Weekly Market Recap


Grains

MFP 2.0 payments are set to be released next week, according to an announcement by U.S. Secretary of Ag Sonny Perdue.  The 2nd round of payments amounts to 25% of the total amount, so far 50% was paid out in the first round.  The Brazilian real weaken to its lowest level vs the dollar in over a year.  This is a windfall for Brazilian farmers as they sell in US dollars and then are able to exchange a larger number of local real. 

Corn

CONAB kept its estimate for Brazil’s corn production unchanged from last month at 98.4 MMT. The USDA is estimating Brazil’s corn crop at 101 MMT.

US corn harvested was at 66% vs 52% last week and 85% on average.  Harvest came in below estimates and this is the 2nd slowest pace since 1992. Ethanol production continued its trend higher this week with a 16,000 bpd increase this week to 1,030,000 barrels per day. Inventories were down by 900k barrels to 21.0 million barrels. Net margins were 3 cents higher and at a positive 16 cents overall. Weekly export sales were 581,600 metric tonnes, which is within estimates of 400,000 to 800,000 metric tonnes. The CFTC COT report showed speculators buyers of 8,358 contracts, bringing their net short to 148,090 contracts.

Wheat

Yesterday’s Egyptian tender concluded with GASC purchasing 8 offers for a total of 465 TMT of wheat. All 8 of these offers were between $231.98 and $232.35 per tonne delivered. All these offers came from either Ukrainian or Russian origin. The Buenos Aires Grains Exchange lowered their estimated of the Argentina wheat crop to 18.5 MMT, down from 18.8 MMT.  This continues a trend of lower wheat production levels with the exchange citing the first 13% of that crop harvested and what yields have been. Wet weather in France are slowing down soft wheat planting, this year they are 72% planted vs. 92% last year.

The crop progress report showed winter wheat planning at 88%. That compares to a 5-year average of 92% complete. The report also showed the winter wheat crop 54% good/excellent, that compares to 57% last year. Weekly export sales were 238,600 metric tonnes, which is near the low end of estimates ranging from 200,000 to 500,000 metric tonnes. The CFTC COT report showed speculators sellers of 5,143 contracts of Chicago wheat, bringing their net short to 34,052 contracts. Speculators bought 18,963 contracts of Kansas City wheat, bringing them to a net short of 5,961 contracts. Speculators sold 2,526 contracts of Minneapolis wheat, bringing them to a net short of 11,570 contracts.

Soybeans

Bloomberg news is reporting that “people familiar to the matter” say that the CME Group, in conjunction with Brazil’s B3 futures exchange, plans to launch a Brazilian soybean futures contract. The contract is to be for soybeans loaded at the port of Santos and would be cash-settled on assessments by a price-reporting agency. Both the B3 exchange and CME Group declined to comment.  Brazil’s central and northern states are still expecting to receive 1-2 inches of rain over the next 5 days, while the southern states are only expecting limited moisture. The 6-10 day forecast for Brazil shows continued dryness in the southern states with near normal temps expected over the region. CONAB increased its estimate for Brazil’s soybean crop by 0.5 MMT to 120.4 MMT. The USDA is estimating Brazil’s soybean crop at 123 MMT.

The crop progress report showed soybean harvest at 85% nationwide, the 5 year average is 92%. WI, MO, MI & ND are all still below 75% complete. Weekly export sales were 1,253,000 metric tonnes of soybeans, within estimates of 800,000 to 1,400,000 metric tonnes. 760,000 tonnes of the soybean sales went to China, 61% of the week’s sales. Soymeal sales were 345,300 metric tonnes, near the top end of estimates ranging from 100,000 to 350,000 metric tonnes and soyoil sales were 30,600 metric tonnes, above estimates of 5,000 to 25,000 metric tonnes. The NOPA Crush report came in very strong and surprised the industry with a new all-time record at 175.397 mil bu, this exceeded the estimates of 157.5-173 mil bu. Soy oil stocks were 1.423 billion pounds, slightly above estimates of 1.42 billion.

Livestock

Chinese authorities have lifted a 4-year old ban on poultry imports from the US effective immediately. The ban was put in place following the outbreak of avian flu in the US in 2015. China continues to struggle with protein shortages due to African Swine Flu hitting their hog herd. The cash cattle market continues to remain firm, with purchases mostly steady to higher. Texas traded $115.00, steady to $1.00 higher. Western Corn belt cattle were largely steady to $1.00 higher at $115.00 live at $182.00 dressed. So far trade has been light, and more may come later today and over the weekend. Margins remain very lofty at nearly $350/head.

Energies

OPEC has forecast that the crude market will be oversupplied by about 70,000 bpd in 2020. It has been stated a number of times that the group will likely focus on tighter compliance to current quotas instead of agreeing to further production cuts. U.S. crude production is at an all-time high of 12.8 million bpd according to EIA data released this week.