Weekly Market Recap


Grains

Daylight Savings Time ends this Sunday 11-3-19 @ 2:00 A. M. Fall back one hour on your clocks. As expected, Alberto Fernandez was elected as the new president of Argentina last weekend. Cristina Fernandez de Kirchner (the former president) will be Vice President which will lead to many questions from the Argentine farm sector as to policies the new leadership will bring. Remember, strict limits on corn and wheat shipments were in place during Kirchner’s two-terms from 2007-2015. This should have a material impact on the ag sector in Argentina.

On Wednesday, Chile canceled the APEC meeting scheduled for Nov 16-17 due to political unrest in that country. The U. S. and China were to sign the Phase 1 trade war agreement at that time. The White House still says they want to sign the agreement in November but an alternative meeting sight or date for the signing is still unknown. Wire stories continue to point to “great progress” made with the Chinese on Phase 1 of a new trade agreement.    

The Federal reserve cut interest rates on Wednesday afternoon by 25 basis points to a range of 1.50-1.75 %. The vote in favor of the rate cut was 8-2. New language in its policy signaled a possible easing in further rate cuts.

Corn

FranceAgriMer reported that 65 % of the French corn harvest had been completed by October 28th. Persistent rains have slowed corn harvest this year compared to last year when 96 % of the crop had been cut. BAGE estimated that Argentine corn planting was 40.2 % complete vs 34.6 % last week vs 35.5 % last year.

Monday afternoon’s Crop Progress Report showed corn is 93 % mature vs 86 % last week vs the 5-year average of 99 %.  Corn is 41 % harvested vs 30 % last week vs the 5-year average of 61 %. The harvested total of 41 % was 2 % below the average trade estimate of 43 %. Corn was rated 58 % G/E vs 56 % G/E last week.                                                           

Wheat

The Buenos Aires Grain Exchange (BAGE) cut its estimate of Argentine wheat production to 18.8 million tons from the previous estimate of 19.8 million tons. Negative weather conditions including dryness, and low temperatures were cited as the reasons behind the cut in production.  Ukraine’s grain exports have increased by almost 39 % so far in the 19/20 marketing year led by wheat exports of 10.92 million tons vs 7.40 million tons in the same time period last year. Recent rains in Argentina have come too late to help wheat fields recover from a prolonged dry spell in some of the key growing areas in that country. Wheat yields that had been expected to be 3.2 tons per hectare have been lowered to an estimated 2.8 tons per hectare according to Argentine consultancy Agritrend. Overall the wheat crop is now estimated at 19-19.5 million tons, down from earlier estimates of 21 million tons. Egypt’s GASC purchased 235,000 tons of wheat to complete its latest international tender. GASC bot 60,000 tons of French wheat from Glencore @ $235.85/ton c&f, 55,000 tons of Ukrainian wheat @ $234.55/ton c&f, 60,000 tons of Romanian wheat from Cargill @ $235.40/ton c&f, 60,000 tons of Ukrainian wheat from Dreyfus @ $236.16/ton c&f. Prices paid appear to be $3-5 dollars/ton above their last purchase on Oct.16.     

The Crop Progress Report Monday afternoon showed Winter wheat plantings @ 85 % complete vs 77 % last week vs the 5-year average of 82 %. Key HRW states were ahead of the planting pace over the last five years with the exception of Montana which showed 87 % planted vs the 5-year average of 95 %. Winter wheat is 63 % emerged vs 53 % last week vs the 5-year average of 64 %. The first Winter Wheat ratings for the crop year showed 4 % Very Poor vs 3 % last year, 9 % poor vs 11 % last year, 31 % Fair vs 33 % last year, 44 % good vs 45 % last year, 12 % Excellent vs 8 % last year. A Bloomberg Survey indicates that U. S. farmers are prepared to plant the fewest of acres of winter wheat varieties in 110 years. The survey says farmers will plant 31.118 million acres of winter wheat varieties compared to 31.159 million acres last year. The estimated planted acres would only exceed the acres planted in 1909 (when record keeping began) of 29.196 million acres.                     

Soybeans

IMEA reported that soybean planting in Mato Grosso is 64 % complete vs 42 % complete last week. Meanwhile, EMATER reported that RGDS has seen rains slow early planting but about 7 % is planted vs 3 % last week.  Argentine soybean planting is just ramping up after rains eased some dry areas so BAGE did not publish a soybean planting progress this week. Last year, soybean planting in Argentina was 3.5 % complete by November 1st.

Daily Price Limits for Grains and Oilseeds reset on November 1st. The Soybean daily limit has changed from 65 cents to 60 cents. The Crop Progress Report pegged soybeans dropping leaves @ 97 % vs 94 % last week vs the 5-year average of 99 %. Soybeans harvested came in right at the average trade estimate of 62 % vs 46 % last week vs the 5-year average of 78 %.                                                     

Livestock

Cattle futures have continued to push sharply higher after setting lows back in early September.  Cash cattle traded $2-3 higher in most areas.  Packers are still reaping huge margins at $325/head.  They have plenty of room to pay higher cash rates with that lofty of a margin environment.

Energy

OPEC’s 14 members increased production in October by 1.11 million bpd from September to average 29.7 million bpd. The increase came as Saudi Arabia recovered from oil infrastructure attacks. Iraq’s production fell 100,000 bpd in October to 4.68 million bpd, which is still above its OPEC agreement level. The Keystone crude pipeline remains shut after leaking 9,120 barrels of oil in North Dakota on Wednesday. The company has not said when they expect the line to reopen. Reuters heard form market sources that the line will be shut for at least a week. The number of gas stations offering E-15 in the United States is below 2,000, most of which are in Minnesota and Wisconsin, the Growth Energy trade association said. The offering is very limited in many high consuming states such as New York and California. There remain challenges in broader adoption. States need to change laws to allow it and the cost to retrofit pumps to allow for the blend can be prohibitive.