the US are still holding low-quality inventory from last year.

Highlights

* Market activity becoming more technical than fundamental

* We are one week from Sep stocks report

* Plans for oil industry subsidy are tabled

* Rains move through South America, more needed

* Interior basis volatility is building

* Ethanol slow-down causes CO2 shortage

* State of US economy remains uncertain

* Covid causing more closures globally

* Economists still project economy will improve

* Near perfect weather for US harvest activity

Corn

* Brazil corn prices attract buyers

* Average cash corn bids at 6 month high

* Corn/soy ratio favors soybean production

* Farmers selling picks up

* New crop corn sales remain record sized

Soybeans

* Soybean supply in Brazil questioned

* US soybean sales 56% of projected total

* China purchases may to 100 mmt

* Purchases totaled 96 mmt last year

* Brazil planting slows ahead of rains

Wheat

* Yearly sales +6.8% year ago

* 12% of Argentine wheat crop in drought

* Argentine farmers may abandon wheat in worst cases

* US winter wheat acres +2-3% this year

* Australian crop twice last year’s size

Livestock

* August beef in cold storage at 460.2 million pounds

* Pork in cold storage at 467.68 million pounds

* Pork belly supply at 30.53 million pounds

* Chinese pork supply down to 2 or 3 months

* More ASF found in Germany

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Tuesday, September 22nd, 2020

Futures rebounded on the open today in a classic Turnaround Tuesday action. It was suspected that yesterday’s futures break would entice import buyers, and this was correct. This morning’s flash sales report included 140,000 metric tons of corn and 266,000 metric tons of soybeans to China. An unknown was also in and booked 320,000 metric tons of corn and 264,000 metric tons of soybeans. Harvest is more of a market topic though as progress is being made across the US. While early it is apparent this year’s crops will be highly variable in both yield and quality which is not surprising.

Even with drought conditions building, Russia has started to increase its grain sales volume. Russia is on track to export 5.65 million metric tons of grain in September compared to the 5.1 million metric tons in August. The majority of September’s exports are wheat with 5 million metric tons. Corn sales out of Russia are down on the month and only expected to total 50,000 metric tons.

When it comes to global corn trade, all interest remains on China. China has an estimated 22 million metric tons of corn on its import books. Just over half of this is expected to originate from the United States with 12 million metric tons. These numbers are significantly different than the 7 million metric tons China is claiming it will import. China has already confirmed it will have a corn deficiency this year and needs appear to be greater than they are indicating, which may be a ploy to keep values depressed.

The unknown with China is just how great their corn deficiency is this year. Initial reports had the shortfall in Chinese corn production at 30 million metric tons. Since then we have seen some analysts predict the Chinese corn crop will be even smaller, and the country will have a deficit upwards of 80 million metric tons and possibly more. China’s corn crop started out the growing season with favorable weather conditions, but was soon affected by drought, and then the late season typhoons that have cut production.

China is also seeing its corn demand build as the country rebounds from the African Swine Fever outbreak. It has been reported that China’s hog herd is up 31% from a year ago at this time. We are also seeing new hog farms in China with production increase for seven months straight. In August of this year alone China opened 2,030 new hog production farms. For the 2020 calendar year China has added a total of 11,123 new hog farms to production lines.

There remain concerns in the US markets over the state of the global economy. This started yesterday and has spilled over into all markets. The concern is that many tech stocks have exhausted their run and are seeing profit taking. There are also concerns that renewed Covid travel restrictions will slow or stop more economies. In turn, this may again pressure commodity demand. One of the greatest concerns is in the livestock industry as consumers are again shopping for low-cost protein food products.

We are already seeing private analysts release their new crop acreage projections for the United States. The latest was the group HIS Markit, formally known as Informa. Markit is projecting US plantings to increase on all three major US crops next year from the current year. Corn plantings are forecast to expand by 1.7 million acres, soybeans by 3.3 million acres, and wheat by 1.1 million acres. These predictions are in line with what most other analysts have projected. The fact remains there are many factors that will ultimately determine next year’s plantings though, and these numbers will change several times.

Hog futures shot higher today, posting limit gains at times throughout the session. This came on the heels of a report that China may only have 100,000 metric tons of pork remaining in storage facilities. If correct, this is only about a two to three-month pork supply for the country. This may also lead to elevated pork imports, even higher than the already record purchases and imports we are seeing.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Tuesday, September 22nd, 2020

As expected, a fair amount of harvest took place in the US last week. Corn harvest is now 8% complete and soybean harvest is 6% harvested. This is as expected on soybeans but a slightly lower than estimated corn figure. As harvest picks up across the US, so do crop reports. So far, the most attention is on corn. Attention is not just on yield, but crop quality as well. It appears as though the quality of this year’s corn is already coming in on the low side for test weight. Early indications are pointing to a yield that would fall short of the current USDA estimate. While early, if the current conditions persist it appears as though the average corn yield this year may be at 177 bushels per acre. If everything else on corn remains constant, this lower yield and production would reduce new crop ending stocks to roughly 2.2 billion bu. This is in line with the 2019/20 ending stocks, and not what would be considered a bullish number. That said, it is well below the initial 3.3 billion bu estimate on ending stocks and would by no means be considered bearish. The possibility that ending stocks may hold steady from one year to the next is the main reason why corn futures have again started to work into a sideways pattern.

Highlights

* Informa predicts higher plantings on Corn, soy, and wheat next year

* Political tensions build in global markets

* Drought losses in Argentina stabilize

* US dollar volatility builds, impacts commodities

* US economy expected to be pressured through 2023

* Some countries reconsider lock-downs to fight Covid

* China buying to fill reserves

* Interior basis becomes choppy

* US yields mixed, quality also

* Trade starting to position for Sep 30th reports

Corn

* Harvest at 8%

* Crop is 59% mature

* Heavy activity expected this week

* China corn futures reach a record $9.06/bu

* Standability a concern on US crop

Soybeans

* Soy harvest 6% complete

* 59% of crop is dropping leaves

* Chinese soy futures hit $18/bu

* Canola at 2 year highs

* Private analysts keep US yield est steady

Wheat

* Winter wheat 20% planted

* Winter wheat 3% emerged

* Black Sea sales picking up

* US remains high priced in global market

* Ukraine soil moisture lowest in past 10 years

Livestock

* Cattle slaughter -4.5% this year

* Boxed beef shows strength

* Hog slaughter slightly above last year

* Hog weights near last year

* Consumer demand is down

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Monday, September 21st, 2020

Sizable losses were posted in the market today as fund selling developed. This was the result of several factors with losses in the equity markets being a primary one. Weather was also negative for trade today as conditions in the US are favorable for a rapid harvest pace, and in South America, they are favorable for planting of the Brazilian soybean crop. Although trade ignored them, our flash sales streak continued today with soybean sales of 132,000 metric tons to China, 132,000 metric tons to Pakistan, and 171,000 metric tons to an unknown.

The United Kingdom has indicated it may lock itself down again for two weeks to prevent the spread of Covid which started the selling in equity markets. This has generated concerns over the state of the global economy and potential commodity demand as well. Further equity market losses came from the uncertainty in US politics as a result of the passing of Supreme Court Justice Ginsburg over the weekend. Building tensions between China and Taiwan only added to the negative tone in the financial markets.

Details of the new Covid-19 relief package have been released. The subsidy package will total nearly $14 billion and cover the three major US crops along with livestock and dairy and other products. Data shows that a US farmer with a 200 bushel per acre APH on corn will receive roughly $46.00 an acre. For a farmer with an APH of 60 bushels per acre on soybeans will receive an estimated $18.72 an acre. The intent of these payments is to help offset ongoing losses from trade disruption due to the Covid outbreak.

Weather remains a significant factor in today’s trade. While most of the attention is on South America, we are also seeing conditions in the Black Sea impact trade. This is more of a case on wheat right now with dry soils likely to limit plantings and production of the winter crop. As a result, farmers in the Black Sea are not making sales, which had US futures to rally.

US weather is also a factor as we head into the harvest season. We are also seeing interest on long-range weather outlooks for the US, mainly the maps that are indicating warm, dry conditions across the Corn Belt this winter. While early, these are already generating thoughts that next spring could be drier than what we have seen in recent years. Given the fact balance sheets have already started to tighten, this is getting more attention, and earlier than usual.

Export inspections for the week ending September 17th were released today with slightly lower numbers than the previous week. This is not surprising given the logistic disruptions due to Hurricane Sally in the Gulf. For the week the US inspected 29.7 million bu of corn, 48.2 million bu of soybeans, and 17.3 million bu of wheat for loading. Of these numbers, only the soybean total was above what is needed to reach its yearly USDA projection.

A term we have started to hear in the market again is inflationary buying. Inflationary buying is a trend that develops when investors become concerned with the state of an economy and fear we will see inflation, so they shift ownership to physical products such as commodities. While this can be supportive for a market, its also generates trade such as we had today, when investors simply walk away from all markets and drive values down.

Not only did a reversal of buying weigh on today’s session, but so did a shift in fundamental attitude. Harvest is getting underway in the United States and it appears as though progress will be rapid. Not only is this putting hedge pressure on futures, but on basis as well. We are also hearing more yield data, and while under initial estimates, several are coming in as “better than expected.” This is giving trade the indication that the USDA may not be far off in their yield expectations, and crop sizes may actually increase in future balance sheets reports.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Monday, September 21st, 2020

Trade will anxiously await tonight’s weekly crop report with more interest being placed on harvest as that process gets underway. Last week the US corn crop was reported at 5% harvested and that number could easily double this week. While ratings become much less of a factor once harvest begins, we may see a shift in that figure this week due to recent weather. One weather event that is being noted is the landing of Hurricane Sally in the Delta. While this missed most of the main crop production area, it likely caused at least some loss. Another factor being monitored is the frost that took place in the Upper Plains. This was noted in last week’s report, but more damage is expected to surface this week. Crops in this region have struggled all growing season and any additional stress will be viewed as yield negative. Even if production is not lost in the Upper Plains, quality could easily be lost. Aside from harvest, trade will continue to monitor export demand this week to see if China remains an active buyer. China is getting closer to having enough coverage in place to make it to when South American supplies will become available. Any buying past this level, or the lack thereof, will have an impact on trade attitude. Trade will also be monitoring the building tensions between China and Taiwan and what impact they could have on all markets, and of course the building harvest pressure we are seeing.

Highlights

* Tropical Storm Beta hits US Gulf

* Storms continue to disrupt logistics

* Chinese/Taiwan political tensions build

* Big advances expected to harvest tonight

* US economy expected to be pressured through 2023

* Covid subsidy for ag at $14 billion

* Funding for oil refiners meets opposition

* US ethanol now a 9c discount to Brazil

* US sees more La Nina influences

* Local basis pushes seen

Corn

* Harvest near 10% tonight

* Harvest to advance quickly

* Interior basis starting to soften

* Wheat/corn spread narrows

* National average cash price $3.33

Soybeans

* Initial harvest report tonight

* China buying will be closely monitored this week

* Brazil planting to advance with rains

* Corn/soy ratio at 2.7:1

* Average cash value at $9.34

Wheat

* Spring harvest winds down

* Winter wheat planting near 15% tonight

* Australian exports to double this year

* EU exports -42% on the year

* Russian rally supports global values

Livestock

* Cash markets hold a premium to futures

* Concerns of livestock being overbought

* Consumer demand levels out

* Hog slaughter slows

* Cattle slaughter remains high

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Wednesday, September 16th, 2020

Trade was on the positive side today as once again buyers flocked to the soy complex. This drove futures higher and formed a key reversal on the daily November chart to the upside. Soybeans were further aided by another flash sale of 327,000 metric tons to China. The grains eventually worked higher as well. Grains are being restricted by the global market and how the US needs to remain competitive to maintain demand.

Even with elevated buying interest in recent weeks, China is still likely to fall short of its Phase 1 obligations. This is from the fact the guidelines of the Phase 1 plan were based on revenue rather than volume. Trade is also starting to show less interest in the entire Phase 1 plan as it simply brings sales back to where they were prior to the trade war. While we may see Chinese demand increase in the future, so is global production, and the United States will still need to remain price competitive to maintain its market share.

Another unknown on Chinese demand is yesterday’s ruling from the World Trade Organization on tariffs. The WTO ruled that the tariffs the US placed on China in 2018 when the trade war started were unfounded and need to be removed. The concern with this is China may now wish to renegotiate current purchases or possibly cancel them altogether, which seems unlikely given their elevated demand base. The US now has sixty days to appeal the WTO ruling.

Weather in the Black Sea was a disruption to grain production in that region a year ago and is again this year. While planting of winter crops is starting to get underway in the Black Sea, they are going into drier than cared for soils. This is mostly an issue for wheat production at this time. It is possible that this is why Russia is currently holding its wheat off the global market.

The La Nina weather event continues to build and become more of a market factor. Forecasters now claim there is a75% chance of a La Nina being in place through the winter months. Typically this brings drought to Argentina, but favorable growing conditions to Brazil and Australia. The pattern can generate mixed conditions in the United States, with wetter patterns in the north and drier conditions in the south. The real question with this event is how long it will last, and if it will be gone by next year’s growing season.

Trade is closely monitoring the Brazilian economy. Brazilian officials have recommended removing import tariffs on commodities to lower food costs in the country. Right now this rate is at 8%. While this may lower consumer costs, it will also remove a portion of the country’s revenue. What is most likely is windows of opportunity for tariff-free imports in a quota system, similar to what other countries offer.

Another uncertainty in Brazil is their export forecast on soybeans. The Brazilian firm Safras is estimating new crop soybean exports at 82.5 million metric tons, which would be unchanged from this year. This seems low given estimates for Brazil to increase soybean production by 10 mmt this season. The answer may be in Brazil’s expanding domestic use of commodities, and how these soybeans may be needed for crush.

The ethanol manufacturing report for the week ending September 11th was again mixed. Ethanol production for the week was down 1.6% from the previous week at 6.482 million barrels. Yearly ethanol production remains 7.4% under last year according to numbers from Mid-Co Commodities. We did see a 195,000-barrel decrease to ethanol stocks though, putting them at 19.8 million barrels versus last year’s 23.24 million.

US ethanol values have been on a steady rise in recent weeks. Ethanol for export now has an average value of $1.55 per gallon. This is a 4-cent increase from a week ago and narrows the gap between the US and Brazil. US ethanol is now only 2.7 cents lower than Brazilian ethanol in the global market. Given the lower stocks the US is seeing ethanol values are likely to keep rising.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Wednesday, September 16th, 2020

Weather has again moved to the front of the market as a price discovery tool. In the United States all interest is on conditions as we start the harvest season. For the most part, conditions are favorable across much of the Corn Belt and fieldwork will start with few disruptions. This is being reflected in basis levels with buyers who anticipate delivery of new crop bushels not pushing for coverage. One region where weather is more of a concern in the US is the Deep South where Hurricane Sally is disrupting fieldwork as well as exports. We are also seeing attention on the Upper Plains where more frost is expected this week. While only limited damage took place from last week’s cold temperatures in this area, Canada had more losses, mainly in canola. We are also seeing more interest in South American weather as soybean planting is underway in Brazil. Soils are reported as dry in the country, but at this stage, that is actually a benefit for plantings. Rains are forecast to begin later this month as the seasons shift which is favorable for not just planting but crop development. Even Argentina has seen rains in recent weeks, helping to stabilize the country’s drought losses in wheat.

Highlights

* WTO rules against US on Chinese tariffs

* EPA rejects 54 blender waiver requests

* Brazil yearly ethanol production -13%

* 75% chance of La Nina through winter

* Government may subsidize oil industry

* Sally disrupts export activity

* More US frost likely this week

* Brazil wants to expand US trade talks

* China/EU trade issues develop

* Harvest activity picking up

Corn

* Brazilian production estimates rising

* US corn crop remains 2nd largest in history

* Crop loss from Hurricane Sally likely

* Larger ethanol production expected

* Chinese import forecast rising

Soybeans

* Brazilian planting advances

* Futures rally to increase SAM plantings

* NOPA crush for August a 9-month low

* Trade showing more interest in new crop dynamics

* Canola reaches record highs in Canada

Wheat

* Global wheat production rising

* Rains benefit Argentine crop

* Australian crop estimates increase

* Market becomes buyer friendly

* US becoming over-valued in world market

Livestock

* Wholesale beef is mixed

* No cash cattle trade this week

* More countries ban German beef

* Brazil sees record pork exports

* Chinese hog herd +31.3% in August

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Tuesday, September 15th, 2020

Futures were mixed to start today’s trade but were on the negative side shortly after the day session got underway. Fundamentally nothing has changed in the market, and losses were more technical in nature. Corn and soybeans both worked into over-bought territory and instigated the correction. A flushing of weak longs added to the negativity, especially in soybeans. Losses were limited by reports of frost damage in the Upper Plains with most loss in North Dakota. We again had flash sales today with China buying 132,000 metric tons of soybeans and an unknown taking 132,000 metric tons of soybeans and 120,000 metric tons of corn.

Brazilian soybean exports are staring to slow but remain higher than initially thought. The USDA is currently predicting Brazilian soybean exports this year at 81 million metric tons, but indications are this is between 1 and 3 million metric tons too low. The country’s soybean exports are forecast to remain high into 2021, with the firm Safras already indicating sales of 82.5 million metric tons. These forecasts remain heavily based on Chinese demand, which shows no signs of slowing.

Brazil’s corn exports are starting to ramp up but remain below last year. Last week Brazil exported an estimated 55 million bu of corn which is up from recent weeks as soybean loadings do slow. For the year, Brazil has exported 20.3 million metric tons of corn, well below last year’s 26.6 million metric tons at this time. While heavy soybean exports are one reason for this decline, so is the elevated use of corn domestically for feed and ethanol.

Trade is starting to question this year’s energy product demand and what it could possibly mean for ethanol usage as well. Gasoline demand in the month of August was down 18% from a year ago. This is not that surprising given the lack of travel that continues following the Covid 19 outbreak. The Energy Information Administration predicts world crude oil demand will average 93.1 million barrels per day for 2020, down 8.3 million barrels from 2019. This is expected to rebound 6.5 million barrels per day in 2021, but still be depressed overall.

This same loss of demand is being noted in the ethanol industry. Data indicates global ethanol production is down 20% this year from last. This is from a lack of travel and has led to the closing of 250 ethanol plants world-wide. In the United States there is a 10% decrease in ethanol demand at the present time as many of the closed plants have started to resume manufacturing. Industry officials believe we will see ethanol production rebound to normal levels in the 2022 calendar year.

The National Oilseed Processors Association soybean crush report for August was released today with less than expected demand being shown. For the month NOPA members crushed 165.05 million bu of soybeans, the lowest monthly amount since last November. The August crush total was 4.5 million bu under expectations and well below the 172.8 million bu seen in July. Soy oil reserves at the end of August totaled 1.519 billion pounds, the least amount in nine months.

China’s hog numbers continue to grow as the country rebounds from its African Swine Fever outbreak. According to data from Mid-Co Commodities, China had a reported 31.3% more hogs in production at the end of August than it did at the end of August 2019. Sow numbers in China were up 37% from last August. This increase in numbers has generated elevated feed demand in China and is a leading reason for the high corn and soybean imports we are seeing.

Even with these elevated hog numbers the United States may see higher pork export demand to China. This comes on the heels of the ASF outbreak in Germany that has led to China shutting off imports from that source. Germany has been China’s 3rd largest pork supplier, and this now leaves a void that will need to be filled. US exporters are hoping to see a significant portion of this demand.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Tuesday, September 15th, 2020

The weekly progress report has started to take a shift for corn. The crop is rated 60% Good/Excellent, but now that harvest is underway trade will be more interested in yields. Soybeans are rated 63% G/E, but as with corn, trade is now interested in production rather than ratings. Now that the September WASDE report is behind us, trade is focusing on the data that will be released at the end of the month. On September 30th we will receive the quarterly grain stocks. In effect, this will give us our old crop ending stocks figures. We will also see domestic wheat production updated as that data was omitted from the WASDE release. This data can not only alter old crop balance sheets, but those on new crop as well. September 30th is also the end of the quarter which can cause an increase in volatility ahead of it. Until then, we will start to see more attention on actual field collected data as harvest will gain momentum over the next few weeks. When it comes to harvest the most interest will likely fall on Iowa to see if crops are as bad as indicated. If not, it could not only cause a reaction in futures, but in local basis as well. Of course we will see more attention on South American weather as planting is now taking place there as well, mainly on Brazil’s soybean crop.

Highlights

* State of global economy debated

* New crop acreage being predicted

* Crop damage from frost reported

* Feed grain demand expected to rise

* Trade still waiting for Covid relief package

* US/China political tensions rise

* CFAP payments reach $9.7 billion

* Markets become over-bought

* Rains moving through both Brazil and Argentina

* Black Sea reporting drought conditions

Corn

* US crop is 41% mature, normal is 32%

* US corn 5% harvested

* Chinese crop smaller than thought

* DDG values decline

* China to allow additional tariff-free imports

Soybeans

* Soybeans rated 63% G/E

* 37% of soybeans dropping leaves

* NOPA crush today at 169.5 mbu

* Chinese values weaker

* Frost hits Canadian canola

Wheat

* Spring wheat 92% harvested

* Winter wheat 10% planted

* Russia continues to raise crop est; now at 83.5 mmt

* US to see elevated export competition

* Buyers already pass on US offers

Livestock

* Cattle slaughter -4.6% from year ago

* Hog slaughter +1.3%

* US hog expansion to slow

* China bans German pork

* Germany is 3rd largest pork supplier to China

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Monday, September 14th, 2020

Trade started out the week on the positive side with soybeans remaining the market leader. This strength carried over from last week’s finish in response to the monthly WASDE data that showed tighter domestic ending stocks. The grains were mixed to start the week with wheat in positive territory and corn on both sides of unchanged. Several flash sales were announced this morning, with sales of 350,000 metric tons of corn to China and 106,000 mt of corn to Japan. On soybeans we had sales of 129,000 mt to China and 318,000 mt to an unknown. More attention was on weather today as conditions appear favorable for the start of the US harvest, as well as for soybean planting in Brazil.

The Farm Service agency has updated its harvested acreage estimates for the United States. The FSA is now estimating corn prevent plant acres of 6.078 million this year, a 731,000 increase from their July 31st estimate. Prevent plant on soybeans is now pegged at 1.45 million acres, a 228,000-acre increase. The majority of these prevent plant acres are in the Dakotas where spring flooding limited planting.

The group Stats Canada was out with that country’s production figures today. Stats believes Canada will produce 14.03 million metric tons of corn this year compared to 13.4 mmt last year. Wheat production in the country is estimated at 34.1 mmt, up from last year’s 32.35 mmt. Canola production is expected to decline slightly from last year’s 19.47 mmt to 19.4 mmt this year.

Brazil has been selling soybeans at a record rate and has likely once again over-extended its bookings. Last year Brazil did this on corn and was forced to make imports prior to harvest. We are now hearing reports that Brazil is importing soybeans from Paraguay for the same reason. One reason for this may be economics, as Brazil can sell its soybeans for higher values than they can make imports for. It is believed this is a trend that will likely continue next year as Brazil already has record new crop sales on the books.

At the present time Brazil has 48% of its 2020/21 soybean crop sold. This is twice as much as the country normally forward contracts. In a highly unusual move, Brazil is also selling soybeans for its 2021/22 marketing year as well. Concerns are this will further narrow the window for the US to supply soybeans to the global market.

China continues to buy US commodities but there remains concern over how long their demand will last. One reason for this is that China’s projected needs until the next South American harvest will begin are almost covered. Another is the ongoing trade tensions between the two, which were only heightened last week when it was announced the US is considering actions against China in opposition to labor issues. The combination of these two factors is why the market is not reacting as much as hoped to daily sales news.

While much of the interest in the market has been on Chinese soybean demand in recent months, the country’s corn demand is also a market factor. China’s corn imports are now estimated at 7 million metric tons for both this marketing year and next as demand continues to outpace production in the country. This projection for the 2020/21 marketing year is confusing as China already has 8.8 mmt of corn imports on the books. Chinese officials are also predicting soybean imports of 96 mmt for this year and 95 mmt for next year.

While mostly overlooked, export inspections for the week ending September 10th were released today. Inspections totaled 34.6 million bu on corn, 41.18 million bu on soybeans, and 23.4 million bu on wheat. These are all favorable numbers but were slightly lower than in recent weeks.

There are concerns that corn and soybeans are becoming technically over-valued. The 14-day Relative Strength Index is an indicator that is used to determine the bullish or bearish sentiment of a market. At the present time the 14-day RSI is at 72% on corn and 87% on soybeans. Any values above 70% is considered over-bought and signals a correction may be coming.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Monday, September 14th, 2020

The majority of today’s session will likely be spent realigning futures positions to match the WASDE supply and demand numbers from last Friday. The most talked about was and will be the sizable reduction to new crop soybean ending stocks from 610 million bu in August to the current 450 mbu level. This is also a 115 mbu reduction from old crop to new crop. Corn changes were less drastic, and mostly in line with trade expectations. Corn yield and production were both down from August but in line with trade estimates. Corn carryout is still projected at a comfortable 2.5 billion bu this year though, and while down from earlier projections, is still 250 mbu more than last year’s carryout. Trade will show interest in tonight’s crop condition report, but not as much as in recent weeks. The crops are maturing, and more interest is on actual yield numbers that will soon be seen. The next weekly number that will get interest is likely to be the winter wheat planting progress for an indication of how many acres of that crop may be seeded this year. Early indications are winter wheat acres will be up given current returns compared to other crops.

Highlights

* WASDE data supports trade

* Stats Canada production data today

* US harvest activity to increase this week

* Lower consumer confidence becoming an issue

* Economists closely monitoring holiday sales activity

* Planting advancing in Brazil

* Dry soils seen as a benefit for now

* US ethanol demand 10% under year ago

* Brazil to extend tariff-free imports for 90 days

* Trade now focused on September 30th data

Corn

* Average corn yield 178.5 bpa

* Crop size 14.9 bbu

* Global ending stocks 306.8 mmt

* 19/20 carryout 2.25 bbu

* 20/21 carryout 2.5 bbu

Soybeans

* Average Yield 51.9 bpa

* Crop size 4.31 bbu

* Global ending stocks 93.6 mmt

* 19/20 carryover 575 mbu

* 20/21 ending stocks 460 mbu

Wheat

* 20/21 ending stocks est 925 mbu

* 19/20 world carryout 299.8 mmt

* 20/21 world ending stocks 319.4 mmt

* Record Australian crop

* More production data in Sep 30th reports

Livestock

* US 20/21 beef production 3.14 billion pounds

* US beef production +244 million pounds from 2019/20

* US 20/21 pork production 7.65 billion pounds

* Pork production +103 million pounds from 19/20

* Average values at $111.75 on live cattle, $44.25 on hogs

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Thursday, September 3rd, 2020

Even with friendly news, trade was under pressure for much of today’s session. Export sales were high on all commodities and we had additional flash sales on soybeans of 318,000 metric tons to an unknown and 132,000 metric tons to China. These were rumored yesterday though and had a “sell the fact” effect on the market. Early harvest data is starting to come in on the US crops and it appears that to start, yields are not as poor as thought, which applied pressure to day’s trade. Sharp losses in the equity markets also weighed on commodity trade as investors pulled money out of all markets to regroup. Once again soybeans rallied into the close as buyers surfaced late in the session.

Export sales for the week ending August 27th were favorable for the grains and soybeans. Corn sales totaled 3.77 million bu on old crop and a large 94.05 mbu on new crop. Soybean sales were split with 3.24 mbu on old crop and 64.77 million bu for new crop. Wheat sales were a solid 21.5 mbu on the week. China remains the leading buyer of all three commodities.

Exports on the meats were also released today, with favorable numbers as well. Beef sales totaled 11,354 metric tons which ins line with recent sales. Pork sales were the 2nd highest of the calendar year though at 53,646 metric tons. It is no surprise that China was the leading buyer of US pork, taking 54% of total sales.

A rumor hit the market late yesterday that Brazil was in the market for US soybeans for import. It is really not that surprising that this would happen as Brazil can sell their soybeans for record values and then replenish reserves with cheaper US inventory. Sources claim that while possible, the market is still not where it would make economical sense for Brazilian crushers. They believe for Brazil to make soybean imports from the US the spread between the two countries needs to narrow another 25 cents.

There are several analysts and producers who have been disappointed with the market’s reaction to our recent flash sales and elevated export demand on grains and soybeans. The main reason for the poor reaction is that we have yet to meet the high sales projections the USDA has set in balance sheets. Until these are surpassed, the market may continue to hold futures at current levels.

One area of demand that is getting the most attention is corn for ethanol. During the month of July the US ethanol industry consumed 424.4 million bu of corn. While this was up from June, it is still a 5.68% decline from a year ago. This brings into question the 7.2% increase in corn demand the USDA is projecting from old crop to new crop for ethanol usage. This would put new crop corn consumption at 5.2 billion bu, and while possible, seems like a stretch at this time.

The greatest unknown on commodity demand on a whole is China. This is not just domestically, but for the entire world market. China has stated that there is no food shortage in the country but continues to import large volumes of all commodities. There are also sources in China that claim the country will have a corn deficiency estimated at 30 million metric tons this year. This has created the opinion that China’s need of commodities is more of a factor in recent purchases than the Phase 1 agreement.

A benefit for the United States in global grain demand is less competition from countries such as Ukraine. Ukraine was a leading competitor for the US on grain sales this year, but lower production will cut that source’s exports as well. It is believed Ukraine will export 4 mmt less corn and 500,000 mt less wheat this coming year than last. This will reduce the main source of export competition for the US to South America where production is also starting to be questioned.

Trade is already starting to monitor the new crop price spread between corn and soybeans. The rating between new crop futures has narrowed, but still stands at 2.65:1. This means it will take 2.65 bushels of corn to equal the value of one bushel of soybeans. A ratio this wide tends to favor soybean production over corn. While it is very early for this to significantly influence new crop acres, before long it will become more of a topic, and in turn a market factor as well.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Thursday, September 3rd, 2020

We are starting to hear mixed opinions on this year’s crop conditions. While the national crop ratings have declined in recent weeks, these have been drug down by conditions in a few select regions. Others have claimed crop conditions have actually improved following rain events and cooler temperatures. Some regions of fringe states are reporting soybeans that are still setting pods, which will help offset losses in other areas, mainly the much talked about Iowa. Even in Iowa sources claim the crops are not as bad as initially thought. It appears as though this is definitely going to be a year with very good and very poor crops. As always, this mixed opinion is giving us an elevated amount of volatility in the futures market. Commodities are also being driven by the outside markets, especially the US dollar. The US dollar continue to drop in value which is historically beneficial for US exports. While US export interest has perked up recently, some buyers report having most of their needs covered and are unwilling to extend coverage, even with a weaker dollar. Many are also waiting to see if the dollar decreases even further before extending coverage, especially on the new crop months. Much interest will be placed on the soy complex today as yesterday there were several demand-based rumors that gave it support. These included reports of several Chinese purchases and speculation that Brazil may be importing US soybeans.

Highlights

* New farm incomes in 2020 to reach $102.7 billion

* 2020 farm subsidy payments a record $37.2 billion

* CFAP payments totaled $9.44 billion on August 31st

* Iowa leads CFAP payments with $935 million

* Much cooler temperatures forecast for next week

* Yields may be better than thought

* Commodity use does not exceed projections

* China’s economy appears to be improving

* China suspends more Australian imports

* Brazil may extend ethanol import tariff waivers

Corn

* Global corn plantings rising

* Harvest activity rising

* Corn use for feed up

* US total corn exports at 1.64 bbu; was 1.86 bbu year ago

* Brazil August corn exports -11% from 2019

Soybeans

* Buyers showing more interest in Brazil new crop

* Brazil only received 75% of normal precip in August

* Soybean planting in Brazil to start next week

* Brazil August exports +1.2% from last year

* US July soy oil stocks -6.4% from June

Wheat

* US yields remain “good”

* Market searching for fresh news

* Early frost potential monitored in upper Plains

* Large Canadian crop adds market pressure

* US struggling to remain competitive

Livestock

* Cash trade very light this week

* Consumers opting for cheaper cuts of meat

* China food shortage questioned

* Brazil August beef exports +28,000 mt year ago

* Brazil August pork exports up 38,700 mt from 2019

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Monday, August 31st, 2020

Trade started this week where it left off last week; with funds buying and covering short positions. The most interest remained in soybeans and is a result of the weather-related impact on production. While rains did move through the Corn Belt over the weekend, precipitation amounts varied. Forecasts have also removed several chances of rain for the remainder of the week. This has already created the driest conditions across parts of the Corn Belt since 2013. We did see our string of flash sales continue on corn with China booking 596,000 metric tons, although once again no sales were listed on soybeans.

The firm Stats Canada was out with its production forecasts for this year early in today’s session. The group is predicting a Canadian corn crop of 13.93 million metric tons, up 500,000 metric tons from a year ago. The Stats soybean forecast is for a 5.96 mmt crop, just under last year’s total. All wheat production in Canada is forecast at 35.74 mmt, up a large 3.39 mmt from last year’s crop.

The grain with the most uncertainty right now is wheat. Several countries have indicated their wheat production will be down this year. Some of the largest are the EU with a 3 million metric ton decrease from a year ago predicted, and Argentina where some locals believe he wheat crop will be down 50% on the year due to drought. Other regions claim their crops will be much larger on the year, including Russia, Australia, and even Brazil. This is why even with regional losses, it is believed global wheat production will still be larger than last year.

Trade continues to monitor the developing La Nina weather event. It is believed that a La Nina will build over the next few months but may not be real long lasting. Current models indicate the event may start to break down and be back to neutral by year end. If correct, this may have limited impact on global production. The exception to this is Argentina where crop loss is already being reported, primarily on the country’s wheat crop.

Trade remains confused by the Brazilian corn market activity. Corn values in Brazil have rallied to record levels in recent weeks, even with the country harvesting a record sized crop. Brazil has also reduced import tariffs on many commodities, including corn, to help prevent inflation in the country. At the same time, Brazil is still selling its corn into the global market. There is speculation Brazil is doing this as they feel corn will be cheaper in the future and they can replenish stocks at a lower value than currently seen.

When it comes to global corn demand, trade is keeping a very close eye on China. China is expected to import 276 million bu of corn this year according to the USDA and is getting very close to this total. Thoughts are that China may only need to import another 20 million bu and they will reach this volume. Trade is questioning if China will continue to import US corn past this level, or possibly take newly harvested corn out of Ukraine.

Export inspections for the week ending August 27th were sharply lower that the previous week. A reported 15.8 million bu of corn, 29.5 million bu of soybeans, and 18.9 million bu of wheat were inspected for export during the week. This was the result of Hurricane Laura moving into the Gulf of Mexico and the suspension of nearly all port activity. Numbers are expected to rebound considerably next week.

For several months China has been the leading importer of US pork. For the year China has imported 38% of the total US pork exports of 1.5 mmt. We are now seeing China increase its beef imports with last week’s purchases totaling 3,315 metric tons, the most on record for one week. The building trade tensions between China and Australia are thought to be behind the increase in US trade, as is the simple ongoing rise in Chinese meat demand on a whole.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Monday, August 31st, 2020

The majority of today’s session will be spent getting final month end positions in place on the September contracts. While most contracts have already been rolled, there are always a few left that increase market volatility in thin trade. Trade will again show interest in the weekly crop ratings tonight that are expected to show further declines in condition. This is not uncommon at this time of the year as the crops are maturing. Field scouts are claiming the lower conditions may be a result of the crops dying however, which is not a good situation. This is a sign the crops did not fully mature and tends to lead to lower test weights and quality issues later on. Even if the crops would receive rains now, they would likely be too late to provide much benefit, especially on crops that have been stressed for several weeks. In fact, rains at this stage of the year can sometimes been seen as negative as they can lead to harvest delays. This tends to be more of a factor in years with shorter old crop supplies, however. One concern with rainfall this year is in Iowa and the amount of corn laying over in fields, and how moisture could easily lead to additional quality loss. More immediate concern is on the dry conditions that continue to affect the US, mainly Iowa and Nebraska. Sharp losses in the US dollar are also giving the commodity complex ongoing support.

Highlights

* Month End Positioning

* Stats Canada to update acreage today

* Canadian grain stocks to be updated on Friday

* Brazil weather dry ahead of planting season

* US cutting back on Covid testing

* Gulf ethanol firms to $1.47/gallon

* China finds fewer corn auction buyers after rally

* More countries lower/remove import taxes

* China voices displeasure with US tariffs

* Gulf ports getting back to normal

Corn

* Dec corn +18 ¾ last week

* Open interest declining in corn

* Brazil Safrinha 86% harvested

* Ukraine corn harvest underway

* Brazil scales back Aug export total

Soybeans

* Nov soy +45 ¾ last week

* Export basis weakening

* Brazil soy supply larger than thought

* Global oilseed supply rising

* Chinese imports from Brazil +27% in July

Wheat

* French wheat crop -10 mmt year ago

* French wheat exports to decline 40%

* US not as competitive in global market

* Cheaper freight does benefit US

* Global wheat supply to remain adequate

Livestock

* Brazil to increase beef production 4% in 2021

* Brazil pork production +4.5% in 2021

* Taiwan to increase meat trade with US

* USDA says not enough safety measures on poultry processing

* Current guidelines to not prevent salmonella outbreaks

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Closing Comments; Friday, August 28th, 2020

Trade was mixed to finish the week with soybeans remaining the leader while the grains suffered from profit taking. Soybeans continue to benefit from drought conditions in production regions of the Midwest and forecasts that indicate these will last. We had another flash sale on corn this morning of 324,032 metric tons to an unknown buyer, but trade showed little interest given the fact global corn reserves are still expected to increase this year. It is interesting to see that soybean sales have been limited in the past week, indicating maybe buyers have needs covered for now. All contracts benefited from the weak US dollar but were pressured by a lack of fresh news.

Trade is questioning how long the current soybean demand pace will last, especially to China. It is no secret that China is the leading buyer of US soybeans at the present time and claims they will make record purchases this calendar year. China has been booking huge amounts of Brazilian new crop soybeans though and trade is now starting to speculate when China will have enough coverage until those soybeans become available. For reference, China purchased 8.18 million metric tons of Brazilian soybeans in July compared to just over 38,000 metric tons from the US.

Trade is also trying to figure out the corn situation with China, and how much demand we may see on that grain. Sources in China report the country has depleted much of its usable corn reserve and remaining inventory is being passed on. This was verified by this week’s corn auction in China that did not sell all that was offered, unlike all sales up to this point. Corn in China has also rallied to a point where it is at a $100.00/metric ton premium to US corn imports. Thoughts are this could lead to between 15 and 20 million metric tons of Chinese corn imports this year.

Several other countries have indicated they may be upping their grain imports in the near future. Both the EU and Brazil announced this week they would be scaling back or totally eliminating import tariffs this week in an effort to curb rising domestic commodity prices and limit inflation. There are some thoughts that this may be needed to cover demand though, especially in the EU where drought cut this year’s production. Trade is questioning why Brazil would do this after just harvesting record crops, and while still making exports.

We have started to see analysts revise their corn production estimates given recent weather conditions. Several analysts are now predicting a 178 bushel per acre corn yield and a 14.86 billion bu crop. While this is under the 15.28 bbu of production being estimated by the USDA, it is 2.2 bbu more than the US produced last year.

We have also seen revisions to the US soybean yield, with some surprising figures. The USDA is currently projecting a national average soybean yield of 53.3 bushels per acre. This is well above the baseline trend yield estimate on soybeans of just 50.3 bpa. History indicates that with recent weather conditions the soybean yield may be no greater than 51.8 bpa. Some analysts believe the yield will be closer to 52.5 bpa though, as they believe losses in drought regions will be made up for with favorable yields in others.

When it comes to global corn production, more attention is being placed on Brazil after their sizable projected increase in new crop production this week. Brazilian officials predicted a 12% increase in crop size to a record 112.9 million metric tons. This is mainly from a 7% increase in planted acres. The production will be split with 23% from the 1st crop, 74% from the 2nd crop, or the Safrinha crop, and 3% from the 3rd crop. The most interest is on the 3rd corn crop in Brazil as that is where the most expansion will likely come from in the future.

When we talk about Brazil most interest is normally on soybean or corn exports, but we are starting to see more attention on their meat sales potential. Brazilian officials believe that country will export 10.5 million metric tons of beef in 2021, a 4% increase from 2020. Pork exports are expected to increase 4.5% in 2021 to total 4.3 mmt. A weak Brazilian Real and elevated demand from buyers such as China are behind the higher export forecasts.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

Morning Comments; Friday, August 28th, 2020

The majority of today’s session will be spent getting final positions in place ahead of month end. Next Monday is first notice day on the September contracts which will be more of a factor for corn and wheat than soybeans as most soybean contracts were rolled directly to November. We are also quickly approaching the harvest season which will cause a shift in how trade looks at weather. While there is still time for rains to benefit developing crops, they will also generate concerns of harvest delays if conditions turn overly wet. There is plenty of old crop inventory to satisfy demand so delays will not impact the grain supply, other than for those who decided to not extend coverage. What rains can do at this time of the year is cause quality issues and make it harder to crops to dry down normally in the field. This is especially the case on corn. The greatest concern on soybeans is rain causing pods to swell and burst. These are worst case scenarios, but any reduction to production is likely to get market attention given the large production estimates we have.

Highlights

* Trade assessing Hurricane Laura damage

* Most commodity values back to pre-Covid levels

* Brazil seeing more demand than the US

* Renewable fuels become political debate topic

* La Nina continues to build

* US temps to drop to below normal levels in some regions

* US ag exports forecast at $140.5 billion in 2021

* Ag export projection +$5 billion from 2020

* Energy demand remains depressed

* China claims flooding caused little crop damage

Corn

* Ratings expected to decline again next Monday

* Trade closely monitoring IA, NE crops

* So Africa now backs off production estimate

* US crop still record sized

* Export basis firming

Soybeans

* Further reduction to ratings likely

* Rally in soy to encourage SAM plantings

* China buys more from Brazil than US

* US crop still one of US’s largest

* Ending stocks may still remain above 500 mbu

Wheat

* US wheat exports +3% on the year

* US values pressured by global production

* Winter wheat production +5 to 10% this year

* EU wheat crop 6 mmt under USDA estimate

* Argentine losses build from drought

Livestock

* China to auction 10,000 mt pork today

* Chinese pork auctions total 500,000 mt

* Weekly beef sales 11,800 mt; -40% from week ago

* Weekly pork sales 39,443 mt; +91% last week

* China accounted for 28.4% of export demand

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.