Weekly Market Recap


Grains

The CHS Annual meeting is next week in Minneapolis, Dec 6th & 7th. President Trump is still considering adding additional tariffs of $200 billion on Chinese goods.  A lot will depend on the outcome of the G20 summit this week. President Trump said the thinks the Federal Reserve’s monetary policy is a greater threat to the US economy then the trade war with China.  He also indicated he is “no even a little bit happy” with Fed Chairman Powell.  Powell gave a speech shortly after those comments and his tone softened about how aggressive future rate increases would be.

Corn

Ukraine corn exports for the year so far have totaled 5.2 mil tons compared to 2.9 mil last year.

Corn export sales are trending higher and this week’s sales were the best of the past 8 weeks. Ethanol production increase this week very slightly to 1.042 million barrels/day. Ethanol margins are still running at a negative 12 cents and we are hearing about some plants going down until margins improve.

Wheat

Last weekend there was a major escalation in tensions between the Russian navy and Ukraine in the Black Sea/Sea of Azov region near Crimea, where Russian ships have blockaded passage and Ukraine’s government has declared a state of emergency. This action shouldn’t disrupt the wheat trade as roughly 5% of Ukrainian wheat leaves these ports.  However, the bigger issue is more fighting that would alter the risk premium for all Black Sea/Russian wheat supplies. SovEcon upped their Russian wheat export forecast to 34.7 mil tons, 500k higher than their previous estimate.

First notice day for wheat was this Friday and the December contracts for all classes, way outperformed the deferred months blowing out the front spreads. Wheat inspections were very weak and the gap behind the USDA pace has widened every week. US wheat export inspections are running 19% behind last year at this time  which is about 370 million bushels.

Soybeans

Argentine soy industry representatives are in discussions with Chinese officials trying to open up meal imports in to China and hope to work out a deal in the near future. China has rarely ever imported bean meal. Chinese customs data show soybean imports for October of 6.53 million tons from Brazil - 94% of their total. Only 67,000 tons came from the US. Brazilian bean planting estimated at 89% complete, well ahead of the 5 year average of 78%. Estimates for Brazilian production are starting to inch up as 95% of the crop is rated very good.  The weather has also been near ideal with no real threats from an El Nino pattern showing up yet.

Soybean inspections were ok this week, surpassing the 1 million ton mark for the 7th straight week.  Inspections are running just 11 million bushels above the USDA pace. Normally the pace is much greater, and we slow considerably when Brazil comes on line in a few months.  There were 2 nice flash soybean sales announcements this week.  However, weekly export sales were nothing special as cancellations to both China and unknown pulled down the total. Soybean oil sales were the best of the marketing year last week, but sharply flipped to a very poor total that was the lowest of the marketing year this week.

Livestock

Announcements on new outbreaks of African Swine Fever are almost a daily event now.  The number of cases is now over 70 and there appears to be no slowing of the spread despite massive efforts by the Chinese government. Cash trade has yet to develop with a very wide bid offer at the close of the week.  Packer margins have dropped quiet a bit from last week but are still very healthy at $140/head.

Energies

Crude oil traded down $1.01 to $50.44, down $15.14 or 23% on the month, on pace for its biggest monthly decline since 2008.  Russian President Putin plans to meet with Saudi Crown Prince Mohammed bin Salman during the G-20 meeting in Buenos Aires later this week.  Putin said they were in contact with OPEC and “are ready to continue our joint efforts if needed.” AAA is reporting a national average gasoline price of $2.511, down from $2.586 a month ago and compared to $2.495 at this time last year.