Morning Highlights


Highlights                

  • REPORT DAY
  • USDA will release the regular Feb S&D report this Friday 2/8/19, along with the delayed January reports, including the Dec quarterly stocks report, and winter wheat planting intentions, and final corn/bean production/ yield estimates.
  • Wire story reports out yesterday that President Trump and Chinese President Xi now are ‘highly unlikely’ to meet before the March 1 deadline, where tariffs would increase. This is said to have pressured grain and energy markets lower. Other officials however said ‘things could change’ after next week’s trade meetings.
  • Heavy rains and severe flooding in northeast Australia have resulted in thousands of cattle deaths.
  • U. S. Dollar index unch @ 96.56, Dow futures -135 @ 24,996, Crude Oil futures -.26 @ $52.38.

        

Corn

  • CH/K spread inched in to -7.75 on the first day of the GS index roll. Corn open interest was up 18,000 yesterday.
  • The macros meant a lower day for corn also, with CH back under its moving averages, and tickling the last two weeks low range just above $3.76.
  • Argentine corn ratings are pegged at 59% G/E by BAGE.
  • S. Korea passed on their overnight corn tender.
  • Average trade estimates for US corn ending stocks come in at 1.708 bil bushels. The Dec report had it at 1.781 bil. The guess for world corn ending stocks is 307.06 mil tons.

 Outlook: corn chopped lower along with everything else. No good reason it seems, but other markets faired worse. Only 4 hours to wait until reports come out, and then we’ll see where the dust gets blown. The market is leaning towards a lower yield and production, but perhaps also lower ethanol use. Calls : steady/ +1

 

Oilseeds

  • SH19 took some pressure, and traded down to its 50 day moving average [$9.13].
  • Average trade estimate for US bean ending stocks come in at 926 mil bushels. The Dec report had it at 955 mil.The guess for world bean ending stocks is 112.67 mil tons.
  • Last Dec USDA had Brazil bean production estimated at 122 mil tons.Most trade industry guesses on that crop now are around 117 mil tons.

Outlook: a somewhat surprising dime drop in beans yesterday, but all markets were negative. This week has seen heavier rains in parts of Argentina, bringing isolated flooding, but should benefit the bean crop. Will USDA lower US bean exports any, or leave them unchanged now that China business has resurfaced?  Calls: steady

 

 Wheat

  • Wheat spreads continued to back off.KWH/K drifted back to -8, with WH/K to -4.5. It was the first day of the GS index roll as well. WH closed -.12 ¾ @ $5.13 ¼ , KWH closed -.13 @ $4.96 ¼ and MWH closed -.08 ¾ @ $5.64 ½ .
  • WH19 has managed to trade from its 2 month high [5.31] back down below chart trendline support [$5.10], all in two sessions!
  • Egypt’s GASC announced a tender for wheat last night, for March 21-31 shipment. Last tender they bought Romanian and French origin.
  • Russia, Kazakhstan and Iran plan to sign a wheat trade deal next week, Feb 12th .
  • Average trade estimates for US wheat ending stocks come in at 989 mil bushels. The Dec report had it at 987 mil. The guess for world wheat ending stocks is 268.09 mil tons.

Outlook: the world came crashing down on wheat markets early yesterday. No clear reasons for the .10-.12 cent declines early on.  Maybe some technical selling, or positioning in front of today’s reports? WH19 did gap lower and at the re-open was just under the 100 day moving average [$5.23], so that may have triggered some sell stops on the way down. Some may have felt the USDA report would lower US wheat exports, thus increasing carryout? Maybe that pushed the planted acres watchers to the side? With Egypt jumping into the market overnight, it might get a firmer tone.  Calls: +2 to +5  on a bounce from yesterday

 

 

Estimates for Friday:

USDA 2018-19 U.S. corn and soybean crops (production in billions of bushels, yield in bushels per acre, harvested area in millions of acres):

Average of

Range of

USDA Nov.

Reuters

analysts'

analysts'

2018-19

Jan. poll

estimates

estimates

estimate

average

Corn

production

14.532

14.343-14.760

14.626

14.538

Corn yield

177.9

176.7-179.9

178.9

178.0

Harvested area

81.680

80.850-82.100

81.767

81.668

Soy production

4.569

4.490-4.620

4.600

4.572

Soy yield

51.8

51.0-52.4

52.1

51.8

Harvested area

88.187

87.364-88.509

88.343

88.189

U.S. quarterly stocks as of Dec. 1, in billions of bushels:

Average of

Range of

USDA

USDA

Reuters

analysts'

analysts'

Sept. 1,

Dec. 1,

Jan. poll

estimates

estimates

2018

2017

average

Wheat

1.957

1.846-2.003

2.379

1.873

1.960

Corn

12.092

11.940-12.400

2.140

12.567

12.097

Soybeans

3.743

3.414-3.872

0.438

3.161

3.725

 

U.S. winter wheat seedings for 2019 harvest, in millions of acres:

Average

Range of

USDA 2018

Reuters

of analyst

analyst

final

Jan. poll

estimates

estimates

plantings

average

All winter

32.128

31.500-33.300

32.535

32.279

Hard red winter

22.579

21.925-23.620

22.923

22.727

Soft red winter

5.963

5.643-6.200

6.076

6.019

White winter

3.488

3.211-3.700

3.536

3.486

USDA 2018-19 U.S. grain and soybean ending stocks, in billions of bushels:

Average of

Range of

USDA Dec.

Reuters

analysts'

analysts'

2018-19

Jan. poll

estimates

estimates

end-stocks

average

estimates

Wheat

0.989

0.950-1.028

0.974

0.987

Corn

1.708

1.621-1.787

1.781

1.694

Soybeans

0.926

0.800-1.015

0.955

0.904

USDA 2018-19 world grain and soybean ending stocksin MMT:

Average of

Range of

USDA Dec.

Reuters

analysts'

analysts'

2018-19

Jan. poll

estimates

estimates

end-stocks

average

estimates

Wheat

268.09

266.00-269.70

268.10

268.22

Corn

307.06

305.00-308.94

308.80

307.32

Soybeans

112.67

109.00-115.10

115.33

114.36

USDA 2018-19 South American corn and soy production in MMT.

Average of

Range of

Dec. USDA

Reuters

analysts'

analysts'

2018-19

Jan. poll

estimates

estimates

estimate

average

ARGENTINA

Corn

43.09

41.50-45.00

42.50

42.39

Soybeans

55.14

54.00-56.00

55.50

55.29

BRAZIL

Corn

93.41

91.00-95.50

94.50

94.31

Soybeans

116.99

115.00-119.00

122.00

120.13

USDA world production, in MMT:

Dec. USDA

Dec. USDA

2017-18

2018-19

estimate

estimate

Argentina wheat

18.50

19.50

Australia wheat

21.30

17.00

Canada wheat

29.98

31.80

Russia wheat

84.99

70.00

Argentina corn

32.00

42.50

Brazil corn

82.00

94.50

South Africa corn

13.53

12.00

China corn

259.07

256.00

Ukraine corn

24.12

35.00

Argentina soy

37.80

55.50

Brazil soy

120.30

122.00