Weekly Market Recap
11/23/2018 12:51:58 PM
China/US trade relations remain at the forefront of news. Many traders remain optimistic that an agreement will return to normal US soy exports to China, but a return to normal, regardless of a deal, appears doubtful. Vice President Pence cautioned China this weekend at the Asia-pacific Economic Summit and said the US will continue to take action to hold nations accountable for their unfair economic practices.
The USDA reported corn harvest at 90% complete, gaining 6% for the week. Harvest a year ago was 89% complete and the five year average is 93%. Ethanol production continues at high levels despite margins remaining negative. The outlook for ethanol margins remains weak and there is talk of a possible closing of another ethanol plant in Nebraska. The EPA should issue their final ruling on biofuel blending requirements by the end of the month. Most are expecting the numbers to be right in line with what was proposed in June. Corn export sales failed to hit the 1 million ton mark for the 6th straight week.
The USDA estimates US winter wheat seeding is 93% complete versus 97% on average. Emergence is estimated at 81% versus 88% on average. The crop is rated 56% good/excellent, up 2 from last week. Last year was rated 53% good/excellent. Egypt’s GASC tendered on Wednesday. They bought 60,000 tons of Russian, 60,000 tons of Romanian, and 120,000 tons of US SRW for January shipment. This is the second consecutive tender the US has been able to connect to Egypt. US was cheapest overall on a FOB basis, but with freight calculated in, the US offers lost some of the advantage. The Variable Storage Rate calculation for Chicago SRW wheat will come in under 50% meaning the storage rate will decrease from $0.00365/bushel/day to $0.00265/bushel/day effective December 19th. Wheat inspections beat the high end of expectations this week by posting the best inspection number of the year. Inspections are still behind the USDA total by 121 million bushels however. The inspection gap has widened every single week this year.
USDA estimated US soybean harvest at 91% complete with KY, TN, MO and KS having the largest % remaining. Northern US beans remain higher moisture with widespread harvest activity. Soybean inspections surpassed 1 million tons for the 6th straight week. Inspections are above the USDA pace by 9 million bushels. Soybean export sales were the best in 7 weeks. But cancellations to China and Unknown destinations really dropped this week’s total. Soybean oil posted the largest export sales total of the year.
China’s African Swine Fever epidemic continues to spread across the country with new cases being reported this week. Wednesday’s cattle on feed report was friendly. Placements of only 94% were well below the expectation of 99.1%. Cash cattle were trading in the $116-$117 range which is up $3 to $4 from last week. Packer margins are still ridiculously good at $195/head.
Crude oil futures are sharply lower this week. Robust production and growing stocks continue to weigh on prices. Crude Oil futures are headed for a 7th consecutive weekly decline and are down 20% month to date. AAA is reporting the average price of diesel at the pump at $3.211 compared to $3.292 last month. The average price last year was $2.838.