NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
Monday, March 15, 2021
                                                                              NTG Morning Comments
                                                                                   www.nesvick.com

Weather
No big changes to the US outlook this morning. The
bottom line is we’re looking at a fairly active
precipitation pattern for the next two weeks. The 7-
day QPF is shown at the right. The big rains shown in
the HRW belt will be mostly Tues/Wed before that
area clears out for a few days. As shown in the map
at the right, however, it is likely that above normal
precipitation chances will continue into the 6-10 day
period as well. Temps should mostly average above
normal, but nothing major.

Nothing new on the forecast in South America.
Northern Brazil will see near to below normal
precipitation over the next two weeks. Southern
areas will see rainfall through the next few days but
the area should clear out after that. Argentina should
see some solid rainfall potential today and tomorrow
with additional chances for rain early next week as
well. Argentine temps should remain cool.

Crops
For a while there I had a habit updating Chinese
domestic meal and corn prices every other week or
so. At the time, prices were skyrocketing higher. I
haven’t commented on them in a while, but it is
worth a quick mention this morning as the direction
of prices has certainly changed. In the case of soymeal, the first chart below shows that prices have been falling
very sharply in the past several weeks. Since the peak earlier this basket of prices has dropped about 20%.
What is the cause in the break? Maybe the big soybean import arrivals and strong crush pace has over-supplied
the market. Or maybe the talk of a resurgence in ASF is legit?

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
Monday, March 15, 2021
                                                                               NTG Morning Comments
                                                                                    www.nesvick.com

                                    Basket of Chinese Cash Soymeal Prices
       4,300

       4,100

       3,900

       3,700

       3,500

       3,300

       3,100

       2,900

       2,700

       2,500

The situation in cash corn prices isn’t quite as dramatic but still perhaps telling. This basket of domestic corn
prices rallied roughly 50% during 2020. After initially continuing the rally in early 2021, we’ve since been stuck
at basically an unchanged price since the end of January. Hardly a disaster, but still an interesting change in
dynamics.
                                      Basket of Chinese Cash Corn Prices
      3,150

      2,950

      2,750

      2,550

      2,350

      2,150

      1,950

      1,750

I once described Chinese grain/oilseed demand as insatiable. Has that now changed?

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
Monday, March 15, 2021
                                                                                NTG Morning Comments
                                                                                     www.nesvick.com

Livestock
Just a quick update on LC basis this morning. Not that anything has changed. Basis remains record weak
virtually across the curve. The first chart below shows basis vs. the April contract. It has narrowed a bit recently
but remains historically weak and with only a few more weeks until expiration we still have a lot of ground to
cover. I’ll skip the June contract and go with a chart on the August basis next, but they look basically the same.
Suffice to say this is very abnormal basis right now.
                                            April Live Cattle Basis History
     $30.00
     $25.00
     $20.00
     $15.00
     $10.00
      $5.00
      $0.00
      -$5.00
     -$10.00
     -$15.00
     -$20.00
               59          54    49    44          39    34       29     24   19      14          9    4
                                                        Weeks To Expiration
                    2014        2015        2016        2017       2018       2019         2020       2021

                                        August Live Cattle Basis History
    $30.00
    $25.00
    $20.00
    $15.00
    $10.00
      $5.00
      $0.00
     ($5.00)
    ($10.00)
    ($15.00)
               58 56 54 52 50 48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0
                                                        Weeks To Expiration
                    2014        2015        2016        2017       2018       2019         2020       2021

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
Monday, March 15, 2021
                                                                                       NTG Morning Comments
                                                                                            www.nesvick.com

Financials
Nothing particularly new to pass along this morning. Generally speaking, the risk-on appetite continues this
morning though the enthusiasm has waned since the open last night. As an example, earlier this weekend
Bitcoin was trading above $60k but has since fallen fairly sharply and is trading near $56k as I type this morning.
Equity futures are well off their highs from last night and the dollar has reversed higher since opening weaker
last night. I don’t see any major headlines to get excited about. The big ticket item this week will be the Fed’s
meeting on Wednesday. Both the BOE and BOJ will update their policies this week as well. I’m seeing some
articles starting to get passed around hyping Biden’s
plans to raise taxes in their next spending bill. We knew
this was only a matter of time but interesting to see the
media pushing it right after the Covid bill was passed.

Meanwhile vaccines continue to roll out. Averaging 2.4
mil per day lately. At that rate every adult (18+) in
America could have one shot by June 10th.

Energy
You might have seen these stories already if you were
watching the news or Twitter during the weekend. Still,
I think it is worth a quick mention this morning. The first
one – TSA reported the highest number of passengers through security checkpoints since the pandemic started.
You can see in the chart below we’re still a long way off from “normal”, but I honestly think we’ll close that gap
pretty quickly this summer.

                                             TSA Throughput Numbers
     3,000,000

     2,500,000

     2,000,000

     1,500,000

     1,000,000

       500,000

            0
             1-Jan   1-Feb   1-Mar   1-Apr   1-May     1-Jun        1-Jul   1-Aug   1-Sep   1-Oct   1-Nov   1-Dec

                                                2019               2020      2021

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
Monday, March 15, 2021
                                                                               NTG Morning Comments
                                                                                    www.nesvick.com

The second story that was floating around Twitter this weekend was the resurgence in gasoline demand. The
chart attached here was making the rounds. This shows GasBuddy’s estimate for US gasoline demand. This
shows that US gasoline demand was up roughly 3%
from the prior week but, more importantly, was
just 0.98% below the prior year’s level. This was
right about the time we started seeing lockdowns
last year, so perhaps one could make the
argument that US gasoline demand is now almost
back to “normal”?

Today’s Calendar (all times Central)
   • Empire Manufacturing Index – 7:30am
   • Export Inspections – 10:00am

Thanks for reading.
David Zelinski
dzelinski@nesvick.com
901-766-4684
Trillian IM: dzelinski@nesvick.com

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NTG Morning Comments www.nesvick.com - Monday, March 15, 2021 - Nesvick Trading Group
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