AgriVisor Grain Recap

Thursday, April 18, 2019
 *** Grain markets will be closed until Sunday night. ***  

   Today’s activity in the grains going into a long, holiday weekend illustrates the differences between today’s markets and those from years past.  Even though spring fieldwork is not getting off to a quick start, the bigger speculative element was comfortable with their heavy short positions as the week drew to a close.  Markets had tepid closes.  In year’s past, we would probably have seen more short covering than was notable today. 

   Argentina did put out their first official estimate of their new corn and soybean crops late yesterday. The 55.9 mmt. soybean number was within the range of expectations from other forecasters, but maybe at the upper end.  The corn number, 55 mmt. was higher than other numbers, but the Arg. corn forecast includes corn that is used locally and never counted by other forecasters as well as their silage output.  Hence, it is a high number.  Their estimate for last year, 43.46 mmt. was 10-11 mmt. above everyone else.  USDA is at 46 mmt for the current crop, a level that’s relatively consistent with Arg’s 55 mmt. number.  The BA Grain Exchange estimates corn harvest is 23% done, with soybeans at 34%.  Yield numbers for both have been as good as, if not a little better than, expected. 

   Even with the latest news about the Chinese trade negotiations, the trade has an ambivalent, if not a little negative, attitude.  The 2 sides are set to meet in China the last week of April, with meetings the following week in the U.S. The comments flowing from the involved parties indicates that a deal is all but complete, with a signing ceremony expected by the end of May. 

   The latest 7 day outlooks have good rains across the S. Plains, the South, and much of the Midwest.  The Dakotas, and parts of Minn, may be the only areas that miss heavy rains over the next week. The 6-10 and 8-14 day weather forecasts continue to project above normal temperatures across much of the Midwest.  The 6-10 outlook shows dryness from Nebraska west through Colo/Wy.  North and east of that are expected to have a little higher than normal precip, with a band east and north having normal precip. The 8-14 outlook has normal precip from the central Plains to the Ind/Ohio border. Areas west, north, and east are expected to be a little above normal.  The outlook for May shows the S. Plains and South having above normal moisture, with other Midwestern areas not showing any particular trend.  The East, West, and northern states will be warmer than normal, with the far Southern Plains a little cooler than normal. That’s not a terrible planting forecast, depending on how the short term unfolds. But then again, few were concerned about planting timeliness at the end of April in 1993 either. 

   Even though planting hasn’t gotten off to a fast start, it’s not yet late.  But, we are hearing of some spots in the Midwest where fertilizer is tight on a local basis, the western Corn Belt in particular.  

   Keep an eye on central Europe and southern Russia.  The weather pattern has been a little high, with the near term outlook staying similar.  The industry has big crops built in from those areas, especially after this week’s 83.4 mmt. Russian wheat forecasts. 

   The trade wanted to talk down the export sales, but other than soybeans, they didn’t look that bad to us.  Corn sales, 966,000 tons, were actually a little larger than expected. They continue to be a little off the pace, with 1.76 bln. bu. now sold for the year. USDA is forecasting 2.3 bln. bu. Soybean sales, 403,200 tons, were at the low end of expectations. The sales total for the year now stands at 1.63 bln. bu. against a forecast of 1.87 bln. bu. Soymeal sales were good though, with 298,100 tons sold for the week. They lag the needed pace a little, but remain robust.  Wheat sales, 545,500 tons, were within the range of expectations, but were good compared to some of the weekly sales earlier in the winter. 915.4 mln. bu. have been sold against the 945 mln bu. USDA forecast. And the sales/shipments don’t include flour which gets added into the export mix for wheat.  One other piece of note.  Another 23,500 tons of pork were sold to China this week, taking their total to 166,300 tons for the calendar year.  It’s not as big as last week’s sale to them, but still a significant number.

   The other big story that continues to get play is the ASF in China.  No one is quite sure what the level of problem has been ranging from modest/moderate to significant.  We saw one forecast Thurs projection a 10% reduction in the herd.  Meanwhile, spot sales of soymeal seem to remain reasonably active making us believe the fear is greater than the reality. But that is not unusual.

   Interestingly, we are seeing the FOB basis in Brazil starting to firm, reflecting the slight reduction in farmer sales and tightening of supply at the ports.  Arg is not a competitor in a significant way with more of their crop moving into the world through the processing industry.  In addition, there is some talk of Arg. protein being a little light, reducing its competitive stance compared to US and Braz. 

   Here in the US merchants continue to talk about tightness in the spot markets for the row crops.  And with planting garnering attention, new sales will be somewhat limited unless prices spark upward.