Virus, South American Weather and Strikes Whipsaw Grains

Good Morning from Allendale, Inc. with the early morning commentary for December 21, 2020.

US markets did an about face and sold off as the European markets opened and concerns ramped up over the newest strain of coronavirus that is spreading at a faster rate than the original. There is no data on if the new strain is as dangerous as the previous one but it has shown to be more dominant strain in new cases in the UK, South Africa and other countries.

Grain Markets surged higher as Brazil continues to battle dryness and Argentina port strikes block shipments.  Trade will continue to watch South American weather as well as any export sales on this typically quite holiday week (half day of trading on Thursday – Christmas Eve and no trading on Friday – Christmas Day).       

Last week, March corn futures were up 14.00 cents, March soybeans were up 57.50 cents, March wheat down 6.25 cents, March soymeal was up $23.90 and March soyoil was up 161 points.

CFTC Commitments of Traders showed funds new net position long +250,260 corn contracts (+269,583 last week), long +190,218 soybean contracts (+185,655 last week), long +6,672 wheat contracts (-5,692 last week), long +41,269 live cattle contracts (+38,222 last week)and long +31,744 lean hog contracts (+33,584 last week).

Brazil’s Customs Ministry reported 4.896 million tonnes of corn was exported in November.  This is 19% over last year’s monthly exports (4.110 million tonnes).

Bloomberg newswire reported on Friday due to recent strikes by Argentine grain inspectors and oilseed workers it has cut shipping down to 25% of expected for this month.  In the first two weeks of December,  soymeal shipments have been 587,000 tonnes (1.75 million tonnes scheduled) and soyoil shipments 85,000 tonnes (528,000 tonnes scheduled).

USDA Monthly Cattle on Feed Report was released Friday afternoon showing On Feed (as of December 1) at 0.0% over last year (1.3% over last month) at 12.036 million head.  November placements at 8.9% under last year (11% under last month) at 1.906 million head and November marketings at 1.7% under last year (0.1% under last month) at 1.782 million head.

As of November 1st, China is $21 billion short of reaching the $36.5 billion Phase 1 obligation.  US soybean sales to China are at 31.3 million metric tons (10.5 mmt last year)  with 3.6 mmt of soybean sales to unknown (half of which is estimated to be China).  China has purchased 11.6 mmt of U.S. corn with a portion of the 7 mmt of corn to unknown estimated to be China.

February lean hog futures finished the week up $2.67.  The quarterly Hogs & Pigs report will be released this Wednesday at 2 p.m. CDT.

February live cattle futures finished the week up $1.55 and May feeders closed the week $1.75 higher.  Cash cattle looked to stabilize at the end of last week and trade will be looking for a confirmation over the next few weeks.

Dressed beef values were mixed with choice down 0.88 and select up 0.57.  The Feeder cattle index is 138.48.  Pork cut-out values were down 1.75.

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