Weekly Market Recap


Grains

China’s imports of U.S. agricultural products fell 55% in the first five months from a year ago, says the Ministry of Agriculture and Rural Affairs. China imported 32.73b yuan vs 73.2b yuan a year earlier. Shipments were up from other nations including Brazil, Australia and Canada. Imports from Brazil expanded 21%. A meeting between President Trump and President Xi is planned at this week’s G20 summit. Nothing of substance is expected to result as both are expected to present their terms for trade war resolution.

Corn

Brazil’s corn export lineup is large as they are on pace for record June exports. AgRural estimates safrinha harvest at 19% complete.

The corn market gapped higher after Monday’s crop conditions report lowered the crop rating to 56% good/excellent from 59% last week. Emergence remains behind the 5 year average of 99%, currently sitting at 89% emerged. Planting was reported at 96% complete. The USDA has said they will allow corn for silage to be planted on prevent plant acres. This changes the dynamics as we can have corn planted for silage that will be considered PP acres, freeing up planted acres to be combined. The quarterly stocks report dropped a bomb on the corn market.  The USDA said that 91.7 million acres of corn were intended to be planted which was well above the average guess of 86.7 and even above the highest guess. Corn stocks of 5.202 billion bushels was on the lower end of expectations, but not a big driver on its own. There was wild price action right at the report release time.  Corn briefly traded 10-15 cents higher, but none of the major new services had the data out.  But in less than a minute corn went from 13 higher to 15 lower before grinding to limit down.  There was a slight price recovery before December corn ended the day 19.5 cents lower. The CFTC report showed that specs continue to pile money in the corn market. Specs have been buyers for 9 straight weeks with a whopping 482,000 contracts bought over that span.

Wheat

Europe sees a heat wave with record June temperatures from Germany to France. Their wheat crops have been looking good but worries that the rising temps will trim production is supportive. The EU cut their forecast for wheat production from 143.8 million tons to 142.3 million tons. This is up from last year’s production of 128.8 million tons. Wheat exports were left unchanged, with new crop wheat export estimates at 25.5 million tons, and old crop estimates at 21.0 million tons.

 

US winter wheat crop ratings saw a seasonal slip to 61% good/excellent from 64% last week but remains well above last year’s 37%. Weekend hail across parts of the HRW crop didn’t help. Spring wheat is rated 75% good/excellent. The stocks and acreage report was pretty neutral at face value.  Acreage was spot on expectations at 45.6 million.  Winter wheat acreage came in at 31.8 million vs expectations for 31.6.  Wheat stocks of 1.072 billion were also right in line.  The biggest problem for the wheat market was the corn numbers were so bearish that wheat got pulled down with corn. December Chicago wheat closed 18.25 cents lower on Friday which erased all gains for the week. 

Soybeans

The USDA showed US soybean plantings at 85% complete, well behind the 5 year average of 97%. Crop conditions were pegged at 54% good/excellent, this compares to 73% last year. The acreage report was extremely bullish for soybeans.  The acreage number was only at 80 million. This was almost 4.5 million acres below the estimate and really caught the market off guard. Quarterly stocks were just slightly lower than expectations at 1.79 billion bushels.  But it was the acreage number that propelled the bean market to nice gains of 11 cents on report day. The rally on Friday recovered most of the week’s losses.

Livestock

China, the world’s top pork consumer, imported a record volume of meat in May in a bid to mitigate the impact of African swine fever as domestic pork prices rebound. China bought 556,276 tons of meat and offal in May, up about 45% from a year earlier, according to official customs data. That brings total imports in the first five months to 2.2 million metric tons, a 23% increase from last year. Cash cattle tried to rebound with higher trade this week. With an improving weather pattern, we are finally seeing retailers pushing beef as a feature. Packers have plenty of room to pay up at margins are still at a very robust $194/head.

Energies

It was a strong month in energies. Today was a relatively benign day in energy (with many eyes on the USDA acreage report) until the EU said a mechanism that would allow trade with Iran that circumvents US sanctions was operational. That helped push crude and products lower, perhaps on the premise it could allow for increased Iranian crude shipments. Deep selling subsided and prices recovered somewhat into the weekend. All eyes will be on the G-20 and in particular the meeting between President Trump and President Xi on Saturday to see if progress can be made in the US/China trade dispute. Monday brings the OPEC meeting in Vienna where participants have suggested an extension of the current cut at least, or perhaps even a deeper cut. Volatility could be in high gear Sunday night into Monday across asset classes.