FW: FI Evening Grain Comments 10/09/18

PDF attached includes US cash soybean crush

 

Corn.

・         Corn ended lower despite President Trump announcing E15 year-round sales. Year-round sales will be slow to develop. Some stations offer it, others do not. We understand many gas stations will need to add a tank so that E10 and E15 could be offered.

・         Secretary Perdue Statement on President Trump’s Ethanol Announcement” https://content.govdelivery.com/accounts/USDAOC/bulletins/2132036

• Funds sold an estimated 7,000 corn contracts.
• Day 3 of the Goldman Roll.
• US corn harvest progress of 34 percent was at trade expectations. US corn conditions fell one point from the previous week.
• USDA US corn export inspections as of October 04, 2018 were 1,351,177 tons, within a range of trade expectations, below 1,377,263 tons previous week and compares to 582,248 tons year ago. Major countries included Japan for 386,567 tons, Korea Rep for 260,591 tons, and Mexico for 243,134 tons.
• The USDA Attaché estimated the 2018-19 Brazil corn production at 95 million tons. https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Update_Brasilia_Brazil_10-4-2018.pdf
• France’s AgMin lowered their estimate for the 2018 corn crop to 12.2 million tons from 12.4 million last month, 14.6 percent below last year’s level and 15.5 percent below the five-year average.
• Conab will be out on Thursday. China CASDE and MPOB is due out this week.

・         China reported H5N6 avian bird flu on a poultry farm in southern Hunan province, resulting in the culling of 1,029 birds. Late last month a bird flu case was reported in Guizhou province.

・         To date 28 cases of African swine fever have been reported throughout China. Latest outbreak is in Liaoning.

・         China extended their ban on pig imports to include Belgium and Japan.

• On October 11 USDA will update their latest US crop supply survey and demand expectations. Using Bloomberg trade guesses, we were surprised to see such a wide range on US corn ending stocks for 2018-19 of 648 million bushels. The average trade guess is 1.913 billion bushels, up 139 million from September’s 1.774 billion bushels. US corn production averaged 14.859 billion, 32 million above last month with a 305-million-bushel range between the low/high estimates. Analysts look for the US corn harvested area to increase 34,000 acres from September.

 

Soybean complex.

・         Soybeans ended lower on a weather forecast calling for drier US conditions by mid-October, and wetter conditions for Brazil’s Mato Grosso during the October 16-21 period. Large US supplies and China/US trade tensions also weighed on prices. President Trump brought up additional tariffs on Chinese goods on Tuesday. 

・         Funds sold an estimated 8,000 soybean contracts, sold 3,000 soybean meal and sold 3,000 soybean oil.

・         Soybean oil prices fell on technical selling. Dec SBO hit sell stops at its 100-day MA of 29.38.

• US soybean harvest progress of 32 percent was 3 points below trade expectations. US soybean conditions were unchanged from the previous week.
• USDA US soybean export inspections as of October 04, 2018 were 569,776 tons, within a range of trade expectations, below 630,249 tons previous week and compares to 1,490,783 tons year ago. Major countries included Egypt for 52,188 tons, Indonesia for 44,825 tons, and Mexico for 33,141 tons.
• 16,417 tons of canola was shipped to Mexico.
• France’s AgMin raised their estimate for the 2018 rapeseed crop, to 4.9 million tons from 4.8 million last month.

・         Imea expects Brazil’s Mato Grosso soybean plantings at 9.62 million hectares, up 1.64 percent from last season, resulting in a 32.45 million ton crop, up from 32.3 million tons last season.

・         Abiove: 2018-19 production 119.5MMT, Crush 43.6, Exports 77MMT; 2019 Crush 43.2 and Exports 71.9

・         A Bloomberg article talked about Brazilian crushers running out of soybeans as they compete with exporters. Some of them have seen negative crush margins in LH September.

・         China may soon lift its ban on Indian oilmeal.

・         Bloomberg reported a feed group China is considering whether to cut the amount of protein required in hog rations. On analyst estimates China could cut back on as much as 8 million tons of soybean meal consumption, or roughly 9-10 million tons of soybeans.

・         Sunseed prices in Ukraine spiked recently on China protein interest.

・         MPOB will release September trade data on October 10. A Reuters survey on palm oil production calls for a 14.7 percent in September from August.

 

Wheat. 

・         US wheat ended higher after USDA announced US exporters sold 120,000 tons of hard red spring wheat for delivery to Bangladesh during the 2018-19 marketing year. Bangladesh does not buy much wheat from the US. They picked up less than 300,000 tons over the past two crop-years. Bangladesh typically buys the lowest offer in their import tenders, so this sale was seen as supportive for US wheat.

• Funds were even in SRW wheat.
• US wheat planting progress of 57 percent was a point above trade expectations.

・         Russia raised their 2018 grain crop to 106MMT from 105 previously.

・         Russia exported 15.7 million tons of grain during the July 1-October 4 period, up 26 percent from same period a year ago.

• USDA US all-wheat export inspections as of October 04, 2018 were 423,270 tons, within a range of trade expectations, above 371,991 tons previous week and compares to 355,257 tons year ago. Major countries included Vietnam for 79,103 tons, Indonesia for 70,385 tons, and Mexico for 54,613 tons.
• France’s AgMin lowered their estimate for the 2018 soft wheat crop to 34.2 million tons from 34.55 million last month down 6.5 percent from last year.
• Syria could produce a wheat crop of only 1.2 million tons, lowest in 30 years, making the country dependent to fulfill more than 50 percent of their consumption needs outside the country. Consumption used to be around 2.5MMT.
• Russia will resume wheat/grain state reserve auctions in LH October.