December 13, 2017

EIA Reports Record Ethanol Production

December 7th, 2017

Good Morning! From Allendale, Inc. with the early morning commentary for December 7, 2017.

Grain markets react to estimates for next week's USDA Supply and Demand report as Argentine rain forecasts receive a lot of the attention. Outside markets watch the latest out of Washington regarding a budget agreement and possible government shutdown.

A record 1.108 million barrels per day ethanol production was reported yesterday. That is 8.3% over last year, and beats the two previous weeks that were both great at 5.9% and 5.3% over last year. The year to data pace is now 4.1% over last year, well above USDA’s whole-year goal at 0.7% over last year. Given this data, USDA may raise corn for ethanol on next week’s report.

Estimates for next Tuesday's monthly supply/demand report (WASDE). For our submission, Allendale listed no US production changes for the report, only demand changes. We see US corn stocks raised from 2.487 billion last month to 2.498 (lower exports). US soybeans stocks are seen increasing from 425 million bushels last month to 445 (exports). US wheat stocks are expected to increase from 935 million bushels last month to 939. Lowered exports may offset larger domestic use. Average analyst estimates will be out soon.

Weekly export sales will be out this morning at 7:30 AM.  Analysts are expecting to see combined 2017/18 and 2018/19 corn sales of 800,000 to 1,300,000 tonnes. Soybean sales of 1,000,000 to 1,650,000 are also expected, while analysts expect wheat sales of 250,000 to 450,000.

Statistics Canada updated grain production estimates yesterday. The wheat crop was seen at 29.984 million tonnes. That was much over the 28.0 trade expectation. Last year's crop was 31.729. Canola production was seen at 21.313 million tonnes, over the 20.2 trade expectation. Last year's crop was 19.600. Soybean production was estimated at 7.717 million tonnes, over last year's 6.552. Corn production was seen at 14.095 mt, over the 13.193 from last year.

Brazil will issue a decree on Friday laying out terms of grains and oilseeds trade with Russia, particularly wheat and soybeans, which could help reopen the Russian market for Brazilian meat, agriculture minister Blairo Maggi said on Wednesday. (Reuters)

Managed money funds were sellers across the board yesterday with traders estimating they sold 4,000 corn contracts, 9,000 soybeans, 4,500 wheat, 5,000 soymeal, and 4,000 soyoil.

Jobless claims are the key economic data out this morning with Initial and Continuing Claims due at 7:30 AM CST. Consumer Credit is also out today at 2:00 PM.

Beef exports in October totaled 260 million lbs. That was 14% over the previous year. This is in line with the two previous months that were also strong at 16% and 13% over last year.

Cash cattle has sold this week at $117 and $118, a bit of a disappointment as that is down from last week's mostly $120 and $121.

Pork exports in October totaled 495 million lbs. This would be considered positive at 10% over last year. The two previous months were unchanged at 1% over respectively.

Dressed beef values were lower with choice down 2.68 and select up 2.52. The CME Feeder Index is 156.11. Pork cutout value is down 2.03.

Technical Chart of the Day

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