Weekly Market Recap


Grains

The trade war between the US and China just can’t seem to come to a resolution. Things looked promising just 10 days ago with both sides believing a deal was imminent.  But China apparently made some changes to already agreed upon items, and the whole deal has now taken several steps back. Amidst continuing trade tensions between the U.S. and China, President Trump tweeted that China should not retaliate against the U.S. tariffs as it will only get worse for China. China issued a statement proposing to set import tariffs against $60 Billion in U.S. goods taking effect on June 1st.  The US reached a deal with Canada and Mexico to lift tariffs on steel and aluminum in return for those countries to add measures to prevent Chinese steel and aluminum to come into the US though those countries.

Corn

A private analyst lowered their Ukraine corn harvest forecast from 35.6 million tons to 33.7 million tons for 2019. Their corn export estimate for 2019/2020 was lowered from 26.8 million tons from 25.5 million tons.

In the US, corn planting remains extremely slow. This is one of the slowest years ever. The crop progress report showed corn planting came in at 30%, which was well below the 5-year average of 66%. Corn emerged was also well behind the average of 29%, coming in at 10%. Illinois should be 82% planted by now but is only 11% complete.  Weather forecasts have widespread rains across the whole corn belt, so planting will remain well behind normal. Planting insurance dates run from May 25-June 5. There is talk of seeing a discounted yield for every day that corn does not get planted. Analysts assessments and predictions should start to emerge.

Wheat

Germany’s 2019 wheat crop is pegged to increase almost 20%, rising to 24.28 million tons. Australia will begin importing wheat from Canada as drought continues to present challenges to the area. A private analyst raised their Ukraine wheat harvest to 26.2 million tons from 24.6 million tons. They raised their 2019/2020 exports estimates from 15.7 million to 16.2 million tons.

The crop progress report showed U.S. winter wheat headed at 42%, behind the average of 54%. Winter wheat condition was 64% good to excellent, 28% fair, and 8% poor to very poor. Spring wheat was 45% planted versus the average of 67% and 10% emerged versus the average of 34%. Minneapolis wheat had 40 re-deliveries. Chicago wheat had 23 deliveries, bringing the month to date total to 2,373 contracts with the next available date being 5/10/2019. Kansas City had 0 deliveries.

Wheat export sales were soft in old crop, but posted a solid new crop total. The new crop total was not only the biggest of this year, but was bigger than any new crop sales last year. There were also sizable cancellations to Korea and unknown.

Wheat inspections were excellent, going way above expectations this week. This was the best inspection total of the year. Inspections are behind the USDA total by 41 million bushels.  HRW made up 47% of this week’s inspection total.

 

Soybeans

The soybean crop in Brazil is just about fully harvested. Production estimates for the soybean crop in Brazil have been trending higher as the harvest ended.

It comes as no surprise that a U.S. Soybean Export Council (USSEC) director said the U.S. is likely to permanently lose soybean export market share in China the longer U.S. and Chinese negotiations continue. The USSEC director also stated, China is unlikely to ever return to importing record volumes of U.S. soybeans as they did in 2016. Chinese overseas investment in ag, forestry and fishing rose more that 10X since 2009. Investments in 2016 totaled $3.3 billion dollars. The crop progress report showed soybeans planted at 9%, well behind the average of 29%.

Livestock

African Swine Fever continues to ravage the Chinese hog herd. The Chinese government is not giving the public a lot of information. It is being estimated that up to 100 million hogs have died or been culled.  The US hog herd is around 70 million, so the problem in China could be bigger than our entire production.  Hope remains that China will come to the US for pork supplies, but this week we saw another pork cancellation to China on the weekly export sales data.  Vietnam’s government reported that they have culled over 1.2 million pigs infected with African swine fever. A breaking development has hit the newswires.  Spanish scientists have developed a vaccine for ASF.  So far, the testing has been done on wild boars, but the results were promising.     

Energies

Tensions between the U.S. and Iran continues as Irian oil output falls to the lowest level in 5 years. Earlier this week, the EIA reported Iranian oil output was 2.6 million barrels a day in April compared to 2.74 million barrels. Iran has vowed to keep exporting oil, disregarding U.S. sanctions. According to AAA the national average price for a gallon of gasoline is $2.861. Last week the average stood at $2.877 per gallon. The highest recorded average was achieved on 7/17/08 at $4.114 per gallon.