AgMaster Report - Wednesday, Dec. 23


A COVID mutation was discovered in England – sparking a panic sell-off in the financials as traders feared another pandemic! But the row crops showed their resilience – bouncing back from early double-digit losses to post new contract highs! Adding to already stout supply-demand fundamentals were the ongoing Argentina dock strike & the upcoming Russian export tax! All of this has elevated Jan Beans to plus $12 heights & six-year highs on the monthly charts! The El Nina pattern that has ravaged S/A has centered in Argentina & South Brazil! This means their production will be late & less – both very advantageous to the US! Stocks are already on 6 yr lows! What if it turns dry during planting?


Whereas beans are clearly the upside leader, Mar Corn has been no slouch – posting new contract highs on Monday! One thing holding corn back is much-diminished ethanol demand as Covid has dramatically reduced driving! But today’s passage of the relief package will provide financial aid to the ethanol industry – part of an overall $13 billion legislation – which should help bridge the gap between Covid & widespread vaccination in 2021! Plus, the simple fact that US Corn is the cheapest feedgrain anywhere – really enhances its exportability! Dryness in Argentina will hurt their corn crop & a falling dollar will really jump our exports! Finally Mar Corn Futures – even after their impressive rally – are still in the bottom 20% of their 10-year range ($3.00 – $8.00)! Corn stocks are on 5-year lows & dwindling under the pressure of massive exports! And to date, no “demand rationing” has occurred yet! In 2021, THERE IS NO MARGIN FOR ERROR!!


The most momentous news to impact the wht mkt was Russia’s announcement last week that they would implement an export tax beginning on Feb 15 & extending thru the end of June! Since the move had been widely expected, the mkt reacted in a “buy-the-rumor/sell-the-fact fashion immediately selling off! The mindset was that the mkt was already overbought & that Russian exporters would flood the mkt wht before the 2/15 deadline! but after all the smoke cleared, export taxes are friendly for global wht prices – and will support the mkt! Also, help could come from very dry Plains condition – which may jeopardize our WW crop & from spill-over from our row crops – in the midst of an aggressive the bull move off of a S/A drought & stellar exports!

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