ADMIS AM Commentary 073119

By ADM Investor Services Research Team


Wheat prices overnight are down roughly 3 cents in the SRW Wheat, down 2 in HRW, and down 1 for HRS; Corn is down fractionally; Soybeans down 3; Soymeal down $0.50, and; Soyoil down 15 points.


For the month, Winter Wheat prices are down roughly 39 cents for Soft Red Winter, down 35 for Hard Red Winter, and down 28 for HRS; Corn is down 11 cents; Soybeans down 30; Soymeal down $15.00, and; Soyoil down 10 points (crushing margins are down 6 cents at $0.98, oil-share is up 1% at 31%).


For the year, Winter Wheat prices are down 9 cents for Soft Red Winter, down 57 for Hard Red Winter, and down 22 for Hard Red Spring; Corn is up 36 cents; Soybeans down 6; Soymeal down $6.00, and; Soyoil up 80 points (crushing margins are up 2 cents at $96, oil-share is up 1% at 32%).


Chinese Ag futures (September) settled up 5 yuan in Soybeans, down 2 in Corn, up 7 in Soymeal, down 14 in Soyoil, and down 8 in Palm Oil.


The Malaysian Palm Oil market was up 7 ringgit at 2,068 (basis October) on improved demand.


The U.S. Midwest weather forecast calls for below average temps over the next 7 to 8 days with less than average rainfall; by the end of the 10 day period, temps look to warm to a bit above average and rains are seen for much of the region.


The Southern U.S. Plains has things mainly dry over the next 10 days with the exception of the eastern third of Kansas and Oklahoma where rains will be in the region; temps will be running average to above average.


The Northern U.S. Plains looks to have below average precip over the next 10 days with temps running average to below in the east and average to above in the west.


The U.S. Delta and Southeastern states has timely showers occurring during the next week bringing rain to all areas in the Delta and the Southeast by early next week; coverage of significant rain will be erratically distributed, however.


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


In deliveries, Soymeal totaled 404 lots; Soyoil 1,057; and; Soybeans 408 contracts.


The player sheet had funds net sellers of 3,000 contracts of SRW Wheat; sold 11,000 Corn; net sold 7,000 soybeans; sold 3,000 Soymeal, and; net sold 3,000 lots of Soyoil.


We estimate Managed Money net long 21,000 contracts of SRW Wheat; net long 124,000 Corn; net short 44,000 contracts of Soybeans; net short 36,000 lots of Soymeal, and; net short 35,000 Soyoil.


Preliminary Open Interest saw SRW Wheat futures up roughly 20 contracts; HRW Wheat up 2,500; Corn up 6,300; Soybeans up 410 contracts; Soymeal down 250 lots, and; Soyoil down 10,000.


There were changes in registrations (Soybeans up 400)—Registrations total ZERO contracts for SRW Wheat; ZERO Oats; Corn 1,251; Soybeans 410; Soyoil 3,322 lots; Soymeal 745; Rice 1,036; HRW Wheat 5, and; HRS Wheat 1,176 contracts.





In tender activity—Algeria bought 570,000t optional-origin wheat—Jordan bought 60,000t optional-origin wheat—Bangladesh bought 100,000t Russia wheat—S. Korea bought 65,000t optional-origin corn—Egypt delays tender for optional-origin vegoil—


U.S. and Chinese envoys met Wednesday for trade talks after President Donald Trump rattled financial markets by accusing Beijing of trying to stall in hopes he will fail to win reelection in 2020; economists say quick breakthroughs are unlikely because the two governments face the same disagreements over China’s technology policy and trade surplus that caused talks to break down in May

—China’s foreign ministry said on Wednesday that the United States was to blame for flip-flopping in bilateral trade negotiations over the past year, after comments from U.S. President Donald Trump warning Beijing against stalling talks.

—It is unclear what triggered President Trump’s new round of tweets against China, but maybe what did the trick was news that U.S. soybean exports to China had collapsed in the first half of the year to the lowest level in more than a decade alongside another fall in pork sales in June, says NAB.




Fertilizer producer and farm supply dealer Nutrien Ltd expects U.S. farmers to plant as many as 95 million acres (38.5 million hectares) of corn next year, the most in seven years, after a frustrating year of floods, its chief executive said; the wet conditions left millions of acres unplanted across the U.S. farm belt, but have also lifted corn prices and given farmers incentive to sow more next year; we do expect a pretty significant rebound in market fundamentals in 2020; you can see it in crop pricing futures but you can also see it in some of the business we’re seeing in crop protection (products) in the third quarter; 2020 is setting up to be a very good agricultural year.


USDA June soybean crush seen at 159.4 mln bushels; the USDA is scheduled to release its monthly fats and oils report at 2 p.m. CDT on Thursday


—the U.S. Department of Agriculture (USDA) is expected to report that 4.782 million short tons, or 159.4 million bushels, of soybeans were crushed at U.S. processing plants in June

—estimates ranged from 158.6 million bushels to 161.0 million bushels

—it would be down from the 165.3 million bushels crushed in May and the 169.6 million bushels crushed in June 2018; it would also be the smallest monthly soy crush since September 2017


U.S. soyoil stocks at the end of May were seen declining to 1.946 billion lbs

—soyoil stocks estimates ranged from 1.890 billion lbs to 1.972 billion lbs

—would be down from 2.018 billion lbs at the end of May and 2.305 billion lbs at the end of June 2018.


U.S. Weekly Deliverable Stocks of

—SRW Wheat totaled 43.8 mil bu versus 42.5 mil last week and 72.1 mil a year ago

—HRW 97.5 mil (97.0 last week, 123.2 mil a year ago)

—HRS 16.0 mil bu (15.2 mil a week ago, 13.2 mil last year)

—Corn totaled 4.5 mil bu (4.3 mil last week, 4.0 mil a year ago)

—Soybeans totaled 15.8 mil bu (16.5 mil last week, 12.7 mil a year ago)


The head of the U.S. Environmental Protection Agency defended his agency’s expanded use of waivers exempting refineries from the nation’s biofuel law during a closed-door meeting with farm state senators last week, arguing the program has had no negative impact on ethanol demand; EPA Administrator Andrew Wheeler’s comments are a sign he may resist an overhaul of the so-called Small Refinery Exemption program, which President Donald Trump last month ordered members of his Cabinet to review based on complaints from the corn lobby.


More than half of the Trump administration’s $8.4 billion in trade aid payments to U.S. farmers through April was received by the top 10% of recipients, the country’s biggest and most successful farmers, a study by an advocacy group showed; highlighting an uneven distribution of the bailout, which was designed to help offset effects of the U.S.-China trade war, the Environmental Working Group said the top 1% of aid recipients received an average of more than $180,000 while the bottom 80% were paid less than $5,000 in aid.


President Donald Trump on Tuesday said he will pursue a U.S. trade agreement with Brazil, suggesting a friendly relationship with President Jair Bolsonaro could help lower trade barriers between the two biggest economies in the Americas; we’re going to work on a free trade agreement with Brazil,” Trump told reporters at the White House, without giving details.


A Chinese delegation is set to visit Argentina in August to inspect soymeal crushing plants, a key step as the South American country looks to open up exports of processed soy to the world’s No. 1 consumer; Argentina has tried for years to break into the China market, the biggest consumer of the meal which it uses to feed its giant hog herd; China, with its own crushing industry to protect, has steadfastly resisted; global trade uncertainties – including pessimism about U.S.-China negotiations that start on Tuesday in Shanghai – has, however, strengthened Argentina’s hand, grain traders said, prompting China to expand its soymeal import options.




The Prime Minister of Kazakhstan has instructed the government to intensify work toward promotion of meat exports to China and other countries; the regulatory requirements for the supply of beef have been approved by China but exports have not started so far; taking into consideration the large capacity of the Chinese market, as well as other priority countries where Kazakhstan can export meat, it is necessary to speed up work in this direction.


The heatwave in the European Union’s main wheat producers last week helped farmers to make rapid progress with harvesting, with some crop forecasts being raised, experts said; record high temperatures in France, Germany and Britain created ideal conditions for wheat harvesting, with the dry, warm weather allowing mechanical combine harvesters to operate at full capacity; rain may interrupt work this week, but confidence is growing that the EU is gathering a fine wheat crop.


Consultancy Strategie Grains raised its forecast for France’s soft wheat crop this year to 38.98 million from a previous estimate of 38.2 million tons and 34 million tons harvested in 2018; the estimate was based on an average yield in the European Union’s largest wheat producer at 7.77 tons per hectare (t/ha), near the record 7.88 t/ha reached in 2015 when the harvest stood at 40.9 million tons.


Farmers in France will harvest their second largest soft wheat crop in history this year at 39.17 million tons, as a record-breaking heatwave failed to hurt yields, consultancy Agritel said; that would be up 14.9% from last year’s weather-hit crop; Agritel projected the national yield of the ongoing harvest at 7.82 tons per hectare, 12% above last year’s poor crop and 7.5% above the average of the past five years when excluding the exceptionally high and low harvests in 2015 and 2016.


The association of German farmers DBV said it has cut its forecast of Germany’s winter wheat harvest in 2019 by about 2 million tons after the heatwave this summer, but the crop will still be up on the year; Germany will harvest about 22 million tons of winter wheat in 2019, still up from the very small crop of 19.6 million tons last year which suffered drought damage; the DRV had in its first forecast on July 3 estimated the 2019 winter wheat harvest at 24.1 million tons.


First Deputy Prime Minister of Ukraine, Minister of Economic Development and Trade on June 30 signed an agreement between Ukraine and the European Union to increase quotas for Ukrainian exporters of poultry; according to a report on the website of the Ministry of Economic Development, the annual quota for poultry will be gradually increase by 2.5 times.


Malaysia palm oil exports are forecast to be higher than thought in the year ended Sep. 30 2019 driven by unexpectedly strong demand from India through the first three quarters of this year, the U.S. Department of Agriculture’s local office; it is forecasting exports to reach 18 million metric tons, up from a previous forecast of 17.5 million metric tons; however, it notes that production is expected to be up 5.1% on year.


Malaysia is set to replace Indonesia as the top palm oil supplier to India in 2019 as New Delhi has been charging lower import tax on refined palm oil shipments from Malaysia, giving Kuala Lumpur an edge over Jakarta; the rise in refined palm oil shipments will help refiners in Malaysia and bring down inventories of tropical oil in the world’s second bigger producer, but squeeze Indian refiners that traditionally import crude palm oil.


The current rally in palm-oil prices has room to run and the benchmark contract on Bursa Malaysia Derivatives has the potential to reach MYR2,200 a metric ton by September, industry analyst Dorab Mistry said; he notes, however, that palm-oil prices could retrace back to MYR2,000 a ton as stocks start to rise; he adds that much of the price outlook will also depend on rain in the palm belt from mid-August.


Palm oil prices are likely to recover in the second half of 2019, helped by a slowdown in production growth and rising demand from the biodiesel industry, leading industry analyst Thomas Mielke said; the combination of accelerating consumption for biofuels and food, and a slowdown in growth in palm oil production will keep palm oil prices higher for the rest of this year and in 2020,” said Mielke, editor of Oil World.


Malaysia’s palm oil exports during the July 1-31 period are estimated up 4.8% on month at 1,437,790 metric tons, cargo surveyor SGS (Malaysia) Bhd. said

—Exports of Malaysian palm oil products for July rose 5.1 percent to 1,411,535 tons from 1,343,428 tons shipped during June, cargo surveyor Intertek Testing Services said

—Malaysia’s palm oil exports are estimated to have risen 1.64% on month during July, cargo surveyor AmSpec Agri Malaysia said; AmSpec puts total exports at 1,379,850 metric tons from July 1-July 31