Markets Search for Next Catalyst November 20, 2020
Good Morning from Allendale, Inc. with the early morning commentary for November 20, 2020.
Grain Markets are searching for the next catalyst even as overnight support is closely monitored. Virus concerns, weather premium, and profit taking have all been featured in recent trade. As this week gives way to another holiday-shortened week next week, volume should start to slow.
Corn export sales of 1,088,575 metric tonnes were reported in the weekly report. This was over the 600,000 – 1,000,000 trade expectation. Soybean sales of 1,387,717 metric tonne beat the 600,000 – 1,200,000 trade expectation. Wheat sales were reported at 192,389 metric tonnes, under the 250,000 – 500,000 trade expectation.
Soybean margins will increase today, effective with this afternoon’s close. The cost to hold one contract will increase from $1,800 to $1,900 per contract for front month contracts.
The Buenos Aires Grains Exchange indicated Argentine corn planting is at 31% complete. This is still a bit under last year’s 45%. Soybean planting increased to 28.8% complete. This is still under last year’s 31.3%.
The weekly Drought Monitor map added back drought for the Texas through Kansas area. Longer term forecasts maps through February do not show this situation improving.
Weekly ethanol production numbers were negative the week with a year/year fall to now -6.9%. Implied gasoline usage was also weak at -10.2% year/year. Traders caution that as some states shutdown again due to COVID cases, demand could continue to fall.
Cattle on Feed will be released today at 2:00 PM CST. We see October cattle placements 11.4% under last year, October marketings at -1.5% year/year, and November 1 Cattle on Feed at +1.5% year/year. The Reuters poll shows -8.9% for placements, +0.2% for marketings and +1.8% for Nov 1 COF.
Beef export sales this week reported combined 2020 and 2021 sales of 60,499 metric tonnes. Year to date US beef export sales for 2020 delivery total 919,092 tonnes. That is now 8.0% over last year. Pork export sales this morning totaled 31,210 tonnes for both 2020 and 2021. For 2020 the number was 28,905, 47% under last year.
Cattle weights showed there was a 2 lb. decline from the prior week for the average steer carcass. Now at 924 pounds, dressed steers are 7 pounds off the 931 peak. Heifer carcasses in this week fell 2 pounds to 846. Hog carcass weights increased 1 pound against the prior week to now 216 pounds. Year to year they were unchanged at 1.9% over last year.
Dressed beef values were mixed with choice up 1.86 and select up 0.27. The Feeder cattle index is 137.51. Pork cut-out values were up 1.54.
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