Below is our weekly marketing meeting. A lot of changes to come in the next 30-60 days.We discuss crops health, demand, USDA Report, the dollar, what to do managing the farm right now, and the technical signals.
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By ADM Investor Services Research Team
Wheat prices overnight are up roughly 5 cents in the SRW Wheat, up 4 in HRW, and up 4 for HRS; Corn is up 2 cents; Soybeans up 2; Soymeal up $1.00, and; Soyoil down 5 points.
Chinese Ag futures (January) settled down 37 yuan in Soybeans, up 9 in Corn, down 41 in Soymeal, up 28 in Soyoil, and down 38 in Palm Oil.
The Malaysian Palm Oil market was down 4 ringgit at 2,183 (basis November) on demand concerns after India raised palm oil import taxes.
The U.S. Midwest weather forecast had no major changes and is fairly quiet through Saturday before rainfall looks to arrive Sunday into Monday favoring the northern/eastern sections of the Midwest; the 6 to 10 day outlook differs between the models with the European model showing rainfall mainly in the northern regions of the Midwest while, the GFS model sees widespread rain—-temps look to run average to below average over the next 4 days with no cold air threats, the 6 to 10 day period has temps warming to average.
The 11 to 16 Day Outlook has above average temps in the Plains and Midwest along with average to below average precip in most of the Midwest and below average precip in the Plains.
In deliveries, Soymeal totaled 520 lots; Soyoil ZERO; Rice ZERO; Corn 694; HRW Wheat 12; Oats ZERO; Soybeans 591, SRW Wheat 293, and; HRS Wheat ZERO.
The player sheet had funds net buyers of 4,000 contracts of SRW Wheat; net sold 15,000 Corn; bought 6,000 soybeans; bought 4,000 lots of Soymeal, and; net even in Soyoil.
We estimate Managed Money net short 16,000 contracts of SRW Wheat; net short 122,000 Corn; net short 54,000 contracts of Soybeans; net short 38,000 lots of Soymeal, and; net short 1,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 4,600 contracts; HRW Wheat up 2,400; Corn up 4,300; Soybeans up 1,800 contracts; Soymeal up 2,300 lots, and; Soyoil up 2,300.
There were changes in registrations (Soyoil down 123; HRW Wheat down 782; HRS Wheat down 132)—Registrations total 440 contracts for SRW Wheat; ZERO Oats; Corn 1,729; Soybeans 1,144; Soyoil 1,726 lots; Soymeal 813; Rice 1,055; HRW Wheat 223, and; HRS Wheat 132 contracts.
TODAY—–WEEKLY ETHANOL STATS—
In tender activity—-Saudi Arabia seeks 595,000t optional-origin wheat—Jordan seeks 120,000t optional-origin wheat— S. Korea bought 60,000t optional-origin corn—
Chinese and American officials plan to hold trade talks in Washington in early October, a new attempt to tame a trade war that is rippling through the global economy and hurting business investment and confidence; Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke by phone on Thursday morning Beijing time and agreed to meet next month for high-level trade talks; the U.S. side confirmed the phone call and said a high-level meeting would take place in Washington in the coming weeks.
U.S. Weekly Deliverable Stocks of
—SRW Wheat totaled 45.0 mil bu versus 46.3 mil last week and 72.0 mil a year ago
—HRW 100.5 mil (100.1 last week, 124.7 mil a year ago)
—HRS 19.4 mil bu (19.4 mil a week ago, 17.8 mil last year)
—Corn totaled 3.3 mil bu (2.9 mil last week, 3.9 mil a year ago)
—Soybeans totaled 11.8 mil bu (12.6 mil last week, 7.2 mil a year ago)
Commodity brokerage INTL FCStone raised its estimate of the average U.S. 2019 corn yield to 168.4 bushels per acre (bpa), up from 167.4 in its previous monthly report released Aug. 1; the firm lowered its corn production forecast to 13.809 billion bushels from 13.992 billion previously
—raised its forecast of the U.S. 2019 soybean yield to 48.3 bpa, up from its Aug. 1 figure of 47.2; the firm forecast U.S. soybean production at 3.661 billion bushels, down from 3.743 billion previously
Slightly lower yields and production than forecast by the USDA are what agricultural brokerage Allendale Inc predicts in its yearly estimates
—Allendale forecasts national corn yields at 167.71 bushels per acre; pegs corn production at 13.755 billion bushels, down from the USDA estimate of 13.901 billion
—Soybean yields at 46.13 bushels per acre; soybean production at 3.499 billion bushels, down from 3.68 billion by the USDA
—Last month, the USDA forecast these same figures at 169.5 bushels per acre for corn and 48.5 bushels per acre for soybeans
Wire story reports the ethanol industry is suffering from weaker prices and oversupply as that pillar of the farm economy has been hurt by regulatory changes and the trade dispute with China; producers of the corn-based fuel additive, including Green Plains Inc. and Poet LLC, have closed plants over the past year in Indiana, Iowa, Minnesota and other states; companies such as the grain giant Archer Daniels Midland Co. are scaling back their ethanol business; this is probably the worst downturn we’ve seen in the industry’s history, said chief executive of the Renewable Fuels Association.
—U.S. biodiesel industry leaders told an Environmental Protection Agency regional administrator in Houston that they want the Trump administration to boost the volume of biodiesel that oil refiners must blend into their fuel each year; the request came days after President Donald Trump promised to deliver a “giant package” to U.S. farmers related to ethanol, in response to pressure from the corn lobby over the administration’s expanded use of waivers freeing small refineries from their obligation to blend biofuels
U.S. July Grain Exports
——- In Bushels, CWT or Pounds ——-
Jul 19 Jun 19 May 19 Jul 18(*)
Barley 259,515 194,923 191,798 307,202
Corn /1 113,465,801 120,815,938 184,630,486 266,376,069
Sorghum 6,313,344 12,446,699 10,641,762 3,765,536
Oats 140,749 273,835 133,848 59,490
Wheat /1 71,400,821 79,227,995 102,922,098 65,147,909
wheat flour /1 518,626 458,311 480,645 407,002
Total wheat imports in July 44 mil lbs versus 116 mil in June; corn imports in July 57 mil lbs versus 48 mil in June.
U.S. July Oilseed, Meal, Oils/Fats Exports
——- In Bushels, Pounds or Short Tons ——-
Jul 19 Jun 19 May 19 Jul 18(*)
soybeans 135,232,044 117,341,750 94,078,987 125,908,295
soyoil 174,323,535 95,392,468 205,734,111 174,753,962
crude 150,634,473 73,894,031 177,052,804 135,320,750
refined 133,704 250,103 180,054 362,460
other/1 22,957,899 20,460,409 27,677,926 38,286,030
hydrogenated 597,459 787,923 823,327 784,722
soymeal 789,938 654,296 903,258 961,076
soymeal flour/me 93,705 242,783 204,202 274,947
soymeal hulls 24,531 10,011 13,521 19,535
Total soybean imports in July 74 mil lbs versus 37 mil in June.
Wire story reports U.S. corn exports finished off the recently concluded U.S. marketing year at the slowest pace in seven years, while soybean exports hit a record high in the fourth quarter owing to anomalously large shipments to China; analysis of the latest data suggests that U.S. corn exports in 2018-19, which ended on Aug. 31, will fall short of the current full-year government forecast but soybeans likely topped its target.
Tyson Foods Inc slowed chicken processing this year after it recalled millions of pounds of poultry over concerns they contained materials like rubber and metal, raising its costs, the Chief Executive said; the higher costs contributed to a $220-million cut to the company’s expected adjusted earnings for 2019 on Tuesday; almost half of the cut was linked to Tyson’s poultry business providing new details on the adjustment; Tyson is also grappling with volatility in prices for grain used to feed chickens and a fire that shut a large beef plant in Holcomb, Kansas.
World food prices fell for a third month running in August, pushed down by a sharp drop in the prices of sugar, wheat and maize, the United Nations food agency said; the Food and Agriculture Organization (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 169.8 points last month from an upwardly revised 171.7 points in July; that figure was previously given as 170.9
—FAO also predicted that cereal supplies would be more abundant in the 2019/20 period than previously expected; the FAO cereal price index plunged 6.4% in August month-on-month thanks to big drops in the prices of wheat and major coarse grains, especially corn; by contrast, rice prices rose
Statistics Canada is scheduled to release its estimates of total Canadian crop stocks as of July 31, 2019, on Friday, Sept. 6 at 7:30 a.m. CDT (following are trade estimates of 11 traders and analysts)
|Average estimate||Lowest estimate||Highest estimate||Statscan
CHINA SELLS 235,569 TONNES OF CORN, OR 6.74% OF TOTAL OFFER, AT AUCTION OF STATE RESERVES -AVERAGE SELLING PRICE OF CORN IS 1,673 YUAN/TONNE -TRADE CENTRE
USDA ATTACHE SEES 2019/20 CHINA SOYBEAN IMPORTS AT 80 MILLION TONNES, BELOW UDSA OFFICIAL FORECAST OF 85 MILLION
—Selected highlights from a report issued by a U.S. Department of Agriculture attache in China
—Soybean meal (SBM) consumption for 2019/20 and 2018/19 are unchanged from August’s report, but down from their preceding year as domestic swine inventories continue to shrink due to African Swine Fever (ASF)
—Soybean imports in 2019/20 are set to be the lowest in five years
—A reduction in 2019/20 and 2018/19 soybean oil consumption will be substituted with larger imports of palm and sunflower seed oils; the market for vegetable oils continues to diversify and is expected to witness further growth into 2019/20
—Encouraged by subsidies favoring soybean production, farmers have increased planted area and the 2019/20 forecast remains at 17.1 million tons
China’s customs said that it has allowed imports of soybean meal, rapeseed meal, sunflower meal and sugar beet pulp from Russia.
Chinese health inspectors are expected to start evaluating four Brazilian beef plants on Thursday as part of a push to approve new meat exporters amid an outbreak of swine fever; driven mainly by China, Brazil recorded a 14.2% jump in beef exports by volume in the first eight months of 2019; volumes hit 1.13 million tons in the period while beef export revenues rose by 7.5% to $4.3 billion.
Argentina’s wheat crop for the current 2019/20 season is projected to come in at 21 million tons (USDA at 20.5 mt, last season was 19.5 mt), the country’s agriculture ministry said; the ministry said that planting was now complete on the 6.6 million hectares of land dedicated to the grain, which farmers expect will lead to a record harvest
Selected highlights from a report issued by a U.S. Department of Agriculture attache in Korea
—In Marketing Year (MY) 2020 (January – December), Korea’s chicken production is projected to increase about 1.6 percent to 957,000 metric tons (MT) compared to MY 2019; in 2020, Korea’s chicken imports are projected to increase about three percent to 170,000 MT compared to the current marketing year
Selected highlights from a report issued by a U.S. Department of Agriculture attache in Thailand
—While a dry spell caused marginal damage on corn production in MY2019/20, the impact of fall armyworm infestation adversely affected corn production to a greater extent; while imports of corn, mainly from neighboring countries, are estimated to reach a record high in MY2018/19, continued corn supply shortage should lead to a sharp increase in import demand for feed wheat to replace corn in feed rations in MY2019/20
India has raised the tax on refined palm oil from Malaysia to 50% from 45% for six months to curb imports and boost local refining; the world’s biggest edible oil importer currently imposes a 40% import tax on crude palm oil and 50% on refined palm oils; but since January, shipments of refined palm oils from Malaysia have been taxed at 45%, under an agreement with Malaysia.
Selected highlights from a report issued by a U.S. Department of Agriculture attache in India
—estimated soybean production for marketing year (MY) 2019/20 (Oct.-Sept.) is revised lower to 10.5 million metric tons (MMT) on 11.2 million hectares; the national average yield will settle below last year’s level due to concerns over prevailing weather conditions
—availability of soybeans and considering strong domestic demand for animal feed (soymeal), the out-year oilmeal export forecast is lowered 6.2 percent to 3 MMT
—after remaining flat for the last two years, out-year edible oil imports will grow 12 percent to 16.4 MMT
PREVIEW-Malaysia Aug palm stocks set to hit 13-month low – Reuters survey
- Aug. stocks seen edging down 7.1% to 2.22 mln T -survey
- Output seen slightly up 1.8% at 1.77 mln T -survey
- Exports forecast to rise 14.5% to 1.70 mln T -survey
- Malaysian Palm Oil Board data due Sept. 10
|Production||1,668,000 – 1,830,000||1,770,000|
|Exports||1,570,000 – 1,722,851||1,700,000|
|Imports||40,000 – 80,000||65,000|
|Closing Stocks||2,110,000 – 2,420,000||2,222,000|