This week’s sell off in corn is very concerning. How can this market decline like this when
- FSA is revealing many’ s worst thought that PP could reach 12.5 ma or more and exceed the previous record 9.6 in 2011
- A private company spent a large investment to bring images to the industry that show poor stands and repairable holes in every state of the corn belt.
- Cash traders have started booking trains from the west to the ECBLT in order to start securing supply
- Some agronomists we have talked to think our yield is high and that when USDA is surveying crops for the September report (late August) they will just be finding ears that have been set…it will take a late freeze for this to make it. And if it doesn’t, the consequences area game changer
This is not unprecedented. Read articles by Brian Splitt and Brian Burke about 1993 and the analog sell off that was followed by a rally.
Our S/D projections based on our study, suggest a 12.4 crop with good weather versus a 14.3 demand. Rationing is still needed. Unless our international trade policies continue to divert demand away from the US at a rate that is unconscionable. That is probably our biggest risk. But the final out come of this crop is a bigger risk in our opinion. Taking ownership on this break is advised. Watch the charts for a reversal.
By ADM Investor Services Research Team
Wheat prices overnight are up roughly 4 cents in the SRW Wheat, up 3 in HRW, and up 1 for HRS; Corn is up 1 cents; Soybeans up 3; Soymeal up $1.00, and; Soyoil up 10 points.
For the week, Winter Wheat prices are down roughly 26 cents for Soft Red Winter, down 30 in the Hard Red Winter, and down 18 for Hard Red Spring; Corn is down 29 cents; Soybeans down 29; Soymeal down $7.00, and; Soyoil down 70 points (crushing margins are up 5 cents at $0.97, oil-share is up 1% at 31%).
Chinese Ag futures (September) settled up 3 yuan in Soybeans, unchanged in Corn, down 14 in Soymeal, down 6 in Soyoil, and down 8 in Palm Oil.
The Malaysian Palm Oil market was down 9 ringgit at 1,974 (basis October) on worries of sluggish demand.
Chicago corn futures ticked higher on Friday, but the market was poised for its biggest weekly drop since June 2017 as cooler weather across the U.S. Midwest boosted crop prospects. Wheat edged higher on bargain-buying after finishing lower for the last four sessions, with gains were capped by harvest pressure around the northern hemisphere. The most-active corn contract on the Chicago Board Of Trade has declined by 5.9% this week, the most since the week ended June 23, 2017. Soybeans are down 3% for the week, giving up some of last week’s gains, while wheat has lost 5.1%, the most since early March. “We are in weather market and there is going to be volatility until the harvest,” said a Singapore-based grains trader. Last week, grain markets were underpinned by fears that U.S. crops could suffer from prolonged hot and dry weather, but Midwest rains brought some relief on Thursday. Investors in the grains market are awaiting the USDA acreage report on Aug. 12 for price direction.
The U.S. Midwest weather forecast has a cold front pushing through over the weekend with moderate rainfall and coverage of around 85%; things dry out Monday and for the remainder of the week—-temps cool into the 80’s with the front and remain there through most of next week.
The Southern U.S. Plains has a front moving through over the weekend bringing moderate rainfall but then things quiet down for the rest of next week—temps go from average to above to below average next week.
The Northern U.S. Plains will be looking at mostly below average precip during the 10 day period—temps will be running average to a bit above average during the period.
The U.S. Delta and Southeastern states will see a seasonable pattern of isolated to scattered showers each day during the next two weeks
The 11 to 16 Day Outlook continues with an average to below average precip and an average temp pattern for the Midwest.
The player sheet had funds net sellers of 7,000 contracts of SRW Wheat; sold 28,000 Corn; sold 1,000 contracts of Soybeans; net sold 2,000 Soymeal, and; net sold 1,000 Soyoil.
We estimate Managed Money net long 31,000 contracts of SRW Wheat; net long 156,000 Corn; net short 44,000 contracts of Soybeans; net short 23,000 lots of Soymeal, and; net short 31,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 3,500 contracts; HRW Wheat down 125; Corn down 5,000; Soybeans up 2,700 contracts; Soymeal up 1,300 lots, and; Soyoil up 7,600.
There were no changes in registrations–Registrations total ZERO contracts for SRW Wheat; ZERO Oats; Corn 1,251; Soybeans 10; Soyoil 3,547 lots; Soymeal 745; Rice 1,036; HRW Wheat 5, and; HRS Wheat 1,176 contracts.
TODAY—–CATTLE ON FEED—COMMITMENT OF TRADERS—
In tender activity—Thailand bought 60,000t U.S. wheat—
For the week ended July 11th, U.S. All Wheat sales are running 22% ahead of a year ago, shipments up 32% with the USDA forecasting a 2% increase on the year. For the week ended July 11th, U.S. Corn sales are running 15% behind a year ago, shipments 7% behind with the USDA forecasting a 14% decline on the year. For the week ended July 11th, U.S. Soybean sales are running 16% behind a year ago, shipments 22% behind with the USDA forecasting a 20% decline on the year. Soymeal sales 2% behind on the year, shipments 4% behind with a 1% decline forecasted. Soyoil sales 18% behind a year ago, shipments 16% behind with a 16% decline forecasted
China made its biggest purchase of U.S. sorghum since April last week, according to U.S. Department of Agriculture data issued on Thursday; the world’s top sorghum importer bought 51,072 metric tons of the grain even though China imposed a 25% tariff on American shipments in July 2018; the purchases will likely be used to feed livestock or make a fiery Chinese liquor called baijiu; China has made other modest purchases of sorghum since the beginning of June.
U.S. ethanol plants are expected to sharply curtail production in the weeks ahead as steep Midwest corn prices and the U.S.-China trade war have led to weak margins and oversupply, industry sources said; margins to produce ethanol in the Corn Belt have fallen to a four-year seasonal low, while ethanol inventories are at the highest seasonally since at least 2010; production hit its highest seasonal level since 2010, the earliest data available; industry sources said this glut makes future cuts inevitable, particularly as corn prices are making production even more expensive; that could boost fuel prices, as U.S. law requires ethanol to be blended into gasoline.
The United States generated slightly fewer renewable fuel blending credits in June from the prior month, the Environmental Protection Agency (EPA) said; some 1.24 billion (D6) blending credits were generated in June, down from 1.29 billion in May, and 357 million biodiesel (D4) blending credits were generated in June, compared with 382.7 million a month earlier.
Big farm loans drove an increase in agricultural lending in 2Q as farm finances deteriorated further, according to the Federal Reserve Bank of Kansas City; said the volume of loans to fund farm operations grew 11% compared to a year prior, the fastest rate in eight years; average loan durations increased by about three months, likely reflecting increased stress as farmers grapple with low commodity prices and historic wet weather.
—the Federal Reserve Bank of Kansas City shows the share of troubled farm loans has grown in recent years, totaling 8% at the largest agricultural banks; total farm debt is also on the rise, thanks recently to increased real estate debt; farm real estate debt has grown 47% since 2013, though the Fed says stable farmland values continue to support the farm economy; still, payment rates on farm loans continue to decline and high loan demand has squeezed available funds at many farm banks
POLL-U.S. June cattle placements seen down 1.8% from year ago (due at 2 p.m. CDT on Friday)
|On feed July 1||100.9-103.2||101.9||11.497|
|Placements in June||93.2-105.7||98.2||1.766|
|Marketings in June||95.8-98.3||97.0||1.946|
Saskatchewan Agriculture’s weekly Crop Report.
—Sixty-three per cent of the fall and spring cereals, 53 per cent of the oilseeds, and 73 per cent of the pulse crops are at their normal stages of development for this time of year; crop conditions vary throughout the province, but the majority are in poor-to-good condition
As China looks to diversify its soybean supply away from the United States, the Commerce Minister agreed with Russian counterparts to deepen trade in soybeans and other agricultural products during a meeting this week; they met on Tuesday to discuss ways in which the two countries could increase bilateral trade.
Argentina farmers have almost completed planting for the 2019/20 wheat crop, the Buenos Aires grains exchange said, with producers completing 92.1% of sowing for the expected bumper 6.6 million hectares (16.3 million acres) given to the grain; Argentina harvested a record 19 million tons of wheat after planting 6.2 million hectares with the crop.
Russian agriculture consultancy IKAR has lowered its forecast for the Russian grain harvest to 121.4 million tons; on July 3, IKAR forecast that the grain harvest would be 123.4 million tons.
—Black Sea wheat with 11.5% protein was quoted at about $230 a ton, C&F, in Asia’s physical market as compared with $220 a ton a few weeks ago
Ukraine’s grain exports have risen in the first weeks of the 2019/20 July-June export season, reaching 1.94 million tons in the month to date from 1 million tons a season before, the agriculture ministry said; the volume included 394,000 tons of wheat, 350,000 tons of barley and 1.19 million tons of corn.
French farmers had harvested 33% of this year’s soft wheat crop by July 15, compared with 9% a week earlier, farm office FranceAgriMer said
—Conditions for soft wheat were stable with 73% of crops rated good or excellent, unchanged from a week earlier
—Crop ratings for maize, which is facing drought during its summer growth season, declined again to 74% good/excellent against 78% a week earlier
Japan’s usage of corn in animal feed rose to 49.1% in May, compared with 48.7% in the same month of 2018, preliminary data from the Ministry of Agriculture, Forestry and Fisheries showed.
Indonesia’s palm-based biodiesel consumption is set for another large year-over-year increase in 2019 largely due to further expansion of B20 (bio diesel 20%) to the Non-PSO transport sector, according to the U.S. Department of Agriculture in a note; USDA expects biodiesel consumption to increase to 6.2 billion liters in 2019 up from an estimated 3.95 billion liters in 2018
—furthermore, it adds that exports are forecast to remain elevated near 1.8 billion liters, up from 1.77 billion liters in 2018, based on continued demand from the EU and ChinaBack