Weekly Market Recap


The South China Post is reporting that the US and China are close to agreeing on an interim trade deal as soon as next month. US Secretary of Agriculture Sonny Perdue confirmed Thursday that farm visits by the Chinese trade delegation were in the works as a way for China to build goodwill with American farmers. China officials have changed their travel schedule and were headed back to China earlier than planned, according to Nicole Rolf, the Montana Farm Bureau Federation’s director of national affairs. Nebraska department of agriculture also said the Chinese team called off a visit to farms in Nebraska. No frost risks are seen on the extended forecasts leaving farmers hopeful that the late planted crops will make it to full maturity. The Fed cut interest rates again by 25 basis points.  President Trump criticized the move as he would have preferred a larger cut.  


USDA’s Foreign Ag Service has increased China’s corn production by 20 mmt from the July estimate. Production is still estimated to be down from current production. A government ag official in China doesn’t think that China will be able to meet their 2020 ethanol targets. He cites lack of available corn stocks and slow development of ethanol production capacity. A Reuters survey predicts the next corn crop in Brazil will hit 102.3 mmt which is up from this year’s crop of 99.98 mmt.  This would be the first 100+ mmt crop there.

Informa is projecting 95 million acres of corn will be planted next year. The latest crop ratings have corn good/excellent conditions at 55% which is steady with last week.  Last year the crop was at 67% and the 5 year average is 69%. Corn harvest is underway, and the crop is 4% complete in the first tally of the season. The 5 year average is 7%. The latest ethanol numbers had production off 20,000 bpd.  The current production level of 1,003,000 bpd is the lowest production level since April. Ethanol margins dropped this week and are now 2 cents negative. Export sales were outstanding at 1,464,600 mt.  This is the biggest weekly sales since the end of February.  President Trump is meeting with senators from refining states to discuss the RFS as the President is under pressure from corn belt senators to help the farm community. Biofuel credits are up 30% from last week as refiners are active buyers. A potential change in biofuel policy is the driver for the buying interest.  


Russia has improved its wheat quality which will open up additional markets like Saudi Arabia. Wheat traders in the Ukraine are asking the government to increase the cap on exports from 19 mmt to 20 mmt. There are production concerns in Argentina and Australia due to adverse weather. Widespread frost in Western Australia could make a small crop even smaller. Australia lowered its forecast for wheat export by 7.7% due to drought. The results of the latest Egyptian tender showed them buying 180,000 tonnes of Russian wheat.  No US wheat was offered. 

US harvest results for spring wheat continue to show extremely poor quality. Falling numbers are very low and will have to be diverted into the feed channel. Export sales estimates were very disappointing at only 286,600 tons. US spring wheat harvest advanced to 76% complete but still lags the 5 year average of 93%. Winter wheat planting is underway and is 8% complete in the first reading of the season. The 5 year average is 12%.



China continues to buy soybeans from Brazil despite US supplies currently cheaper. Rumors of China buying 4-6 more cargoes from them circulated late in the week. Early in the week China did buy some US beans as part of goodwill gesture in conjunction with their trade delegation in DC. South Korea reported their second case of African Swine Fever. If the deadly disease spreads throughout SE Asia, feed demand could be cut even more than it already has been.

The CHS Fairmont soybean plant renovation to expand crush and production capacity is moving forward. Construction is now underway and should be complete fall of 2021. The Fairmont plant produces crude soybean oil, soybean meal and soybean hulls. The latest crop ratings has the soybean good/excellent conditions at 54% which is down 1% from last week.  Last year the crop was at 68% and the 5 year average is 67%. NOPA crush was 168.085 million bushels. This sets a new record for the month of August and was well above the average guess set by analysts.  


A second case of African Swine Fever was reported in South Korea and rumors that the disease is spreading to Thailand. China will auction of pork from its reserves this week to help fight skyrocketing pork prices. The latest Cattle on Feed report was friendly live cattle futures.  On feed and marketings met expectations but the placement number of 91% was below the estimate of 93.7%.  Packer margins are still ridiculously good at $350/head.


Yemen’s Houthi rebels launched a drone attack on the world’s largest oil processing facility in Saudi Arabia. It knocked out half of the supplies from the largest exporter of oil in the world.  Prices are very volatile after the event and are currently up over $5 which is almost a 10% move.  The crude oil market stabilized after Monday’s wild ride. Saudi Arabia said it will have the attacked oil facility back up to full capacity by the end of September.