Written Commentary
Market Outlook for US and South America Regions
Grains
From the December USDA report corn, soybean and wheat futures rallied. Some linked the rally to the USDA estimate of lower U.S. 2020 corn and soybean crops and talk of increased demand for U.S. corn and soybean exports. South America weather was also drier than normal across parts of Brazil and Argentina. Talk of increased Russia wheat export taxes helped rally wheat futures.
Lean Hogs
By the end of 2020, packers had hog slaughter back to levels pre-COVID-19 after the massive disruptions in slaughter in April through May. Pork exports increased for the year with the U.S. and China signing the Phase One trade deal.
Live Cattle
The beef market surprised many in the cattle industry in December, as traders expected to see a decline in beef demand. However, retailers’ advertised specials on expensive cuts such as rib roasts beginning in November 2020 and sales remained strong through the December holidays.
Stock Index Futures
S&P 500, Dow and NASDAQ futures advanced to new record highs due to vaccine and fiscal stimulus optimism, along with better than expected quarterly earnings results.
US Dollar Index
The U.S dollar started its decline in May, but did make a near-term bottom in early January. Much of the selling can be linked to rising debt levels coupled with expectations for an extended period of low interest rates.
Eurocurrency
The euro currency made a near-term top in early January and has trended lower more recently.
Crude Oil
January crude oil futures advanced over $13 since the lows were made in the first part of November after finishing weak in October. Much of the strength can be attributed to hopes of a global economic recovery.
Gold
Flight to quality longs were liquidated in the first week of January. However, prices have partially recovered recently on increasing prospects of accelerating inflation rates.
Market Outlook for China and Asia Regions
The key Chinese and Asian event over the last 30 days has been China’s GDP growth of 6.5% in Q4 2020. For year 2020, China’s GDP growth stood at 2.3%, making it the only major economy to expand last year thanks to its success in largely taming the coronavirus within its borders. Other Asian countries are experiencing economic recovery, and expect strong growth in 2021.
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