ADMIS AM Commentary 073019

From the AgMarket.Net Staff:

Subject: Supply demand, charts and risk management ideas ahead of USDA

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By ADM Investor Services Research Team


Wheat prices overnight are down roughly 3 cents in the SRW Wheat, down 2 in HRW, and unchanged for HRS; Corn is down 3 cents; Soybeans down 2; Soymeal down $1.50, and; Soyoil up 10 points.


Chinese Ag futures (September) settled down 4 yuan in Soybeans, down 2 in Corn, up 8 in Soymeal, up 6 in Soyoil, and unchanged in Palm Oil.


The Malaysian Palm Oil market was closed for holiday.


The U.S. Midwest weather forecast calls for below average temps over the next week to ten days with less than average rainfall; a weak front is seen Tue-Wed of next week to bring some rain chances but looks to provide less than .50” with 65% coverage.


The Southern U.S. Plains has things mainly dry over the next 10 days; temps running average to above average.


The Northern U.S. Plains looks to have close to average precip with temps running average to below in the far east and average to above in the west.


The U.S. Delta and Southeastern states has timely showers will occurring this week bringing rain to all areas in the Delta and the Southeast by this weekend; coverage of significant rain will be erratically distributed; the erratic nature of the rain will lead to drying in some areas.


The 11 to 16 Day Outlook for the Midwest has the European and GFS models back in agreement of a northwest flow that provides ridging in the west while average to below average precip and below average temps are seen in the Midwest.


The player sheet had funds net buyers of 5,000 contracts of SRW Wheat; bought 9,000 Corn; net bought 5,000 soybeans; bought 2,000 Soymeal, and; net sold 1,000 lots of Soyoil.


We estimate Managed Money net long 24,000 contracts of SRW Wheat; net long 135,000 Corn; net short 37,000 contracts of Soybeans; net short 33,000 lots of Soymeal, and; net short 32,000 Soyoil.


Preliminary Open Interest saw SRW Wheat futures up roughly 6,400 contracts; HRW Wheat up 845; Corn down 2,800; Soybeans down 18,500 contracts; Soymeal down 15,800 lots, and; Soyoil down 8,300.


There were no changes in registrations—Registrations total ZERO contracts for SRW Wheat; ZERO Oats; Corn 1,251; Soybeans 10; Soyoil 3,322 lots; Soymeal 745; Rice 1,036; HRW Wheat 5, and; HRS Wheat 1,176 contracts.





U.S. Winter Wheat harvested was 75% (trade estimate was 81%) versus 69% last week, 84% a year ago, 86% average.


U.S. Spring Wheat was rated 73% good to excellent (trade estimate was 76%) versus 76% last week, and 78% average; 21% fair (20% a week ago, 18% a year ago), and; 6% poor to very poor (4% last week, 4% a year ago).


U.S. Corn silking was 58% versus 35% a week ago, 90% last year, and 83% average.

Corn doughing was 13% versus 5% a week ago, 35% last year, and 23% average.

Corn was rated 58% good to excellent (trade estimate was 57%) versus 57% last week, and 72% a year ago; 30% fair (30% last week, 19% last year), 12% poor to very poor (13% last week, 9% last year).


U.S. Oats harvested was 21% versus 12% a week ago, 36% last year, and 35% average.

Oats were rated 66% good to excellent versus 64% last week and 71% a year ago; 26% fair (28% last week, 22% a year ago), and; 8% poor to very poor (8% last week, 7% a year ago).


U.S. Soybeans blooming were 57% versus 40% a week ago, 85% a year ago, and 79% average.

Soybeans setting pods was 21% versus 7% a week ago, 58% last year, and 45% average.

Soybeans were rated 54% good to excellent (trade estimate was 54%) versus 54% a week ago, and 70% a year ago; 33% fair (34% last week, 22% a year ago), and; 13% poor to very poor (12% last week, 8% a year ago).


Last week’s seasonably mild temperatures for the U.S. Crop Watch corn and soybean fields were favorable given the drier conditions; but more than half of the producers report that their crops need rain now, and the near-term forecasts are not necessarily generous with the moisture.



The North Dakota fields finally got a much-needed break from the rains last week, allowing soybean condition to improve to 3 from 2. The other ratings are unchanged: corn condition at 2.5, corn yield at 2, and soybean yield at 2. The soybean field is finally fully flowering, though this is at least two weeks later than normal, and that does not usually bode well for big yields. The corn field is very close to putting on tassels, which begins the reproductive stage. An unexpected heavy rain late on Sunday was disappointing for the producer, but the forecast should be dry and mild until the end of the week.



The Minnesota grower left all ratings the same this week: corn and soybean condition both 4.25, corn yield potential 3, and soybean yield at 3.5. Pollination continues in the corn field and the soybean plants are starting to put on pods. Only 0.5 inch (13 mm) of rain fell last week and the outlook for this week looks dry, but the producer is not concerned about moisture for now. Temperatures will be seasonably cool this week, slightly cooler than is preferred.



The Nebraska grower maintained corn and soybean condition at 3.5 apiece but raised both yield ratings to 3.5 from 3 last week. The corn field is just about done pollinating, but more rain is needed as just 0.4 inch (10 mm) was recorded last week. The soybeans are in full bloom and starting to form pods on the lower part of the plant. The bug problem has also subsided for now. The next rain chances may not be until Friday, meaning the producer might turn on the pivots in his bean field midweek for the first time this year.



Soybean condition and yield were left unchanged at 3 apiece, but both corn scores were reduced to 3 from 3.5. The weather has been too dry and the hotter temperatures were not ideal for corn pollination. Soybeans are blooming but growth is still well behind normal, and the number of nodes per plant is just average for the stage. Most fields in the area received only 0.25 inch (6 mm) of rain last week and greatly need some moisture, especially with some heat mixing back in this week. The week’s forecast is dry.



The Iowa producer reduced corn condition to 4 from 4.25 and soybean yield potential to 3 from 3.25. The latter was reduced due to a lower number of pods per node and the delayed development. Corn yield and soybean condition were unchanged at 3.75 and 4, respectively. There was no measurable rain last week and the forecast for the next few days is dry, and the fields are greatly in need of rain. Later-planted crops in the area are especially hurting for moisture.



The Illinois grower raised corn yield to 2.25 from 2 but left all other ratings unchanged this week: corn condition at 3.75, soybean condition at 3.5, and soybean yield at 3. Parts of the corn field are still pollinating and the beans are growing slowly. The fields last had rain on July 21, though the producer is not concerned about moisture just yet. The week’s forecast is dry with very mild temperatures, except for some rain chances on Monday.



The Indiana grower left all four ratings unchanged at 3. The fields need some rain badly, and the best chance of that will be Monday evening as scattered storms will move across the area. If that rain is missed, the next opportunity may be a week out. Cooler temperatures this week will help combat the effects of the dryness.



The Ohio producer left corn condition, corn yield and soybean condition all unchanged at 4 but reduced soybean yield to 3 from 3.25. Growth has fallen short and the number of nodes per plant is smaller than expected. Corn made it through pollination, though some of the field pollinated during the hot spell a couple weeks ago, and this may have led to some erratic pollination. The fields need rain despite the corn receiving 14.4 inches (36.6 cm) of rain since its May 22 planting. The best chances for moisture are overnight into Tuesday, but other than that the week looks dry.


Yesterday’s U.S. weekly export inspections had

—Wheat exports running 24% ahead of a year ago (28% last week) with the USDA currently forecasting a 2% increase on the year

—Corn 14% behind a year ago (12% last week) with the USDA down 14% for the season

—Soybeans 23% behind a year ago (24% last week) with the USDA having a 20% decline forecasted on the year


U.S. government data on Monday showed exports of soybeans to China picking up to the most in five months last week ahead of trade talks between the two countries in Shanghai, although the shipments were for beans bought months ago and new purchases have proven elusive; China has yet to make the large agricultural purchases U.S. President Donald Trump and other top officials say were promised when Trump and Chinese President Xi Jinping met at the G20 summit in Osaka, Japan a month ago to restart stalled trade talks; the U.S. Department of Agriculture said on Monday nine bulk U.S. soybean shipments carrying about 600,000 tons were inspected for export to China in the week ended July 25, the most for a single week since mid-February; one corn cargo was also shipped last week; the soy shipments were part of a series of about 14 million tons in goodwill purchases made by Chinese state-owned firms before trade talks broke down in May


The Environmental Protection Agency hopes to rule in the next few weeks on 2018 petitions to obtain small refinery waivers from the nation’s biofuel laws, administrator Andrew Wheeler said; We’re going through them; We hope to be processing them and making decisions in the next few weeks and month at the most; the program allows small refiners in financial turmoil to seek waivers from regulations requiring them to blend ethanol into gasoline; under U.S. President Donald Trump, the EPA has more than quadrupled the number of waivers granted to refiners, saving the oil industry hundreds of millions of dollars, but enraging corn growers, another key constituency of Trump supporters, who claim the move threatens ethanol demand.


Talks between the US and China on trade set to resume in Shanghai this week are focusing on a few select issues; among them are sizable purchases of US soybeans by Chinese buyers, and a relaxation of a US ban on domestic companies dealing with Huawei Technologies.


China’s pork prices will reach a record level by the fourth quarter of 2019 due to the impact of African swine fever on domestic production, even as imports continue to surge, according to a Rabobank report; pork prices rose by nearly 30 per cent in June compared with a year earlier, according to the Ministry of Agriculture and Rural Affairs, with the spread of African swine fever showing no sign of abating, causing domestic production to plunge; prices for other meats, including chicken, are also expected to rise substantially, putting further pressure on the discretionary spending of Chinese consumers; Pan forecasts that the wholesale price for pork will reach 30 yuan (US$4.36) per kilogram, while hogs will reach 22 yuan; wholesale prices for pork in June stood at 21.59 yuan a kilogram.


The Chinese government is expected to issue 30 permits for Brazilian slaughterhouses in about 10 days to export meat to China, a farm ministry official was quoted as saying; a new inspection protocol via video conference will tend to make decisions more agile; the Chinese evaluation includes suppliers of pork, poultry and beef.


Increased demand for bird protein from China has pushed chicken prices in the domestic market; from January to June, the price of chicken increased by 13.52 per cent, an unseen increase over the past 23 years for comparable periods, according to the Inegi National Consumer Price Index; the increase is driven by African swine fever in China and its impact on meat protein markets globally, which is also affecting Mexico; this year there is an exogenous factor to our country that accentuated the price growth, not only of chicken but of all animal proteins, which has to do with the cases of African swine fever that are occurring in China; by suddenly having a gap of 18 million tons of pork, which is what is expected by the end of the year, the protein that comes closest to fill that gap that will be generated in the global demand for pork ” it’s chicken,” said the executive chairman of the National Union of Poultry farmers; the chicken market in Mexico is also resourcing the effects of a weak family economy as the effect of this contributes to higher demand for poultry meat.


Wheat farmers in Argentina are preparing for a record harvest this year

—The country could produce a harvest of around 22 million tons, besting its record of 19 million tons, the report said, citing grain exchanges in Argentina and analysts

—The bumper crop in Argentina comes as other wheat-producing nations are expecting harvests to be negatively impacted by floods, heat and drought


Russian wheat export prices remained broadly flat last week, supported by lowered harvest and export forecasts, and by farmers holding back sales; Black Sea prices for wheat with 12.5% protein content remained flat on a week earlier, at $193 a ton free on board (FOB) at the end of last week, Russian agricultural consultancy IKAR said in a note; SovEcon, another Moscow-based consultancy, quoted FOB wheat rising by $2 to $197 a ton.


Russia has harvested 47.9 million tons of grain with an average yield of 3.52 tons per hectare, data from the Agriculture Ministry showed; it had harvested 34.3 million tons with an average yield of 3.68 tons on the same date a year earlier.


Russia’s July exports of wheat, barley and maize (corn) are estimated at 3.9 million tons, up from 1.4 million tons in June, the SovEcon agriculture consultancy said.


The share of milling wheat in Ukraine’s 2019 wheat harvest is likely to rise to as much as 70% from around 55% in 2018 thanks to hot and dry weather, analysts and traders said; hot conditions across Ukraine in May and June were ideal for a high-quality wheat harvest, pushing up the proportion of food-grade wheat in the crop and creating a shortage of grain for animal feed, which has seen a consequent rise in prices; Ukraine, which is among the world’s leading grain producers and exporters, had harvested 21.7 million tons of wheat from 80% of the sown area by July 29; while the agriculture ministry gives no 2019 wheat crop forecast, analysts see output up 22% to 30 million tons.


European Union soft wheat exports over July 1-28 – the first four weeks of the 2019/20 season – came to 762,000 tons, down 22% on a year earlier, European Commission data showed

—EU barley exports stood at 225,000 tons over the same period, down 58% compared with the same period a year earlier

—EU maize imports reached 1.61 million tons, up 67% on the previous year


European Union soybean imports over July 1-28 – the first four weeks of the 2019/20 season – came to 1.14 million tonnes, up 19% compared with the same period last year, European Commission data showed

—EU soymeal imports over the same period reached 1.46 million tons, up 27% year on year

—For palm oil, EU imports had fallen 33% by July 28 to 278,000 tons


Selected highlights from a report issued by a U.S. Department of Agriculture attache in Malaysia:

—Malaysian crude palm oil (CPO) production for the first half of calendar year (CY) 2019 was up roughly 10 percent compared to the same time the previous year to 9.8 million metric tons (MT); Post has revised CPO export estimates for MY 2018/19 to 18 million MT due to unexpectedly strong demand from India through the first three quarters of the year; CPO import estimates for MY 2018/19 have also been revised up to 1.15 million MT based on Malaysia Palm Oil Board data