November options expired Friday, and first notice day for November futures is next Thursday. Reuters reports that U.S. and Chinese trade officials will negotiate today, with China expected to request the removal of some planned and existing tariffs. China plans to buy at least $20 billion in U.S. agricultural products in year one of a partial trade deal and will issue tariff waivers for 4-5 MMT of grain. This would be similar to the amount China was importing before the trade war. In a speech yesterday, Vice President Pence said the U.S. government stands with those in Hong Kong protesting the Chinese regime. US weather turns drastically cooler next week, and the ECB looks to be quite wet with a tropical storm making landfall and then working its way north. In a Bloomberg poll of 40 economists, 85% of them expect the Federal Reserve will reduce rates by a quarter percent when they meet next week.
The International Grains Council (IGC) lowered their world corn production estimate by 1 MMT to 1098 MMT. The Buenos Aires Grains Exchange says Argentine corn is 34.6% planted vs 34.4% last year. Ukraine is on pace to export nearly 2 MMT of corn in October, up from 189k MT in September and 1.36 MMT last October.
Weekly corn export inspections totaled 531,744 MT vs 450-650k MT estimates, only 60% of the pace needed to meet USDA projections. Crop Progress showed corn 30% harvested vs 47% 5 year average, with 86% mature vs 97% average. Condition rating was up 1% to 56% good-to-excellent. Export sales were at 491,500k MT vs. estimates of 400k-700k MT. Export demand has been quite ugly, U.S. is still overpriced on the world market, we should be seeing sales of at least 800k MT a week to meet expectations. Top destinations this week were Mexico, Colombia, and Japan. Sales were the 2nd lowest on record for this week, and total commitments are 22.45% of the USDA pace, the lowest on record for this date in history. For the week, Dec19 closed down 4 ¼ cents for the week. This is now two straight weeks corn has closed lower after following 5 weeks of being higher.
The IGC lowered their world wheat production estimate by 2 MMT to 762 MMT. The Australian crop was lowered 2.1 MMT to 17 MMT and the Argentine crop was lowered 0.9 MMT to 19.5 MMT. Rabobank sees the Australian wheat crop at 15.8 MMT vs USDA at 18 MMT and 17.3 MMT last year. Ukraine’s grain exports are up 29% through the first 4 months of the marketing year to 17.6 MMT, including 10.67 MMT of wheat. Iran says they will import 3 MMT of wheat next year, well above USDA’s estimate of 100k MT and IGC at 300k MT.
Weekly wheat export inspections were 565,099 MT vs 400-600k estimates. Spring wheat harvest is 96% complete vs 100% average, with ND 95% and MT 92% harvested. Winter wheat is 77% seeded vs 75% 5 year average. Export sales were 262,400 MT vs. estimates of 300k-600k.
China bought 1.73 MMT of U.S. soybeans in September, up from 132.2k MT last year, but they also bought 4.79 MMT of beans from Brazil and 976.4k MT from Argentina. The IGC lowered their world soybean production estimate by 1 MMT to 341 MMT.
Weekly soybean export inspections were 1.296 MMT vs 0.9-1.4 MMT estimates and are right in line with last year. U.S. soybeans are 46% harvested, a 20% jump from last week but still behind the 63% average. Rain and snow have been a major issue for the Upper Midwest, as MN is 42% harvested and ND 20% harvested vs 81% average. Export sales were 475,200 MT vs. estimates of 800k-1.6 million. Sales were averaging 1.7 MMT this marketing year, the cancellation of 584k MT pulled this week down the lowest number of the year. Top destinations were Pakistan, Netherlands, and Mexico.
Friday’s cattle on feed report was right in line with expectations. Placements at 102% were just a touch higher than expectations of 101.6%. Boxed beef values moved higher this week as did cash trade which moved up to $111. Margins shot higher from $225 last week to $291 today.
Earlier this week Reuters cited several OPEC officials who said additional oil output cuts are on the table when they meet in December to counter what is expected to be weaker demand growth in 2020. Saudi Arabia is China’s largest crude oil supplier, providing 1.74 million bpd in September, China’s custom data showed. That was slightly lower than August, but nearly double the amount from a year earlier. Imports from Iran were 132,000 bpd in September, which was more than four times lower than a year earlier. Imports from the US were 127,000 bpd in September, down from 269,000 bpd the month prior as Beijing imposed a 5% tariff on US crude oil as part of the trade disagreement.