Explore Special Offers & White Papers from AFS

Global Ag News 9.9

President Trump’s continuous pattern of antagonizing China through Twitter and other means has grain traders concerned that China will not follow through with its promises under the phase one trade agreement; the worsening US political rhetoric against China has traders wondering if China will fulfill it purchase pledge on the Phase 1 Agreement.

Overnight trade has SRW Wheat down roughly 2 cents, HRW down 1; HRS Wheat unchanged, Corn is down 2 cents; Soybeans fractionally lower;  Soymeal up $0.50, and Soyoil down 20 points.

Chinese Ag futures (January) settled down 21 yuan in soybeans, down 2 in Corn, down 19 in Soymeal, down 42 in Soyoil, and down 24 in Palm Oil.

Malaysian palm oil prices were down 59 ringgit at 2,812 (basis November) ahead of Thursday trade data.

U.S. Weather Forecast: Last night will be another night of freezes in much of the Northern Plains. Light freezes with a few pockets that drop to or slightly below 28 Fahrenheit will occur in Montana, North Dakota, western and northern South Dakota, and the northern half of Minnesota. Freezes will also occur down into western Nebraska, eastern Colorado, and far northwestern Kansas. A light freeze is likely in pockets of central and southern Minnesota into northern Wisconsin Thursday morning. Temperatures will then generally trend warmer into next week.

The player sheet had funds net sellers of 6,000 contracts of SRW Wheat; bought 10,000 Corn; bought 6,000 Soybeans; net sold 3,000 lots of Soymeal, and; bought 4,000 Soyoil.

We estimate Managed Money net long 12,000 contracts of SRW Wheat; long 29,000 Corn; net long 182,000 Soybeans; net long 21,000 lots of Soymeal, and; long 83,000 Soyoil.

Preliminary Open Interest saw SRW Wheat futures down roughly 4,600 contracts; HRW Wheat down 2,000; Corn up 5,400; Soybeans up 5,700 contracts; Soymeal up 970 lots, and; Soyoil up 2,200.

Deliveries were 39 Soymeal; 453 Soyoil; ZERO Rice; 207 Corn; ZERO HRW Wheat; ZERO Oats; 15 Soybeans; 7 SRW Wheat, and; 9 HRS Wheat.

There were changes in registrations (Soymeal down 44)—Registrations total 95 contracts for SRW Wheat; ZERO Oats; Corn 220; Soybeans 23; Soyoil 2,431 lots; Soymeal 349; Rice ZERO; HRW Wheat 147, and; HRS 1,351. 

Tender Activity—Algeria seeks 30,000t optional-origin soymeal—

U.S. Winter Wheat plantings were 5% complete versus 1% a year ago and 3% average.

U.S. Spring Wheat harvest was 82% complete versus 69% a week ago and 87% average.

The U.S. Corn crop was rated 61% good to excellent versus 62% a week ago and 55% last year. Corn mature was 25% versus 19% average

The U.S. Soybean crop was rated 65% good to excellent versus 66% last week and 55% a year ago. Soybeans dropping leaves was 20% versus 16% average.

Yield expectations for the U.S. Crop Watch corn and soybeans slid for the fifth consecutive week as dry weather continued its dominance; cool, wet weather will prevail for some of the dry western areas this week, and although the rains are too late to undo previous damage, they may help stabilize parched crops.

Yesterday’s U.S. weekly export inspections had

—Wheat exports running up 6% ahead of a year ago with the USDA currently forecasting a 1% increase on the year

—Corn 50% behind a year ago with the USDA up 24% for the season

—Soybeans are down 19% on the year with the USDA having a 29% increase forecasted on the year

China has been buying U.S. soybeans at what seems like a breakneck pace for about two months now, increasing the probability of record U.S. exports to the Asian country over the next year; but while a record volume becomes more realistic as the sales pile up week after week, the lower price of U.S. soybeans relative to most prior years means that less ground is being covered when it comes to the Phase 1 trade deal, which is based on the exported value; further, it has been only three years since China bought U.S. soybeans to this extent, so the current “breakneck” pace is actually not too far out of the ordinary when compared with previous years.

U.S. President Donald Trump has instructed that dozens of oil refiner requests for retroactive waivers from U.S. biofuel laws be denied amid concerns the issue could cut into his support in the Farm Belt; the move, in the form of a direction to the Environmental Protection Agency (EPA), marks the end of an effort by the refining industry to come into compliance with a January court decision that ruled the Trump administration should not have given out some waivers in previous years.

Manitoba crop report: Cereal harvest advanced rapidly across much of the province last week, despite cool and humid weather; widespread frosts affected much of Southwestern, Northwestern, and Central Manitoba, with damage assessment ongoing, as late-season soybean and corn crops are the most susceptible; high winds on Sunday have flipped or rolled up many swathed canola fields, and producers are faced with another difficult harvest.

China’s corn prices inch higher as the market awaits further news about the impact of the recent Typhoon Haishen; there still doesn’t seem to be a clear idea of production losses due to the typhoon, says senior Asia commodity analyst at StoneX; everyone agrees that production and yield were reduced, but no one has really put a specific estimate on the losses; he adds that the fall armyworm has also been reported in 27 provinces, however only 5 provinces have reported adult insects; most of the damage is expected to be limited to the southern areas.

China’s estimated soybean imports for 2020-21 have been revised higher due to a build-up of stocks and growing soybean meal feed use for the expanding swine and poultry sectors, says the U.S. Department of Agriculture; it now expects 2020-21 imports to reach 95 million metric tons; also, the USDA says 2019-20 imports are forecast to reach 95 million metric tons due to three straight months of record imports from Brazil and total imports of about 79 million metric tons during the first 10 months of the marketing year; feed production is projected to rise during the remainder of 2020 and into 2021 as the swine herd continues to recover from African swine fever and the poultry sector expands to meet growing demand,” the USDA says.

China’s highly-fragmented hog-raising market will likely undergo accelerated industry consolidation amid the African swine fever outbreak in the country, Fitch Ratings says; as the epidemic severely hurts breeders’ production volume, larger companies would be better able to withstand the impact, while smaller firms may be forced out of operations; moreover, leading breeders are aggressively expanding capacity to take advantage of increased pork prices, and Fitch expects such ramp-up to enable significant market share gains in the long run; major breeders have also increasingly tapped into other parts of the industry, such as pork packaging and processing, which would further strengthen their dominant positions and underpin market consolidation

Rains over the last 10 days have helped revive Argentina’s drought-hit wheat crop and improve prospects for corn planting later this month, with Southern Hemisphere spring showers expected ahead; the Argentine spring starts Sept. 21. Along with autumn, spring in this part of South America is usually rainy; the problem this year was an atypically dry autumn, setting the stage for what has been a parched winter wheat-growing season; the reactivation we’ve seen of storm fronts significantly alleviates the water stress that was affecting a large part of the central agricultural region; it alleviates the risks for wheat and is key for early corn planting,” said Buenos Aires Grain Exchange chief

Consultancy Agritel said on Tuesday it expects corn production in Ukraine to reach 33.5 million tons this year, down 6.5% from 2019; the projected 2020 output, based on a field tour between Aug. 24 and Aug. 28, would nonetheless be the third-largest corn (maize) crop on record; the consultancy’s estimate was close to a 33 million ton forecast from the Ukrainian government last week.

Kazakhstan’s agriculture ministry sees grain exports in the 2020/21 season at about 8 million tons; the Central Asian nation, which introduced grain export quotas in March-May, plans no export restrictions in the current season.

Poor harvests this year in France are expected to push most grain growers into the red and could put some farms in less fertile regions out of business, farming representatives said; adverse weather, including a parched spring and summer, and insect damage contributed to a sharp drop in cereal and rapeseed production, while also raising the prospect of a plunge in yields in the upcoming sugar beet harvest.

European wheat futures in Paris were little changed on Tuesday after earlier hitting seven-week highs, as export-boosting euro weakness offset falling U.S. markets; benchmark December milling wheat was unchanged at 188.50 euros ($222.2) a ton; the contract on Tuesday again hit the seven-week high of 189 euros also reached last Thursday and Friday but remained capped by chart resistance around that level.

Indonesia, the world’s largest palm oil producer, plans to revise its palm oil export levy rules to allow higher collection when prices increase, a senior cabinet minister said, as part of moves to underpin an ambitious biodiesel program; since June this year, Indonesia has collected a maximum $55 levy per ton on palm oil exports, regardless of the price.

Malaysia’s labor-reliant palm oil companies are looking to recruit recovering drug addicts and prisoners to solve a severe shortage of foreign workers that has worsened due to a coronavirus-driven border closure; planters in the world’s second largest producer have in recent months embarked on rare recruitment drives to hire locals to do everything from harvesting to fertilizing, but response has been lukewarm.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from Archer Financial Services

Get Started

Contact Us Today