Demand in Focus this Morning

Good Morning from Allendale, Inc. with the early morning commentary for January 22, 2021.

Grain Markets turn to demand numbers with the latest in export sales and ethanol production data both being released this morning. Traders expect volatility to remain after the reports as the market weighs South American production, Chinese Demand, and the potential for new policy out of Washington, D.C.

Weekly export sales will be released this morning, one day later than usual due to Monday’s holiday. Traders expect to see corn sales of 600,000 to 1,200,000 tonnes, 1,100,000 to 2,100,000 tonnes of soybeans, and 250,000 to 650,000 tonnes of wheat.

HS Markit, formerly Informa, released updated 2021 acreage estimates. They see corn plantings up from 91.1 to 94.2 million. They raised their soybean planting estimate from 89.4 to 90.1 million. Compared with last year, their planned increase went from 6.4 million acres to 7.0. Their corn + soybean increases combined would involve 10.4 million more acres.

The American Farm Bureau Federation, an agricultural trade group, says confidence is fading in the U.S. Department of Agriculture’s most market-sensitive crop reports, and the government should respond by modernizing its technology and improving transparency. (Reuters)

NOAA issued updates to their long term forecasts for April through June. They see above normal temps for all areas but the Dakota’s and Minnesota. Precipitation is seen above normal for the cornbelt. For the US Plains they see February – April with above normal temperatures and below normal precipitation (Texas through Nebraska).

Commodity Futures Trading Commission chair Heath Tarbert stepped down from his leading role yesterday as was widely expected. Chris Brummer, a Georgetown University academic is currently the leading candidate to replace Tarbert.

Last week the EPA approved three small-plant waivers. A lower court has now rejected that approval via opposition from bio-fuel groups. The issue is now in front of the Supreme Court.

CME has lowered the margin to hold one live cattle contract to $1,600, down from $1,800. The margin to hold one feeder cattle contract will drop to $2,900 from $3,375. The new rates will be effective with today’s close.

Cattle on Feed will be released this afternoon by USDA. Analysts expect to see placements down 3.0% year over year. Marketings are seen 0.6% over last year, while January 1 On Feed totals are seen -0.6%.

Steer carcass weights as of 1/9 rose 3 lbs. from the prior week. That makes two weeks of increases, 10 lbs. in total over this time. Heifer weights in this 1/9 week were unchanged from the prior week. Barrow/gilt carcass weights rose 1 lb. from the prior week. Over a two week period, this now shows a 5 lb. increase in carcass weights.

China’s Ministry of Agriculture and Rural Affairs announced an African Swine Fever finding. That was the first reported finding in three months (though many in trade do not believe it has been gone for three months).

Dressed beef values finished higher with choice up 2.29 and select up 3.00.  The Feeder cattle index is 133.19.  Pork cut-out values were up 1.24.

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