FW: FI Evening Grain Comments 10/04/18

PDF attached

Corn.

• Corn futures ended higher on Thursday as forecasts for rains are to further delay the 2018 US harvest.
• Another week of solid USDA corn export sales are supportive.
• Funds bought an estimated 9,000 corn contracts.
• US producers were light sellers. 
• Nearly 20 percent of Argentina’s corn crop had been planted on record 5.8 million hectares. The BA Grains Exchange looks for a 43 million ton harvest.

 

Soybean complex.

・         Soybeans, in a wide two-sided trade, ended lower on profit taking despite good export demand and lack of producer selling and US harvesting delays. With the predicted rain expected over the next seven days across the US, traders shorting soybeans should be cautious. Highest risks for flooding are for Iowa, Minnessota and Wisconsin.  A private group today raised their soybean yield outlook but lowered production from the previous month, based on recent FSA data.

・         Safras & Mercado sees 2019-20 soybean exports out of Brazil at a large 79 million tons. We assume this is based on China and US not coming to terms on a trade deal.

・         Funds sold an estimated 4,000 soybean contracts, bought 4,000 soybean meal and sold 3,000 soybean oil.

・         December soybean oil saw an outside day lower trade. Weakness in crude oil was one factor for the lower trade in soybean oil.  Soybean meal saw appreciation on good demand for the product. Mexico and Canada are buying US soybean meal, from what we are gathering.  Canada is also taking in US soybeans to crush them in the east and turning around and exporting Canadian soybean inventories to China.

・         Water levels for the upper Mississippi River are high and stalling some cargo shipments.

・         Although USDA soybean export sales fell below our expectations, they were above a trade range and seen supportive as Mexico confirmed their 24-hour sale announcement and 2 cargos of soybeans to Argentina. Soybean sales to Europe were good as well.

・         Mexico committed 2.996 million tons of soybeans this season, with 2.637 million outstanding (359,000 shipped), against 1.317 million tons at this time year ago (1.073 million outstanding). We understand crush margins are good in Mexico and a few large crush plants increased hours of operation in part to expansion to feedlots.

・         Note all soybean commitments of 20.189 million tons are below 23.264 million tons for this time last year. 

・         USDA soybean meal export sales for new-crop were good. Soybean oil sales were ok but could be better for this time of year.

・         The Thursday morning weather models turned drier for France (driest areas) and Poland. Southeastern Europe will remain dry.

・         US harvest progress through at least October 13 will be hampered with heavy rains bias WCB.

・         The USDA Attaché has Brazil soybean production at a large 123MMT, highest estimate we has seen, up from 119.5MMT a year earlier.

・         There is talk China is still buying Brazil soybeans for October/November shipment.

・         2 more Argentina soybean cargos destined for China showed up in the shipping lineup.

・         An Indian oilseed company related CEO predicts India’s rapeseed production could increase 1 million tons this year to 7 million tons.

・         Lanworth recently estimated Indonesia palm production at 42.2 million tons. Note last week Mistry pegged Indonesia palm production at 40 million tons, up 1.5MMT from a previous forecast.

 

 

Wheat. 

・         Wheat finished higher on short covering and steady global export business although Egypt did not buy US wheat and opted for Russian wheat.

• Funds bought 2,000 SRW wheat contracts.

・         USDA all-wheat export sales were ok.

・         The BA Grains Exchange estimated the Argentina wheat crop at a record 19.7 million tons. They noted heavy rains in the past week improved conditions. 53.6 percent of the wheat planting area had adequate to optimal moisture conditions, according to the Exchange. 

・         December EU wheat settled 1.50 euros at 202.75 ($233/ton).

・         The Thursday morning weather models turned drier for France (driest areas) and Poland. Southeastern Europe will remain dry. Eastern Australia may see some rain across NSW and southern Queensland this week. Traders should monitor a potential significant rain event in far southern Brazil Saturday into Sunday which could negatively impact wheat conditions.

・         The EU granted import licenses for 27,300 tons of wheat.

・         The FAO world food price index fell in September from August to 165.4 from 167.7 (revised from 166.6). The global cereals production in 2018 was seen at 2.591 billion tons, up 3 million tons from the previous month, and down 63 million tons, or 2.4 percent, from 2017. World wheat production was left unchanged at 722.4 million tons, lowest since 2013.

・         Iraq’s AgMin mentioned 2018-19 winter crop plantings will be down 55 percent to 315,266 hectares due to a water shortage. Their water reserve is around 11 billion cubic meters, 4 billion less than last year.