Tag Archives: Mike Zuzolo

Summary

It’s Inauguration day and the markets are mixed. The incoming Biden Administration is appearing hawkish against China. This comes as the departing Trump Administration places a strong denouncement of China.

The outside equities are excited for today as President Biden is expected to quickly rollout a strong stimulus plan. All the information around the stimulus plan to this point has been that it will be around 10% of the US GDP or 1.95 trillion dollars. Even with this strong shot into the economy there is no plan for the Federal Reserve to back down from their current stimulus plans. The Fed is  currently pumping $120 billion per month into the economy. That makes the Fed balance sheet $7.3 billion, up 77% over the past year. M1 money supply is at $6.7 billion, up 70% year-on-year. The nation’s fiscal debt sits at $27.8 trillion. It’s that fear of debt overload that is keeping equities in check.

In the grain market the current strong sentiment against China and a slowly starting South American harvest have the bulls pairing gains and taking profits. The Tuesday overnight trade saw strong volume with the March corn contract trading 48,000 contracts and March soybeans traded 67,000 contracts. Unfortunately it was to the downside. The recent downturn has taken much of the gain away that was created following the January WASDE report.

The Biden Administration is starting off hawkish with Treasury Secretary pick Janet Yellen saying she would take a stiff stance against China in her senate confirmation hearing. The Trump Administration also had one strong outgoing message for China as the State Department labeled the Chinese government’s policies targeting ethnic Uighur Muslims and other minorities in the northwest region of Xinjiang as “genocide.” China’s foreign ministry has already fired back telling AP, “Outgoing U.S. Secretary of State Mike Pompeo is a “doomsday clown” and his designation of China as a perpetrator of genocide and crimes against humanity was merely “a piece of wastepaper.”

All of this rhetoric though may sour China from continuing purchases of US commodities in the near term. China did purchase 132,000 MT of soybeans on Tuesday in a USDA flash sale. China was also the destination for 46.8 million bushels of US soybeans last week. Not helping China stop buying from the US is the South American supply is still slow in coming to the ports. Mato Grasso Brazil’s soybean harvest as of Monday was estimated to only be 1% complete. That was 4% behind the 5 year average. Argentina is now experiencing a truck driver strike and Stone X is reporting that only 10% of the normal truck traffic is moving commodities to the ports in Argentina.

Cash cattle started to trade in Kansas and Texas after the Fed cattle exchange with live cattle trading at $110.

The Fed Cattle Exchange Auction today listed a total of 1,547 head, of which 567 actually sold, 980 head were listed as unsold, as they did not meet the reserve prices, that ranged from $110 to $112. Opening prices ranged from $108 to $109, high bids ranged from $110.50 to $111. The state by state breakdown looks like this: KS 299 total head, all 299 head sold at $110.75(grid based); TX 1,248 total head, with 268 head sold at $110.50-$111.00(live), 980 head went unsold.

For the week ending January 09, 2021, Imported Beef Passed for Entry in the U.S. totaled 34,280, 133.91% of the previous week and 109.63% of the 4-week average.

Expected Slaughter numbers Wednesday

119,000 hd today 119,000 hd wk ago 121,894 hd yr ago

Hogs

497,000 hd today 496,000 hd wk ago 493,134 hd yr ago

Midday Carcass Value  Wednesday

Beef

Choice up 0.91 218.40

Select up 0.50 206.94

C/S Spread 11.46

Loads 85

Pork

Carcass up 4.43 81.75

Bellies up 8.28 126.31

Loads 225

Grain Settlements

  • Corn dn 4 – 6
  • Soybeans dn 16 -19 1/2
  • Chicago dn 4 1/2 -8 3/4
  • Kansas City dn 6 3/4 – 7 1/2
  • Livestock Settlements
  • Live Cattle dn 0.57 up 0.02
  • Feeder Cattle up 0.72 – 1.12
  • Lean Hogs up 0.20 – 1.95
  • Class III Milk dn 0.84 -1.38

 

Pre-Opening Market Broker Commentary

Mark Gold, Top Third Ag Marketing, highlights that grains are correcting as the Biden Administration becomes hawkish on China.


Jerry Stowell, Country Futures,  looks at what may impact the livestock futures today. Hogs are trying to match the cash index.


Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Grains continue to selloff as the market realizes possible demand issues.


John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Payne wonders if a nearby low is about to establish.


Jack Fenske, York Commodities, looks at the closing market numbers.

Markets started off in risk off territory on Monday, but ended positive for most of the commodity complex. Mike Zuzolo, Global Commodity Analytics, highlights that it may have started as a buy the rumor sell the fact with Congress finally getting a stimulus package near the finish line. Then pushing the risk off button more was London moving back into lockdown with a new strain of Covid-19. At the end of the day with the World Health Organization reassuring traders that the new strain should not be of great concern with the vaccine rollout. That helped to get equities back positive and commodities followed.

Zuzolo also shares the latest information from his grower survey on planting intentions for 2021. The latest round of government aid may be the final decision some farmers have for corn or soybeans in 2021.

Zuzolo also touches on wheat and weather. There is a possibility the current La Nina could weaken into the 2021 growing season.

Catch all of Zuzolo’s market comments from the Final Bell here: