Weekly Market Recap


Grains

Agriculture Secretary Sonny Purdue stated that the USDA is preparing the second tranche of aid to farmers. Purdue expressed that the aid will hopefully be ready by the end of this month or early December. A White House spokeswoman stated in an interview that the U.S is “very, very optimistic” about reaching a trade agreement with China soon. The Chinese commerce ministry stated that for a trade deal to be agreed on, both sides must simultaneously cancel some of their tariffs. Look for a second MFP 2 payment later this month or early December.  Many believe there will also be a third payment in Jan/early Feb.

Corn

Ethanol production increased again this week, the 6th consecutive week of increased production numbers. Production in the week ending November 1st came in at 1,014,000 bpd, compared to 1,004,000 bpd the week prior. Argentinian producers continue to sell grains at a rapid pace amid fears that the new government there will put export taxes back in place.  They have sold 12.4 MMT of corn vs. 4.6 MMT last year.

The crop progress report showed that corn mature increased 3% from last week, now at 96% mature, vs the 5-year average of 100% mature. U.S corn harvested is now set at 52% harvested, compared to 41% harvested a week ago and the 5-year average of 75% harvested at this time.  Export sales for the week were poor again coming in at 487,900 MT and were estimated at 300,000-650,000 MT. Sales remain well below the needed pace to reach the USDA’s export forecast. The November WASDE report was slightly friendly for corn.  The USDA cut yields by 1.4 bpa to 167.0.  This was slightly below the average guess. Harvested acres were left unchanged despite a resurvey of ND and MN.  The decline in production was offset by small cuts to feed, ethanol, and exports. 

Wheat

A private industry source is estimating Australian wheat production at 15.54 million tonnes, almost 20% lower than the official Australian estimate. The US attaché in Russia put Russia’s wheat crop at 74 mmt, down 5 mmt from his previous estimate.  The USDA was at 72.5 mmt in October.

U.S winter wheat planting came in at 89% planted, slightly ahead of the 88% planted 5-year average. Winter wheat emergence was reported at 71% emerged, vs the 5-year average of 74%. U.S winter wheat is rated as 57% G/E, up 1% from last week’s ratings. Export sales for wheat were disappointing at 360,600 MT, compared to estimates of 350,000-600,000 MT.

Soybeans

The General Administration of Customs of China showed that China imported 70.69 million tonnes of soybeans from January-October this year vs 76.93 last year. Soybean imports for October came in at 6.18 million tonnes vs 8.20 million tonnes in September. Indonesia and Malaysia total palm oil production is expected to stay unchanged in 2020 compared to this year due to dry weather. Indonesia is forecasted to produce 1 million more tonnes, and Malaysia is forecasted to produce 1 million less tonnes, offsetting each other. Arc Mercosul in Brazil estimates that soybean planting has hit 58% complete vs 79% last year and 62% for the 5 year average. Abiove put Brazil’s bean crop at 122.8 mmt, the second highest in history behind last year’s 123 mmt crop.  Exports are forecast at 75 mmt vs. 72 mmt in 2019. Argentinian producers continue to sell grains at a rapid pace amid fears that the new government there will put export taxes back in place. So far, they have sold 7.2 MMT of beans vs. 2.9 MMT last year.

The crop progress report showed soybean harvest at 75% complete, in line with estimates and below the 5-year average of 87% complete. Export sales for soybeans were very strong at 1,807,400 MT, much higher than estimates ranging from 600,000 to 1,200,000 MT. China bought just over half of the total. The November WASDE report was a dud.  The USDA only changed one category on the whole balance sheet.  Crush usage was cut by 15 million bushels.  That’s it.  No adjustments to acres or yields or exports. 

Livestock

The Chinese Agriculture Ministry is planning on reducing the number of small-scale slaughterhouses in order to better prevent African swine fever. Rabobank predicts it will take over 5 years for China’s pig herd to recover from ASF.  Their pig herd is estimated at under 200 million head, down from over 430 million in August 2018. Indonesia has found ASF.  Cash cattle was up $1-$2 again from last week.  The margin environment keeps getting better for the packer and sits at an incredible $365/head.

Energies

Oil markets are on the defensive as traders remain skeptical over a resolution for “phase 1” of the trade dispute between the U.S. and China. OPEC and its partners are expected to keep output at current levels and have not given any indication of a shift during their next meeting in December. According to a Bloomberg survey of traders and analysts, 50% of 26 surveyed are bullish, 35% bearish and 15% are neutral WTI futures. The national average price for retail gasoline is currently $2.628, up slightly from $2.614 a week ago, and down about 10 cents from a year ago at $2.724, according to AAA.