February 22, 2019

USDA Offers Bulls and Bears Something to Like

Good Morning! From Allendale, Inc. with the early morning commentary for July 13, 2018.

Grain markets are reacting to the latest USDA numbers while waiting for new headlines out of the US/China trade dispute. Outside markets look to the tech sector as the Nasdaq made all-time highs yesterday.

USDA offered a tale of two commodities yesterday as the new corn balance sheet looked bullish, while the soybeans looked bearish. USDA reported old crop corn ending stocks at 2,027 million bushels, below the 2,107 MB estimate. Old crop soybean stocks came in at 465 MB, below the 507 MB estimate.

New crop numbers had corn at 1,552 million bushels, well below the 1,712 estimate. Soybeans were reported at 580 MB, well above the 471 MB trade guess. Wheat stocks were reported at 958 MB, just above the 973 estimate.

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Weekly export sales for the week of June 29th through July 5th had corn sales totaling 530,137 metric tonnes (402,102 for 2017/18 and 128,035 for 2018/19), under the 650,000 – 1,350,000 trade estimate. Soybean export sales totaled 429,447 metric tonnes (158,607 for 2017/18 and 270,840 for 2018/19), also under the 450,000 – 1,050,000 trade estimate. Wheat export sales of 136,408 tonnes were also reported (all 2018/19, no 2019/20). That was under the 200,000 – 500,000 expectation.

Low prices are triggering soybean sales to world buyers across the globe as the Chinese tariff on US soybeans stopped sales to China. Importers from Mexico, Thailand, and Pakistan have all been recent buyers. Brazil is also expected to be a big buyer of US beans as China has turned to them in the wake of the US/Chinese trade war.

China has cut its forecast for soybean imports for next crop year and recently slashed orders for US soybeans amid an ongoing trade dispute with the US, state media have reported. On 12 July, China's Agriculture Ministry announced that China's soybean imports in the crop year 2018-19 starting on 1 October will be 93.85m tonnes, down from June's estimate of 95.65m tonnes. China, the world's top soybean buyer, can fully meet the needs of its state soybean reserves without importing from the United States, an official with the state stockpiler told state TV on Thursday. (Reuters)

Argentina's 2018/19 wheat harvest could reach a new record level of 20 million tonnes according to the Rosario Grain Exchange. This would beat the current record set in 2016/17 of 18.2 million tonnes.

The Buenos Aires Grains Exchange warned yesterday that the Argentine corn crop may continue to shrink due to poor yields brought on by drought in major growing regions. Their current estimate for the crop stands at 32 million tonnes.

Managed money funds were estimated buyers of 17,000 corn contracts and 8,000 wheat in yesterday's trade. They were mostly neutral in the soy complex selling 1,000 soybeans, 1,000 soymeal, and 1,500 soyoil.

Economic reports out today include import and export prices as well as the University of Michigan Consumer Sentiment numbers.

USDA added 30 million lbs. to its 2018 pork production estimate, now at 26.745 million pounds. 2018 beef production was increased by 25 million pounds to a total of 27.150 billion. This number is 3.7% over last year.

Weekly beef export sales of 16,226 metric tonnes were reported yesterday. That was 30% over last year in the same week. Pork export sales dipped to 9,195 metric tonnes last week. This is 5% under last year.

Dressed beef values were lower with choice down .86 and select down .13. The CME Feeder Index is 147.16. Pork cutout value is down .09.

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