Weekly Market Recap


Global and domestic concerns are weakening the economy with the Dow down sharply this week and the bond market about to show a recession signal with the 2-year and 10-year yield spread inverting.  Protests in Hong Kong continue to worsen and raise worries China would bring in their army to get a grip on things, a move that would raise global tensions. Argentina’s peso weakened 25% against the US dollar as President Macri lost by a larger than expected margin in a primary election ballot that is a good barometer for the first round of their presidential elections in October. Pro Farmer Midwest Crop Tour will begin next week and undoubtedly, those on the tour will find a large amount of variability and crops that are well behind average development. CHS Hedging will have a person on each leg of the tour, west and east.


The WASDE report was a real shocker.  Corn yields were raised to 169.50 bpa.  Planted acres were 90 million with harvested at 82 million.  This put the production level at 13.901 billion bushels which was well above market expectations and set a very bearish outlook.  Ending stocks were 2.181 billion bushels. The FSA released their estimates on acres and prevent plant data.  11.2 million acres were listed as prevent plant. If you combine the FSA data with the USDA thoughts it would imply that US farmers planted over 101 million corn acres this year.  he EPA has granted 31 small oil refineries exemptions retroactively for 2018. These exemptions do not actually reduce the demand for ethanol as the refineries still need to blend ethanol. Crop conditions stayed flat at 57% in the good/excellent category vs. expectations of a slight drop due to the dry conditions last week. Export sales this week came in at 56.1 tmt for 2018/19 vs. expectations of 100-300 tmt while 2019-20 exports were 307.6 tmt vs. expectations of 100-400 tmt. When the dust finally settled on the week, December corn futures had lost 37 cents on the week. 


The German wheat crop is expected to be at 23.81 MMT according their association of farm cooperatives. It is a sharp gain from last year’s crop, but a 40,000 MT drop from last month’s estimate as late heat and dryness made an impact.

On the WASDE report, HRW production was increased to 840 million bushels vs. 806 million expected. Total winter wheat production increased to 1.326 billion bushels vs. last month’s 1.290 billion. The spring wheat production was at 597 million bushels vs. the average trade guess of 569 million. North Dakota’s yield was raised 3 bushels per acre to 50 bushels per acre while Montana’s was raised 2 bushels per acre to 34 bushels per acre. Spring wheat conditions were down 4% on the good/excellent category to 69%. ND conditions were down 4%, Montana was down 8%, and SD was down 5%.


The WASDE report held surprises for the soybean market.  Acreage was sharply lower than expected at only 76.7 million acres. Harvest acres were at 75.9 million. Soybean yield was left alone at 48.5 bpa, but that is not a surprise given the lateness of the crop and the lack of objective yield data. Ending stocks of 755 million remain very comfortable.  Crop conditions were flat on the good/excellent category vs. expectations of a dip because of the dry conditions last week. The rating of 54% g/e has held steady for the past 5 weeks. Soybean export sales were 110 tmt for 2018-19 vs. expectations of 50-300 tmt while 2019-20 exports were 817 tmt vs. expectations of 100-400 tmt. Soymeal 2018-19 sales were 130 tmt vs. expectations of 75-200 tmt and 2019-20 sales were 144 tmt vs. expectations of 100-200 tmt. 2018-19. Soyoil export sales were 1.4 tmt vs. expectations of 8-22 tmt and 2019-20 sales were 0 tmt vs. expectations of 0-10 tmt.  NOPA crush was 168.093 million bushels. Estimates were between 149.535 and 170.6 million bushels, with the average at 154.5. This is a new record crush for the month of July. This crush is a 13% increase from last month’s figure.


Fire at a Tyson cattle packing plant in Holcomb, Kansas has closed the plant indefinitely. This caused cattle to lock limit down 2 days in a row.  The industry has handled it extremely well with kill level that look to be higher than last week.  The big drop in futures has caused packer margins to explode higher.  They were really good last week at $150/head but closed this week at a staggering $350/head.


WTI futures had a choppy, but sideways week, as geo-economic concerns persist. Fears of recession continue to swirl as the bond market signals a recession. The Gibraltar Supreme Court said Thursday, the U.S. had not taken legal steps to block the released of an Iranian oil tanked that had been seized by British forces. According to AAA the national average for a price of gasoline at the pump is $2.641. Last month the price averaged $2.792. A year ago, prices averaged $2.853 per gallon.