AgriVisor Grain Recap

Friday, March 15, 2019
   At the end of the day, it’s still the China story. China's Parliament passed new laws opening China's market to foreign investment, protects intellectual property and ends/ prohibits the forced transfers of IP. The changes are what the Trump Admin. was seeking as change to bring China's economic policies more in line with the rest of the world. These changes certainly help pave the way for a trade deal to be completed. Going forward, the bigger story may be enforcement. Too many have heard promises from China, only to never see the follow-through.  But for now, it may be getting a deal done that’s most important; for both sides.

   The other big story also involves China, and their hog herd. China's ag 
ministry reported that its hog herd fell 16% year-on-year in February with a 
19% decline in its sow herd as farmers cull their herds because of ASF. The 
same report said that the numbers were down 5.4 percent with the sow herd 5 
percent down last month from January's inventory. That's a steep one month 
drop considering their overall hog herd is well over 400 mln. head. 
Meanwhile, they say domestic meat prices continue to rapidly rise spurring 
food inflation.  Those 2 items don't fit together, especially given the talk 
people are hesitant to eat pork. 

  This past week, China also made their largest purchase of US pork in 2 years. Thursday's report showed they bought 23,846 tonnes of U.S pork in the week ended March 7. Those purchases came with the 62% tariff currently in place. That same story said they had culled 1 mln. head of pigs because of ASF, one-qtr. of 1% of their hog herd.  Again, there is a lot of confusion about the numbers, but with China it seems there always is.

   The February NOPA report showed a record monthly crush rate of 154.5 Mil Bu, but that was 3-4 Mil bu less than what was expected. Soyoil stocks rose  to 1,752 Mil pounds, 140 Mil pounds more than expected. At the end of January, NOPA member soyoil stocks were 1,549 Mil pounds and a year ago stocks stood at 1,856 Mil pounds. The larger than expected stocks suggest biodiesel demand has weakened, potentially tied to the absence of a US blender’s credit.

   Late this afternoon, FC Stone put out their estimates for the end-of-month planting report. They see: corn plantings at 90.4 mln and soybeans at 87.7 mln. Those compare it IEG Vantage(Informa’s) at 91.6 corn and 85.5 mln. soybeans.

   NOAA's latest El Nino forecast suggests there's an 80% chance a weak El 
Nino conditions will prevail in the N Hemisphere through spring; there's a 
60% chance it could persist through the summer. The International Weather Research Institute (IRI) forecast North America should have a near normal growing season in 2019, with a lack of heat and maybe regional dryness in June/July in the Central Plains/SW Midwest. Drought issues look to be focused on Australia, SE Asia and the Black Sea. Above normal temps will impact much of Europe and Russia.

   The new intermediate range weather forecasts tend to stay warm, although there’s some gravitation east on the 8-14 day.  But, wetness is showing in the G Plains, moving into the Corn Belt in the 8-14 day outlook. That hints the Midwest in general only gets a brief reprieve from moisture, with the western Corn Belt/Great Plains not seeing much at all, sustaining some of the flood issues that are currently dealing with. 

   Weather forecasts show Argentina will be mostly dry through the weekend, with a few light showers. More widespread showers may come again Tues. Brazil appears set to continue to have scattered showers, even across central parts of the country.  Temps may be a little warm, but not unusually so. The Arg. govt. will have a production report next Thursday, but we are not sure they will have corn/soy estimates. They don’t always come until April. In the interim, the trade has the reports from the grain exchanges. The BA Grain Exchange has soybeans are 51% g/e with corn at 40.7% g/e.  They are using a 53 mmt. soybean crop and a 45 mmt. corn crop.