ADMIS AM Commentary

By ADM Investor Services Research Team


Wheat prices overnight are down roughly 6 cents in the SRW Wheat, down 4 in HRW, and down 2 for HRS; Corn is down 6 cents; Soybeans down 5; Soymeal down $1.50, and; Soyoil down 10 points.


For the week, Winter Wheat prices were down roughly 22 cents for Soft Red Winter, down 27 in the Hard Red Winter, and down 14 for Hard Red Spring; Corn was down 24 cents; Soybeans down 12; Soymeal down $4.00, and; Soyoil down 25 points (crushing margins were up 1 cent at $0.93, oil-share was up 1% at 31%).


Chinese Ag futures (September) settled up 1 yuan in Soybeans, down 16 in Corn, down 20 in Soymeal, up 8 in Soyoil, and up 10 in Palm Oil.


The Malaysian Palm Oil market was up 12 ringgit at 1,984 (basis October) on bargain hunting.


The U.S. Midwest weather forecast has a northwest flow over the next 5 to 8 days which will dominate the region bringing limited rains and average to below average temps—temps look to turn towards a bit above average at the end of the period.


The Southern U.S. Plains will see limited rainfall through the week, the weekend, and the first half of next week—-temps will be below average for the week turning to average to above by the weekend and first half of next week.


The Northern U.S. Plains will be seeing below average precip with just some hit and miss shower activity through the week, weekend, and first half of next week—temps will be running average to below average for the week warming to above average by the weekend and first half of next week.


The U.S. Delta and Southeastern states has the Delta well mixed over the next ten days with periods of rain and sunshine expected; southeastern states will experience periodic showers and thunderstorms over the next two weeks.


The 11 to 16 Day Outlook will have a zonal west to east flow bringing average rainfall to the northern Midwest but limited rains elsewhere—temps will be running average to above average.


The player sheet had funds net buyers of 4,000 contracts of SRW Wheat; bought 13,000 Corn; bought 7,000 contracts of Soybeans; net bought 1,000 Soymeal, and; net bought 2,000 Soyoil.


We estimate Managed Money net long 13,000 contracts of SRW Wheat; net long 166,000 Corn; net short 38,000 contracts of Soybeans; net short 24,000 lots of Soymeal, and; net short 33,000 Soyoil.


Preliminary Open Interest saw SRW Wheat futures up roughly 1,500 contracts; HRW Wheat up 2.700; Corn down 2,500; Soybeans up 530 contracts; Soymeal down 220 lots, and; Soyoil down 3,300.


There were changes in registrations (Soyoil down 147 lots)–


Registrations total ZERO contracts for SRW Wheat; ZERO Oats; Corn 1,251; Soybeans 10; Soyoil 3,400 lots; Soymeal 745; Rice 1,036; HRW Wheat 5, and; HRS Wheat 1,176 contracts.




In tender activity—Jordan seeks 25,000t optional-origin wheat—S. Korea bought 55,000t optional-origin corn—


Some Chinese companies are seeking new purchases of U.S. agricultural products, China’s official Xinhua news agency said on Sunday, citing authorities, as Beijing and Washington look for ways to end a protracted trade war; Chinese businesses have made inquiries with U.S. exporters to buy crops and agricultural products and applied for the lifting of tariffs, Xinhua said, citing Chinese authorities.


‘Oil World’

Bearish Fundamentals Moving to Foreground Amidst Waning US Weather Concern

New lows in palm oil; Sunflower oil premium widens; Crop losses in EU and Ukraine supporting European rapeseed prices

—Fish meal prices are torn between low production and subdued Chinese demand; we expect fish meal output in Peru to drop to in Apr/Sept 2019

—Sun oil is losing market share at current wide premiums; huge export sales to North Africa, Iran, Turkey, the EU and China absorbed large production and export supplies

—Supplies of rapeseed and oil will tighten in the EU-28 in 2019/20; the rapeseed crop in Ukraine will probably have to be revised downward, decimating exports

—Brazilian soybean exports declined sharply in the first half of July; we expect exports to plunge in July/Dec 2019


Speculators were thought to have established their most bullish Chicago corn stance in more than three years earlier this month, but then the weather outlooks quickly and unexpectedly improved for the U.S. crop; selling early last week offset the prior buying, and the bearish mood continued through most of the week.






Total 2019-crop wheat quantity outstanding into the government’s 9-month price support loan program is 0.498 million bushels, an increase of 0.249 million bushels during the week ended Jly 15, according to the USDA.

—Total 2018-crop corn quantity outstanding is 364.386 million bushels, a decrease of 32.736 million bushels.

—Total 2018-crop soybean quantity outstanding is 99.370 million bushels, a decrease of 5.808 million bushels.


U.S. monthly cattle on feed highlights – USDA –





Summer grain output in central China’s Henan Province topped the national chart with a harvest of 37.45 billion kg in 2019, up 3.6 percent from last year, data from the National Bureau of Statistics (NBS) showed; the total area for growing summer crops fell 0.9 percent to about 5.72 million hectares, while the average output per hectare of crops grew 4.5 percent compared to the previous year, both coming in first nationwide; summer output for wheat, the province’s main crop, rose 3.9 percent to 37.42 billion kg; China’s summer grain output reached 141.74 million tons in 2019, up 2.1 percent year on year.


The Chinese government has guaranteed the pork industry stability affected after the drop in output as a result of the African swine fever outbreak; hog production in the second half of the year will be guaranteed thanks to increased imports and domestic production; hog market supply will remain stable although prices will not taper off due to the international cost

—From January to May, China imported 658 236 tons of hog meat worth $1.19 billion, according to the General Customs Administration; meanwhile, average pork price in wholesale market in June was 21.59 (about three US dollars) per kilogram in June, an increase of 29.8 percent per year

—According to a report by the Ministry of Agriculture with forecasts until 2028, China will acquire -in 2019 only- 1.7 million metric tons of hog meat, in other words, an increase of over 40 percent year on year; as a result, hog meat costs will go up more than 40 percent in 2019 and hold this upward trend over next two years


The protein content in Brazilian soybeans fell for the first time in four harvests in 2018, according to preliminary government data, a development that has already cost Brazilian companies business with top buyer China; declining protein levels in Brazil spells trouble for exporters who are faced with the prospect of cancellations, selling beans at a discount, or stricter contracts requiring quality assurances with buyers who want to guarantee a nutrient-rich purchase; the protein content in Brazil’s 2018 soy crop harvested around January of that year slipped to an average of 36.83% from 37.14% in the previous crop according to preliminary findings.


Brazilian farmers may collect almost 5% more soybeans in the 2019/2020 season than in the previous one as a survey of planting intentions shows them poised to cultivate a record area in the new cycle; according to Safras & Mercado, local farmers will harvest an estimated 123.788 million tons in 2019/2020; planted area in the next cycle, which begins around September, is seen growing by 0.8% to 36.631 million hectares (90.517 million acres), the largest in history

  • BRAZIL 2019/2020 TOTAL CORN CROP SEEN AT 103.97 MLN TNS VS 107.50 MLN TNS IN 2018/2019 – SAFRAS & MERCADO


Russia’s IKAR agriculture consultancy said on Monday it had lowered its forecast for wheat production for 2019 to 76.1 million tons from 77.4 million, and its export forecast to 33.2 million tons from 34.2 million tons; the forecasts were cut because of lower than expected final yields across the south of Russia; IKAR also said it had cut its grain export forecast for 2019/2020 to 42.5 million tons from 43.5 million tons.


Ukraine, which expects its 2019 grain crop to remain steady at last year’s level of around 70 million tons, has harvested 21.6 million tons of early grains as of July 19, the agriculture ministry said; farmers have threshed 6.2 million hectares of grains or 63% of the early grains sown area; the harvested volume includes 15.4 million tons of wheat and 5.7 million tons of barley; Ukraine plans to thresh 9.74 million hectares of early grains this year

—Ukraine’s 2019 wheat harvest is likely to rise to 27.5 million tons from 24.6 million tons in 2018, analyst APK-Inform said; the consultancy said in a statement the wheat yield could total 4.28 tons per hectare this year compared with 3.73 tons in 2018


The European Union is set for a larger wheat harvest this summer as a heatwave in late June which wilted some crops had a less severe impact than initially feared, traders and industry officials said; the heatwave caused a late crop loss of a couple of million tons but overall we are still facing a big crop and big export supplies in the leading producers France, Germany, Britain and Poland; EU wheat was devastated by drought in summer 2018 but weather this year was better

  • Bigger crops in France, Germany, UK, Poland
  • Baltic region also looking better
  • Early summer heatwave not a disaster


Flour millers in South Korea have booked their first new crop wheat cargo from Australia, three months ahead of the start of harvest, attracted by the current price level; the price spread between old crop and new crop has narrowed to close to parity as demand for old crop has weakened from buyers in Asia who are focused instead on buying cheaper Black Sea new crop wheat; competition from the Black Sea in international markets, coupled with recent favorable weather in Western Australia, has been increasingly exerting downward pressure on Australian wheat prices.


Selected highlights from a report issued by a U.S. Department of Agriculture attache in South Africa

—Post forecasts that South Africa could export about 1.0 million tons of corn in the 2019/20 MY, on increased production; on the other hand, post estimates South Africa will have to import about 500,000 tons of yellow corn in the 2018/19 MY to augment local production due to the impact of drought; the total commercial corn crop for the 2018/19 MY is estimated at 10.9 million tons, 13 percent less than the 2017/18 MY’s corn crop of 12.5 million tons; however, South Africa is still in a position to supply 1.0 million tons of corn, mainly white corn, to its neighboring countries where import demand increased after the drought.


Indian farmers planted an array of summer-sown crops on 56.7 million hectares, down 6.9% year on year, agriculture ministry data showed, narrowing the sowing gap estimate from the previous week.

—Selected highlights from a report issued by a U.S. Department of Agriculture attache in India

—a delayed and relatively weak 2019 monsoon has affected planting of most grains, including rice and corn, for the upcoming MY2019/20 kharif season; planting may improve in July based on a forecasted recovery in the monsoon beginning the second week of July; no significant changes in the PSDs of rice, wheat and corn to report from Post’s last report


—India’s edible oil imports are likely to rise 7.3% in 2019/20 to a record high as weak monsoon rains curtail yields of summer-sown oilseeds such as soybeans and groundnut, a senior industry official said; higher purchases by the world’s biggest edible oil importer could support palm oil prices that are under pressure due to sluggish demand amid an expected rise in production; rainfall was scanty over oilseed-growing areas

  • Weak rainfall hits soybean, groundnut, cotton crops
  • Edible oil imports could rise 7.3% to 16.1 mln T
  • Imports could rise to 1.3 mln T/month in coming months


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

—Fall Armyworm has arrived in Indonesia, spreading throughout Sumatera and West Java and threatening corn production; wheat imports are forecast lower as feed mills lower demand.