Weekly Market Recap
9/6/2019 3:40:03 PM
US weather forecasts continue to remain favorable. Additional rains are forecasted, and no real freeze threats are seen in the 2 week outlook. Kudlow stated today that no date has been set for trade talks between the U.S and China, but the talks are planned for early October. He also stated the talks could “heat up” but promised no prediction of the outcome of the meetings.
Talk continues about the administration’s work on a “giant” package for biofuels. An increase in the overall mandate is possible. U.S. President Donald Trump is expected to meet with Department of Agriculture and Environmental Protection Agency officials to consider a plan that would include boosting biofuels requirements for 2020 by 1 billion gallons. 1/2 of that to ethanol and the other half to biodiesel. Egg-sets were 105% of last year and chick placements run at 102% of last year, indicating strong feed use potential. Overall export demand remains subdued as FOB US export offers are still below FOB South America values. On the crop progress report, the USDA says 81% of the corn crop is in the dough stage, behind the five-year average of 93%. The crop is 41% dented, behind the five-year average of 63% and 6% is mature. 58% is rated G/E with 13% rated VP/P. Ethanol production was lower by 25,000 bpd this week. Ethanol margins continue to remain negative but only by a penny now. Corn export sales were negative in old crop and lower than expected in new crop. A poor total for the last full week of data in the marketing year. Exports have really fallen of in the last half of the year. The latest CFTC Commitments of Traders report showed corn specs as sellers for the 7th straight week. They sold 24,700 contracts this week and their net short is up to 139,700 contracts.
Argentina’s Buenos Aires Grain Exchange has supposedly reported that 81% of their wheat crop has adequate or optimal soil moisture, while others have a varying opinion about dryness in the northern region. Parts of Australia remain quite dry. US FOB export offers remain at a premium to French soft wheat offers and Black Sea HRW offers.
The USDA estimates US spring wheat harvest at 55% complete, well behind the average pace of 78% harvested. Montana is estimated at 46% harvested and North Dakota at 52% complete. Wet weather across the northern plains will remain a problem for the HRS harvest. Sprout damage is a concern in some areas and very low falling numbers are being reported. Many regions of the US will begin to seed the next US winter wheat crop within the month of September.
Paraguay’s Ag Minister says soy production could be up 22% from last year. Brazil is preparing to plant soybeans. They are legally allowed back into the field in Mato Grosso on September 16th. However, the rainy season has not returned so farmers will wait until they have received rain to get started. Temps are seasonally hot in the 100+ degree range.
USDA’s crop progress report showing that 86% of the crop is setting pods makes a few traders nervous. The five-year average for setting pods is 96%. Soybeans blooming is estimated at 96%, gaining only 2% from last week. Soybean export sales were very good for the next marketing year. A majority of the sales were to unknown.
The futures market continues to slide as the cash market continues to back off. Despite slaughter levels being back at normal levels, the market packer is still holding all the leverage. Packer margins are still crazy high at $395/head.
Volatile markets continue as the trade war continues to wreak havoc on markets. Prices ended up higher this week as demand concerns and geopolitical issues persist and keep markets very choppy. Hurricane Dorian has weakened and no longer remains a threat to the energy markets.