Monday Movie Night
Matt Bennett reviews all hedge strategies and Brian Splitt puts the chart in perspective ahead of the USDA report, the upcoming end of season weather event and the approaching US-China trade talks .
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By ADM Investor Services Research Team
Wheat prices overnight are down roughly 2 cents in the SRW Wheat, down 2 in HRW, and up 1 for HRS; Corn is up 1 cent; Soybeans down 1; Soymeal up $0.50, and; Soyoil down 15 points.
Chinese Ag futures (January) settled up 29 yuan in Soybeans, up 2 in Corn, up 54 in Soymeal, up 50 in Soyoil, and up 12 in Palm Oil.
The Malaysian Palm Oil market was up 15 ringgit at 2,175 (basis December) awaiting monthly trade data on Thursday.
The U.S. Midwest weather forecast had no major changes in that mainly dry for the week will be followed Friday and Saturday with rains for most of the region from a blizzard that is hitting the Dakotas; western regions will see more of the rainfall than the east with drier weather looking to build back in the first half of next week—-temps will be running above average for much of the region until Friday when they fall below average; temps in the 30 to 34 degree range is seen for the northern Midwest by early next week.
The Southern U.S. Plains has rainfall running above average in the eastern areas of the region with little in the way of rainfall for the rest—–temps will be going from above average through the week to average to below for the weekend and early next week.
The U.S. 11 to 16 Day Outlook has average precip and temps for the Plains and Midwest during the period.
The South American weather forecast has scattered and light precip across Argentina and southern Brazil over the next 5 days; rains look to fall across 70% of the northern regions of Brazil; the 6 to 10 day forecast sees rains falling in most of Argentina and southern Brazil with things mainly dry in the north—-temps will be running near average for most of South America’s growing regions over the next 10 days.
In deliveries, Soymeal totaled 159 lots; Soyoil 2.
The player sheet had funds net even in SRW Wheat; net bought 6,000 contracts of Corn; were net even in soybeans; net sold 2,000 lots of Soymeal, and; net bought 3,000 Soyoil.
We estimate Managed Money net short 25,000 contracts of SRW Wheat; net short 132,000 Corn; net short 9,000 contracts of Soybeans; net short 48,000 lots of Soymeal, and; net long 26,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 4,600 contracts; HRW Wheat up roughly 1,400; Corn down 355; Soybeans down 5,700 contracts; Soymeal down 1,300 lots, and; Soyoil down 1,200.
There were no changes in registrations—Registrations total 60 contracts for SRW Wheat; ZERO Oats; Corn 1,071; Soybeans 1,144; Soyoil 1,535 lots; Soymeal 810; Rice 1,142; HRW Wheat 11, and; HRS Wheat 669 contracts.
In tender activity—-Egypt seeks optional-origin wheat for Nov 10-20 (the third time the country has tapped the global grain market in three weeks)—
Top U.S. officials will welcome a high-ranking Chinese delegation starting Oct. 10 for the latest round of trade talks aimed at easing tensions, the White House confirmed; the two sides will look to build on the deputy-level talks of the past weeks; topics of discussion will include forced technology transfer, intellectual property rights, services, non-tariff barriers, agriculture, and enforcement.
—President Donald Trump on Monday sounded an optimistic note about this week’s negotiations with China to end the trade war between the two global economic super powers, adding that he would not be satisfied with a partial deal; we think there’s a chance we could do something very substantial
The new U.S.-Japan trade deal will provide staged reduction of Japanese tariffs for more than $2 billion worth of U.S. beef and pork, matching access now granted to the 11 Trans-Pacific Partnership trade pact countries; U.S. President Donald Trump presided over a White House signing ceremony on Monday for the final text of the limited bilateral trade pact, more then 2-1/2 years after he pulled the United States out of the much broader TPP.
U.S. Winter Wheat planted is 52% (trade estimate was 54%) versus 39% last week, 55% a year ago, 53% average. U.S. Winter Wheat emerged was 26% versus 11% last week, 28% a year ago, 26% average.
U.S. Spring Wheat harvested was 91% (trade estimate was 94%) versus 90% last week, 100% a year ago, 99% average.
U.S. Corn mature was 58% versus 43% a week ago, 92% last year, and 85% average. U.S. Corn harvested was 15% (trade estimate was 19%) versus 11% a week ago, 33% last year, and 27% average.
Corn was rated 56% good to excellent (trade estimate was 57%) versus 57% last week, and 68% a year ago; 29% fair (29% last week, 20% last year), 15% poor to very poor (14% last week, 12% last year).
U.S. Soybeans dropping leaves was 72% versus 55% a week ago, 90% last year, and 87% average. U.S. Soybeans harvested was 14% (trade estimate was 15%) versus 7% a week ago, 31% last year, and 34% average.
U.S. Soybeans were rated 53% good to excellent (trade estimate was 55%) versus 55% a week ago, and 68% a year ago; 32% fair (32% last week, 22% a year ago), and; 15% poor to very poor (13% last week, 10% a year ago).
U.S. Crop Watch growers in the Northern Plains and Upper Midwest reported no harvest activity in their areas last week due to wet weather; meanwhile, soybean results in the east have been highly mixed, with a poor outcome in Illinois and a surprisingly high yield in Ohio
EAST CENTRAL NORTH DAKOTA
Corn and soybean yield scores remain at 2.5 and 2, respectively. No harvest activity occurred in the area as up to 3.5 inches (89 mm) of rain fell last week. Area producers are extremely frustrated with the lack of progress, and over a foot (0.3 m) of snow in the forecast for later this week adds insult to injury. The Crop Watch producer reports that the few bean fields that have been cut have had decent results, but the quality of all crops in the area have come into question because of the excessive moisture.
Corn and soybean yield scores remain at 3.75 and 4, respectively. The corn has reached black layer, which is the final stage of maturity. Many bean fields in the area are ready for harvest, including the subject field, but the soils need to dry out first. No harvesting occurred in the area last week. The producer may try to get into the beans this week if the field is fit. He still plans to harvest the corn in about two weeks.
Corn and soybean yield scores remain at 4 and 3, respectively. Around 3 inches (76 mm) of rain last week prevented harvest activity in the area, and the producer reports that this will likely be the latest start to harvest in more than 30 years. The frequent rain, then drying cycles have weakened some of the plants, and the producer is concerned about losses should the pattern continue. Many crops in the area, mostly beans, will be ready for harvest once it dries out.
Soybean yield remains at 3.5, and the field is ready for harvest as soon as the ground dries enough from the recent rains. Cooler and wetter weather slowed progress in the area last week, but producers were still able to make headway ahead of the rains. The Crop Watch grower predicts up to 70% of corn has been harvested in the area and that up to 45% of winter wheat has been planted. Field work should be very active during the next week or so because of a favorable forecast. The subject corn field was harvested on Sept. 26 with a final yield of 3.
EAST CENTRAL IOWA
Corn and soybean yield scores remain at 4 and 3.5, respectively. Wet weather kept area farmers out of their fields last week. Both subject fields are ready for harvest, but the soils must dry first. The area received 1 inch (25 mm) of rain on Saturday, and the next 10 days look to be dry except for some rain expected Thursday and Friday.
The soybean field was harvested on Tuesday with a result of 2.5, which is the lowest score of the season. The producer believes the later planting, the wet start, and the dry finish to the crop penalized yield more than he thought. The beans were planted May 18 with a quarter of the field replanted on June 6. Many of the grower’s other soybean fields suffered the same fate, as yields consistently came in lower than expected and well below last year. Last year’s Crop Watch soybean field scored 4.5 on yield. The Illinois farmer is in the top soybean producing district in the country. Corn yield is unchanged at 3.25, and the producer may get into that field this week.
The corn field was finished on Wednesday with a final result of 3. The producer believes the late rains in August really helped crops in the area, despite how poorly they had looked earlier in the summer. The field had been planted May 11, which was extremely early for Indiana. The expected soybean yield remains at 3, and harvest is still likely a couple of weeks away since this was the last Crop Watch field planted, on June 14. Early-planted beans in the area have had decent results, so far.
The soybean field was harvested on Thursday and yield ended at 5, well above the expectation of 2.5. The lower expectations were driven by the June 3 planting, the rough first few weeks of the growing season, and the dry end to the season. No measurable rain was recorded after Aug. 7. In hindsight, the producer believes the extra money spent on plant nutritional fungicide and insecticide may have outweighed the negative factors, including the fact that much of the field was planted with a brand new soybean variety. Last year’s soybean field was planted May 9 and harvested Oct. 10, with a final yield of 4.5. The producer bumped corn yield to 4 from 3.75 because of the visual appeal, and he thinks the warm and dry finish was helpful. The corn may be harvested in about a week.
Yesterday’s U.S. weekly export inspections had
—Wheat exports running 21% ahead of a year ago (23% last week) with the USDA currently forecasting a 4% increase on the year
—Corn 66% behind a year ago (66% last week) with the USDA unchanged for the season
—Soybeans 17% ahead of a year ago (up 6% last week) with the USDA having a 2% increase forecasted on the year
U.S. soybean exporters had a record fourth quarter and corn shipments slumped to a six-year low. But overseas demand for U.S. corn is starting off the new marketing year on an even worse note, while the soybean market hopes for renewed Chinese business.
The Trump administration’s plan to boost biofuel demand by 2020 will likely carry positive environmental implications as it will force the oil industry to blend fossil fuel with 15 billion gallons of ethanol a year; as a gasoline additive, ethanol blends such as E15 reduce greenhouse-gas emissions by 43% when compared with standard gasoline
—Oil-industry player’s object to the plan since it implies higher compliance costs and regulatory burdens that may ultimately affect consumers.
—U.S. President Donald Trump said on Monday his administration’s proposal to boost the biofuels market next year would bring the amount of corn-based ethanol mixed into the nation’s fuel to about 16 billion gallons (60.6 billion liters); We’ve come to an agreement and it’s going to be, I guess, about, getting close to 16 billion … that’s a lot of gallons, he said; the U.S. Renewable Fuel Standard (RFS) program currently requires refiners to blend 15 billion gallons of ethanol per year, but the corn lobby has said the Environmental Protection Agency’s use of waivers means the actual volumes blended are lower than that.
Louis Dreyfus sees tough year as trade war, swine fever hit profits
Louis Dreyfus warned on Monday that international trade tensions and a swine disease epidemic would continue to weigh on its activities in the rest of the year after pushing down first-half profit; the interim results reversed a rebound in group profits in the second half of last year and showed the pressures on trading firms as they try to emerge from a period of falling margins for sourcing and shipping crops such as cereals and oilseeds
The U.S. government is marketing the nation’s crops and meat in smaller countries as Washington and Beijing continue to spar over trade; Ted McKinney, undersecretary for trade at the U.S. Agriculture Department, said the agency is mounting more trade missions and spending more time in lower-profile markets such as Guatemala to find buyers for a glut of U.S. farm goods that has grown over the past year as China curtailed purchases from the U.S.; My team has heard me say, leave no stone unturned
Brazilian farmers have planted 3.1% of the estimated soybean area for the 2019/2020 crop, agribusiness consultancy AgRural said, blaming a lack of rain for the slowest start to the season in six years; at this time in 2018, Brazilian growers had sowed 9.5% of the fields
—some rain in key stakes like Paraná and Mato Grosso, farmers had advanced soy planting from the level of only 0.9% of the area seen in the previous week
—AgRural said the pace of soybean planting was the slowest since the 2013/2014 crop, when farmers in early October had sowed only 2.7% of the area
Russia’s Grain Union has raised its forecast for Russia’s 2019 grain crop by 1.62 million tons to 123.3 million tons; the wheat crop is now seen at 75.8 million tons, while wheat exports in the 2019/2020 marketing season are expected to total at least 34 million tons.
—Russia’s Institute for Agricultural Market Studies (IKAR) consultancy has raised its forecast for Russian wheat crop this year to 75.4 million tons from 75.0 million tons, it said; kept its total grain crop forecast unchanged at 122 million tons.
Export prices for Russian wheat rose last week as Paris futures held near a two-month high on improving export prospects for western European wheat; Black Sea prices for Russian wheat with 12.5% protein content were up $6.50 at $194.50 per ton on a free on board (FOB) basis at the end of last week, agricultural consultancy SovEcon said; IKAR, another agricultural consultancy, pegged wheat prices for the nearest supply at $190 per ton, up $1.50.
Ukrainian ProAgro agriculture consultancy revised up its 2019 grain harvest forecast for Ukraine to 76.51 million tons from 74.33 million tons a month earlier thanks to a higher corn output; the consultancy said Ukraine was likely to harvest 37.37 million tons of corn, 28.2 million tons of wheat and 9.03 million tons of barley
—Ukraine has increased its grain exports by 45% to 14.47 million tons so far in the 2019/20 July-June season thanks to higher wheat shipments, Ukraine’s agriculture ministry; the volume included 9.2 million tons of wheat, 55% more than in the same period a season earlier; Ukraine also exported 2.99 million tons of barley and 2.24 million tons of corn.
Soft wheat exports from the European Union in the 2019/20 season that started on July 1 had reached 6.65 million tons (mln t) by Oct. 6, official data showed; that was 38% above the volume cleared by Sept. 30 last year
—EU 2019/20 barley exports had reached 2.0 mln t, up 43% from the year-earlier period
—EU 2019/20 maize imports stood at 5.5 mln t, up 32% from the year-earlier period
European Union soybean imports in the 2019/20 season that started on July 1 had reached 3.4 million tons by Oct. 6, official data showed; that was down 3% compared with the volume cleared by Sept. 30 last year
—soymeal imports had reached 5.3 million tons, up 19% versus the year-earlier period
—palm oil imports stood at 1.3 million tons, down 16%.
France’s farm ministry on Tuesday raised its estimate of the country’s 2019 soft wheat harvest to 39.7 million tons from 39.45 million seen a month ago, confirming that the EU’s top grain grower had harvested one of its largest-ever wheat crops.
—The revised soft wheat production estimate was up 16.8% compared with last year’s volume and 12.6% above the five-year average
–For grain maize, harvesting of which is in progress, the ministry cut its forecast of this year’s crop, excluding production for seeds, to 12.5 million tons from 12.8 million last month; that would be nearly stable versus last year’s volume; however, the expected 2019 crop would be 10.5% below the five-year average
The culling of nearly 20% of Vietnam’s pig herd will reduce the Southeast Asian country’s demand for imported oilseed, the U.S. Department of Agriculture said; the USDA adds that its local office now lowers its forecasts for soybean imports in 2019 to 1.8 million metric tons, below official forecasts of 2.4 million tons; it adds that soybean imports had been growing at around 5% annually before the spread of African swine fever.