Weekly market review
Officials in China claim that pork production is back to 90% of the levels prior to ASF decimating their swine herds. They expect pork production to have made a full recovery by the middle of 2021. This has helped increase the demand of U.S. corn exports into China.
With many farmers having a large portion of their 2020 crop sold, attention is turning to new crop 2021. Current November futures price is very close to the midpoint of soybean prices for the last 10 years. Expectations for the amount of corn acres versus bean acres for 2021 remain widely varied. Estimated net profitability of soybeans are currently $20/acre higher than corn for north central Iowa, but will that be enough to cause a large shift in acres?
South American weather remains mixed for crop development with the precipitation outlook remaining below normal in the major growing areas. However, the recent rainfalls have helped with planting progress on both corn and soybeans. Currently soybean planting is 98% complete in Brazil and 62% complete in Argentina. Corn planting progress is at 63% complete in Argentina compared to the average of 61% complete. Once soybean harvest is complete in Brazil, the market will monitor Brazil’s safrinha crop, since it contributes to a majority of the corn produced in South America
Wage discussions between large agricultural trading firms and two Argentine soybean unions fell apart this week. Workers and grain inspectors on strike have paralyzed port operations. Exporters said 85 ships are docked and unable to load grain cargoes, with another 44 ships waiting for spots to open up.
November NOPA soybean crush came in at 181.0 million bushels. That is a higher than expected. Although it is down from October’s all time high crush of 185.2 million bushels, it is a record for the month of November and well above last November’s crush of 164.9 million bushels. Cumulative market year crush is at 528 million bushels, already 35 million bushels ahead of last year’s pace. The December USDA report was calling for only a 30 million bushel increase for the entire year, so either USDA will need to adjust their crush numbers in future reports or the pace of soybean processing will need to slow down significantly.
Biden tapped Tom Vilsack to be his nominee to lead the USDA. Vilsack, who hails from Iowa, was secretary of agriculture during the Obama Presidency. During the announcement that Vilsack would be his nominee, Biden vowed to helped make American agriculture the first in the world to achieve net-zero emissions. To help make this happen, the government will create new sources of income for farmer, by paying farmers to put their land in conservation and plant cover crops that use the soil to capture carbon, according to the President-elect. House Agriculture chairman Collin Peterson says a doubling in size of the land-idling Conservation Reserve Program to a minimum of 50 million acres would be a straightforward way to achieve climate change goals through a program already in place and supported by farmers. Peterson said when unveiling his program, “Land enrolled in the program has helped to keep billions of tons of soil from eroding and sequestered millions of tons of carbon”
Ethanol production eased 34,000 barrels per day last week as margins for ethanol producers continue to be poor and some plants are slowing down production in addition to numerous plants remaining idle. Production of 957,000 barrels per day is down more than 10% from last year. Despite the lower production, stocks of ethanol continue to rise. Ethanol stocks rose nearly a million barrels from the previous week and are nearly 1 1/2 million higher than they were last year at this time.
For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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