By ADM Investor Services Research Team
Wheat prices overnight are down roughly 3 cents in the SRW Wheat, down 2 in HRW, and up 1 for HRS; Corn is down 3 cents; Soybeans down 4; Soymeal down $1.00, and; Soyoil down 15 points.
Chinese Ag futures (September) settled up 44 yuan in Soybeans, up 10 in Corn, up 52 in Soymeal, up 4 in Soyoil, and down 14 in Palm Oil.
The Malaysian Palm Oil market was down 33 ringgit at 2,004 (basis July) continuing to slide on U.S.-China trade tensions.
The U.S. Midwest weather forecast had no major changes as the region looks to be mostly dry through the weekend and fairly quiet for next week with just a few spotty and light showers.
The Southern U.S. Plains looks to be turning quiet for the remainder of the week; some light to moderate rains looks to fall in eastern Oklahoma and Texas and most of Kansas early next week before turning quiet again.
The Northern U.S. Plains will see things turn fairly quiet for the weekend and into next week with some light and scattered rains for the region through the period.
The U.S. Delta and the Southeast is not quite as wet for next week and after the region sees frequent rain through Sunday, a period of drier weather will begin next week and will continue through the middle of the following week.
In deliveries, Soymeal totaled 68 lots; Soyoil 222; Rice 23; Corn 252; HRW Wheat ZERO; Oats ZERO; Soybeans 733, and; SRW Wheat 1.
The player sheet had funds net sellers of 2,000 contracts of SRW Wheat; net sold 9,000 Corn; sold 5,000 contracts of Soybeans; net sold 2,000 lots of Soymeal, and; sold 2,000 Soyoil.
We estimate Managed Money net short 77,000 contracts of SRW Wheat; net short 305,000 Corn; net short 177,000 contracts of Soybeans; short 25,000 lots of Soymeal, and; net short 70,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 2,600 contracts; HRW Wheat up 1,100; Corn down 5,500; Soybeans up 9,100 contracts; Soymeal up 4,100 lots, and; Soyoil up 8,700 lots.
There were changes in registrations (Oats down 5; Corn down 44; Rice down 1; HRS Wheat down 68)—Registrations total 251 contracts for SRW Wheat; ZERO Oats; Corn 1,214; Soybeans 1,452; Soyoil 3,547 lots; Soymeal 300; Rice 492; HRW Wheat 2, and; HRS Wheat 429 contracts.
TODAY—–WEEKLY EXPORT SALES—
In tender activity—Jordan seeks 120,000 optional-origin wheat—Philippines seek 55,000t optional-origin feed wheat—S. Korea bought 60,000t optional-origin soymeal—Egypt bought 30,000t optional-origin sunoil, 18,500t soyoil—
President Donald Trump said on Wednesday that China “broke the deal” in trade talks with Washington and would face stiff tariffs if no agreement is reached; “You see the tariffs we’re doing; “Because they broke the deal. … They broke the deal. So they’re flying in; the vice premier tomorrow is flying in, but they broke the deal; they can’t do that; so they’ll be paying; if we don’t make the deal, nothing wrong with taking in more than $100 billion a year”
China is fully prepared to defend its interests in its trade war with the United States, but hopes the United States can resolve problems through dialogue instead of unilateral steps, the Chinese commerce ministry said; China has the determination and capacity to defend its interests, but hopes the U.S. can meet China halfway.
Trade estimates for USDA weekly grain, soy export sales
U.S. ethanol production for the week ended May 3rd averaged 1.036 mil barrels per day (up 1.17% versus a week ago, down 0.38% versus a year ago); stocks totaled 22.468 mil barrels (down 1.00% versus a week ago, up 2.29% versus last year); corn use for the week was 106.9 mil bu (105.6 mil last week and versus the 104.6 mil bu needed to meet USDA projections).
World food prices rose some 1.5 percent in April, with a jump in dairy and meat prices helping offset a fall in cereal quotations, the United Nations food agency said; the Food and Agriculture Organization (FAO) also issued its first forecast for global cereal production this year, seeing a record output for 2019 following a decline in 2018.
—FAO’s food price index averaged 170.1 points last month against an upwardly revised 167.5 points in March; the March figure was previously given as 167.0.
—In its first forecast for 2019, FAO predicted world cereal production would come in at a record 2.722 billion tons this year, up 2.7 percent on 2018 levels, when output declined
—FAO said global food consumption of cereals was set to rise by at least 1.1 percent this year, due to the growing world population, with world cereal utilization seen rising 1.5 percent in 2019/20
—this meant that world cereal stocks are likely to be drawn down by 0.7 percent to 847 million tons, the lowest volume since 2015/16
The virus ravaging China’s pig herd will lead to a surge in the global meat trade and ripple through commodities such as poultry and whey powder, the UN’s food agency said; world meat production will slip this year as a result of the culling while Chinese imports will leap by up to 20%; that will help push global trade in meat and meat products up by 4.8% compared with 2018; the pork shortfall has pushed up Chinese demand for other meats; that’s one reason why it expects global poultry trade to rise 3.7% to 13.8 million tons this year.
China’s soymeal futures rallied more than 2 percent on Thursday in their biggest daily gain since October 2018, amid renewed Sino-U.S. trade tension; the most actively traded soymeal contract on the Dalian Commodity Exchange for delivery in September surged 2.1 percent to 2,659 yuan ($391.67) a ton; with the commerce ministry announcement, the market is now officially reacting to the escalated tension; everyone is very pessimistic; soymeal prices will be strong but we can still buy beans from South America as we are now in South American season, and crushing margins are good; the rise will be slow.
Selected highlights from a report issued by a U.S. Department of Agriculture attache in China
—China’s soybean imports are estimated to fall to 84 million metric tons (MMT) in marketing year (MY) 18/19 (USDA currently at 88 mt) and 83 MMT in MY19/20, compared to 94.1 MMT in MY17/18
—Meanwhile, China’s rapeseed imports from Canada are expected to fall by almost 40 percent during the second half of MY18/19 compared to the same period the previous year, due to reported phytosanitary concerns
—The sizable decrease in MY18/19 and MY19/20 soybean imports is due to reduced feed demand as a result of African Swine Fever (ASF) in China beginning in August 2018; the disease has caused a significant decline in sow and hog inventories, thereby reducing demand for soybean meal for feed; this situation is expected to continue through 2019 and into 2020
—Increased vegetable oil imports in MY18/19 and MY19/20 will fill the gap caused by reduced domestic oilseed crushing
Consumer inflation in China hit a six-month high in April, mainly driven by rising pork prices, official data showed; the official consumer price index rose 2.5% year-on-year in April, its highest reading since October; the number was in line with expectations and slightly higher than March’s 2.3%; pork prices, which are heavily weighted in the gauge’s basket of goods, rose 14.4% year-on-year and 1.6% month-on-month.
Brazil’s corn output this season will be the highest on record after farmers collect their second harvest in the coming weeks, commodities consultancy AgRural forecast; the country’s total corn production will likely reach a record 99.2 million tons in the 2018/19 season, a steep rise from the prior season when production fell to 80.7 million tons because of a drought; Brazil’s second annual corn crop is expected to rise to 69.5 million tons in the country’s center-south farm belt, up from the 63.8 million tons forecast in April; the biggest Brazilian corn harvest to date was 97.8 million tons in the 2016/17 season.
—AgRural also raised Brazil’s 2018/19 soybean crop forecast to 115.3 million tons, up from 114.6 million in the April forecast; despite the upward adjustment, production is still below the initial potential of 121.4 million tons
BRAZIL MEAT ASSOCIATION ABPA RAISES EXPORT FORECAST FOR PORK AND CHICKEN FROM THE COUNTRY, WITH GREATER DEMAND FROM CHINA DUE TO AFRICAN SWINE FEVER
—BRAZIL CHICKEN EXPORTS EXPECTED TO RISE MORE THAN 10 PERCENT BY VOLUME THIS YEAR, COMPARED TO PREVIOUS FORECAST OF 3 PERCENT RISE
—BRAZIL PORK EXPORTS EXPECTED TO RISE MORE THAN 20 PERCENT BY VOLUME THIS YEAR VERSUS PRIOR FORECAST OF 3 PERCENT, AS CHINA, RUSSIA AND OTHER COUNTRIES BUY MORE
The Russian Ministry of Agriculture suggests extending the zero duty on wheat exports; the zero rate of the export customs duty for wheat should be extended; the harvest of 118 mln tons expected in Russia in 2019 will make it possible to fully cover domestic consumption and will create good preconditions for export.
Following recent cyclone devastation, we forecast 2018/19 corn production in Southern Africa to drop; regional corn supply will also be scarce owing to a combination of drought and protectionist trade policies in net-exporting countries; tight corn supply in Zimbabwe and Mozambique will put upside pressure on food price inflation in the short term; nonetheless, external sources such as Argentina, Mexico, Ukraine, Russia and the US are well-positioned to ramp up corn exports to the region and alleviate food security concerns over the long term.
World Weather, Inc.
7 DAY PRECIP FORECAST
U.S. 6-10 DAY FORECAST (TEMP/PRECIP)
U.S. 8-14 DAY FORECAST (TEMP/PRECIP)