Good Morning from Allendale, Inc. with the early morning commentary for December 9, 2020.
Grain Markets traded mixed overnight. Markets are trying to stabilize after soybeans attempted to retest last week’s low in Tuesday’s session. Improving forecasts for South America and concern that USDA may not give bulls the export sales increases they hope for on Thursday.
FDA authorities indicated the Pfizer vaccine has cleared initial hurdles with no new problems noted. The agency is preparing Emergency Use Authorization.
US equities pushed to new highs on Tuesday on the vaccine announcement.
China’s Producer Price Index, a measurement of prices at the wholesale level, rose from -2.1% year/year in October to -1.5% in November. That was even better than the trade expectation of -1.8%. Many see this as a barometer of economic activity.
Tom Vilsack, former Secretary of Agriculture, will be nominated by Joe Biden for a second go at the role. US agriculture has a neutral/positive of the former Iowa governor.
USDA has a good history of lowering US soybean ending stocks on this report. Declines were noted in 10 of the past 20 years. However, the declines were all moderate at 10 to 45 million bushels. There was no change in seven years and only three with increasing stocks.
Export prices are not yet that far in favor of Brazil. As of Monday, Brazil’s discount was only $1.90 from the US Gulf. There will still be continued sales.
Brazilian real values continue to strengthen against the US dollar. A 12% change, positive for US producers, has been seen since the recent October peak.
Chart support for January soybeans is directly underfoot, 1144 1/4. For March corn, its point of interest is 415.
French wheat planting was estimated by the government at 12% over last year, 4.73 million hectares for 2021. Though higher than last year, it was under the 5.0 – 5.2 trade expectation.
Warm temperatures in the Plains will peak tomorrow for Amarillo, TX and Dodge City, KS. They peaked on Tuesday for Norfolk, NE. There will be a 26 – 30 degree drop after that into Sunday. Some suggest this may support cattle futures.
Fed Cattle Exchange has moved viewing for its weekly Wednesday online auction to centralstockyards.com. Bidding via carcass will now be accepted.
First Notice Day for December cattle on Monday has so far brought no takers for deliveries. Assuming a normal basis, futures are implying $106 will trade this month. This week’s limited trade has run $108.
December hogs expire next Monday at noon. The market is implying cash hogs, the Lean Hog Index, will fall from the 65.62 current reading to 64.55 one week from now.
February hogs will be using a one-tick gap on the charts, 66.70 for a short term technical objective.