Weekly Market Recap


President Trump announced he will delay the 5% tariff increase (to 30%) on some of China’s goods by two weeks, now to be implemented October 15th, in a sign of good will ahead of trade talks. There has also been a fair amount of talk around an interim deal as both sides appear to be talking a softer stance than just a few weeks ago.


On Monday Mexico stepped in with a huge flash sale purchase of corn of 651,670 tons.  590,820 tons for 19/20 and 60,850 tons for 20/21 delivery. That was followed up with more sales on Wednesday and Thursday which brought their total for the week to just over 1 million tons.  Weekly ethanol production increased 10,000 barrels per day to 1,023,000 barrels per day. Ethanol inventories declined 1.3 million barrels to 22.5 million barrels. On the WASDE report, the USDA placed the U.S. corn yield at 168.2 bushels per acre, within estimates between 162.0 and 171.5 bushels per acre. Corn production was placed at 13.799 billion bushels, within estimates of 12.620 and 14.003 billion bushels. U.S. 2018-2019 ending stocks were 2.445, within estimates of 2.280 and 2.515 and the 2019-2020 ending stocks were 2.190, within estimates of 1.482 and 2.269 billion bushels. World ending stocks were 306.3 million tonnes, within estimates of 292.7 to 310.


Australia trimmed its wheat production forecast during the 2019/20 season by nearly 10% as prolonged dry weather across the country's east coast wilts production. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) pegged production of the country's largest rural export at 19.2 million tonnes, down from its previous estimate in June of 21.9 million tonnes. BAGE rated Argentina’s wheat crop 41% Good/Excellent, up 2 pts from last week.  Improved rains in the country’s mid-section contributed. The WASDE report wasn’t impressive for wheat, with U.S. stocks unchanged and world ending stocks raised by 1.5 million tonnes.  The USDA placed U.S. 2019-2020 ending stocks at 1.014 billion bushels, within estimates of 989 million bushels and 1.066 billion bushels. The world ending stocks were placed at 286.5 million tonnes, within estimates of 268 to 288.1.



China imported 9.48 million tons of beans in August.  This is the biggest monthly total of the marketing year and the largest since May 2018. The USDA is estimating China will take 83 million tons total this year.  Currently they have imported 74.4 mmt with one month to go.  I think the USDA is right on as my estimate is at 82.8 mmt.  A newswire reported Thursday that China bought at least 600tmt soybeans for Oct/Dec shipment from the PNW; traders reported purchases of 204,000 tons on Friday’s flash announcements. There are new reports that China will exempt soybeans and pork from additional tariffs and waive tariffs on U.S. ag goods that they are encouraging their companies to buy. The USDA placed the U.S. soybean yield at 47.9 bushels per acre, within estimates of 45.5 and 49.0. Soybean production was placed at 3.633 billion bushels, within estimates of 3.434 and 3.745 billion bushels. U.S. 2018-2019 ending stocks were 1.005 billion bushels, within estimates of 990 million bushels and 1.084 billion bushels and the U.S. 2019-2020 ending stocks were 640 million bushels, within estimates of 434 to 797. The world ending stocks were 99.2 million tonnes, within estimates of 89.6 to 119.


Lean hogs locked limit up on Thursday, drawing on optimism about U.S. China relations, and the potential for China to buy more U.S. pork. Hogs had expanded limits of $4.50 per cwt on Friday and locked up limit again.  Cash cattle trades have been pretty light and $-1 to +1 different than last week. Packer margins are still ridiculously good at $370/head, but some feedlots are now current and may hold out for higher money to try to shift some of the leverage away from the packer.



Oil is set for its biggest weekly decline in nearly two months as the IEA has warned of a looming supply glut. In response to the significant challenge of balancing the market, OPEC+ has put pressure on its members to achieve full compliance in terms of production. No further production cuts were discussed in their meeting yesterday afternoon, but they meet again in December with additional cuts possibly on the table.  U.S. crude production remained close to a record high level in June at 12.1 million bpd, but growth has slowed in response to lower oil prices. U.S. average gasoline prices fell to $2.57 a gallon on September 12, according to AAA.