Blogging by the Bushel
With numerous challenges over the past several years for producers, we at Mercer Landmark understand the need for a comprehensive risk management solution. We seek to provide our customers with unparalleled service to ensure maximum results.
Archives

Archive for November, 2018

Market Report

Thursday November 29th, 2018

March 19 corn closed unchanged at $3.73 ¼ at December 2019 closed unchanged at $3.96. January beans closed down 3 ¼ at $8.87 ¼ and March 19 closed down 3 ¾ at $9.00 ½. March wheat closed down 3 ¾ at $5.07 ¾ and July 19 closed down 4 ¾ at $5.21 ½. Crude oil closed up $1.13 at $51.62.

Eerily quiet day in the markets, “the calm before the storm”, if you will, ahead of the G-20 summit this weekend. It is also “position day” for Dec delivery, which occupied most traders’ attentions today. Flat price trade was on virtual lockdown, excepting some early “Tweet buying” on more positive U.S.-China trade comments. Managed Money were viewed small net buyers of corn today, and will head into tonight short just over 55,000 futures and options.

The weekly export sales report got the day started right, as new business topped 1 mmt for the first time since early October.  1.267 MMT made it on the ledger. Not much new on the weather front. U.S. is warming up again, but snow cover will make fieldwork difficult, if not impossible. South America appears to be entering a dryer trend, particularly after the weekend. In the short-run, this should help get Argentina crops planted, but follow-up precip will need to be monitored heading into December days. North Brazil could actually get a little too wet?  Exchanges report 38% of Argentine corn has now been planted, advancing a 1.4% wk/wk.

Soybeans and products traded slightly lower as the market looks ahead to the weekend G-20 summit in Buenos Aires and specifically, the Saturday Trump-Xi dinner. Trade volumes are thinning out with most participants seemingly positioned the way the want to be and in a ‘wait and see’ mindset. Aggressive up front call buying has been a feature all week and has firmed January option volatility 5.5% from a week ago.

The latest trade news hit the wires mid-morning when the WSJ reported that the US was exploring a deal with China where they would suspend any additional tariffs until the spring in exchange for new talks looking at big changes in Chinese economic policy and at least temporarily de-escalate the trade war. Trump was quoted as saying that he is close to doing something with China on trade, but he doesn’t know if he wants to do it. The general market impact of today’s headlines helped provide underlying support perhaps but lacked anything to change our current range bound market structure. We won’t know how the dinner meeting between Trump and Xi went until later Saturday night or Sunday, quite likely by tweet, which sets the stage for a dynamic Sunday evening opening.

Soybean exports of 629 tmt were within expectations.  Outstanding sales on the books stand at 11.342 mmt vs. 13.304 mmt this time last year while exports to date are 11.915 mmt vs. 21.022 mmt this time last year. That represents a shortfall of 335 million bushels from last year’s pace while the USDA is currently estimating exports on the year to fall short of last year by 229 million bushels. China is looking at stockpiling pork reserves as the threat of swine fever threatens to reduce domestic supply and prices remain relatively low. In today’s export sales report, China bought 3 tmt of US pork so if/when a trade deal is reached you would likely see much more US pork sold to China. In terms of feed, their feed demand has begun to slow down meaning less meal usage which has taken their domestic crush margins into negative territory.

Price action across the wheat complex was similar to that of the past few days. As far as flat price, the markets were unable to build off Wednesday’s solid performance and finished the session slightly weaker. Export sales this morning were in line with expectations but were a little disappointing in that it is looking more and more like we did not win any of the Saudi business from a couple weeks ago, the Egypt and Tunisia business from late last week were not on this week’s report and Bangladesh was absent after a couple of consecutive weeks of picking up some HRS.

The Bloomberg story that came out after the close Wednesday talked about how Egypt is asking traders to delay shipments thru December. So, shortly after the US was able to snag three cargoes of Egyptian business in two separate tenders, the GASC has told grain traders they are not able to open letters of credit before January and said they should delay their shipments. The article says some traders have decided to proceed with shipments for the Dec period rather than paying higher costs for shipping delays by waiting until letters of credit are issued. It does not look to effect last week’s tender where the GASC bought four cargoes, of which one was Russian, one Romanian and two US SRW because that shipment is not until mid to late Jan, but it does affect the tender back on Oct 26 when the GASC bought eight cargoes (470 TMT), of which six were Russian, one was Ukrainian and one was US SRW and the tender back on Oct 3 when the GASC bought three Russian cargoes (180 TMT). The story said GASC was not available for comment over the alleged news.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday November 28th, 2018

March 19 corn closed up 4 ¾ at $3.73 ¼ at December 2019 closed up 4 at $3.96. January beans closed up 15 at $8.90 ½ and March 19 closed up 15 at $9.04 ¼. March wheat closed up 5 at $5.11 ½ and July 19 closed up 6 ¾ at $5.26 ¼. Crude oil closed down $1.24 at $50.49.

What a difference a day can make in the grain markets these days. China trade deal sentiment went from extreme pessimism Monday to unbridled optimism today. This sent beans to double-digit gains, with corn coming along for the ride. In fact, more Dec corn traded (198k) on the day than there were contracts left open last night (181k). Managed Money funds were viewed net buyers of 15,000 contracts, and they will head into tonight net short 60,000 corn futures and options.

“Tweet markets” continue, though this time, China gets the credit. President Xi of China himself reportedly made a very conciliatory speech in Spain. In it, he claimed China will open wider to foreign investors and protection for intellectual property rights will improve. These are both currently key demands of U.S. trade negotiators. Note, the talk was given in Europe, which China would obviously like to keep on its side if the U.S. trade conflict continues, but it was enough to spark rallies in many commodities. Macro sentiment was also positive on comments from the Fed, with 600+ point gains in the Dow and a sharp break in the US Dollar.

Elsewhere, U.S. harvest progress has likely stalled out for a moment, as the Midwest grapples with bitter cold and the aftereffects of a winter storm. More precip on the way for the Plains, though temps warm back up some. Today’s weather remains mostly favorable for Brazil and Argentina, although with net drying expected in much of Argentina and similar conditions in southern Brazil next week there is potential for a little more interest in long term rainfall.

The soybean market extended its sharp recovery back to the upper end of the daily and weekly chart formations on another fresh surge of trade optimism and short covering ahead of the weekend G-20 summit and Trump-Xi dinner this coming weekend. Trade volume picked up again and was roughly on par with Monday’s big volume, hard down flush.

Today’s headline support originated in Spain where Chinese President Xi made a speech to the Spanish parliament stating that China plans to widen market access for foreign investors and will step up protection of intellectual property rights. Xi also said China planned to import $10 trillion worth of goods over the next five years without specifying which goods. “China will make efforts to open, even more, its doors to the exterior world and we will make efforts to streamline access to markets in the areas of investment and protect intellectual property.”

The market liked this new sign of cooperation and willingness to address intellectual property as it possibly signals that key change in attitude/action that the US has been noting was absent from the latest talks with Chinese trade representatives.  Elsewhere in the news, the USDA flashed a sale of 269 tmt of soybeans sold to unknown.  They also changed a previous announced sales cancellation of 180 tmt from China to unknown. That cancellation was originally reported on October 19th.

The wheat markets had a little bounce overnight, and prices continued to firm during the early stages of the day, but shortly thereafter the rally stalled and the theme for the rest of the morning. There was talk that of the 600 MT of wheat Algeria bought, Cargill sold 240 TMT of it, and that it was probably Argentine. Eventually, that could be good news for US. The more the Argentinians sell to Algeria or whomever, the less they will have to sell to Brazil, and that Brazil will need to come to us.

In a Bloomberg story that came out after the close, a top Egypt wheat buyer is said to be asking traders to delay shipments. That is correct, right after the US is able to snag three cargoes of Egyptian business in two separate tenders, the GASC has told grain traders they are not able to open letters of credit before January and said they should delay their shipments. The article says some traders have decided to proceed with shipments for the Dec period rather than paying higher costs for shipping delays by waiting until letters of credit are issued. It does not look to effect last week’s tender where the GASC bought four cargoes, of which one was Russian, one Romanian and two US SRW because that shipment is not until mid to late Jan, but it does affect the tender back on Oct 26 when the GASC bought eight cargoes (470 TMT), of which six were Russian, one was Ukrainian and one was US SRW and the tender back on Oct 3 when the GASC bought three Russian cargoes (180 TMT).

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday November 27th, 2018

March 19 corn closed up ½ at $3.68 ½ at December 2019 closed down ¼ at $3.92. January beans closed 13 ¼ at $8.75 ½ and March 19 closed up 13 at $8.89 ¼. March wheat closed down 7 ½ at $5.06 ½ and July 19 closed down 5 ½ at $5.19 ½. Crude oil closed down $.07 at $51.73.

Minor “Turnaround Tuesday” in the grains, as traders continue to look forward to the G-20 summit this weekend. Futures traded as much as $.02 higher at one juncture but failed to keep the excitement brewing into the close. Managed Money traders were viewed small net buyers today, as they hang with a roughly 75,000 contract net short in the market.

Corn continues to drag in the absence of major news, as traders focus more on future events than present issues. A major winter storm, along with follow-up cold, as shelved the U.S. harvest in many areas for some time. Roughly 5 million acres are still out in the field. Forecasts remain mostly favorable for South America for the moment (future potential dryness concerns not withstanding). Argentina appears to be in for a nice mix of weather that will allow farmers that need to plant in the field, while offering rain to some of the dryer areas in need of such precip.

EPA mandate targets for 2019 were “leaked” mid-morning; they will be “officially” released Friday. If the leak proves correct, there will be no changes to the June proposal, as we suspected, maintaining corn ethanol targets at the 15 billion gallon statutory max along with substantial future increases to biodiesel targets. There is still a strong suspicion the EPA will cut cellulosic targets in subsequent yearly proposals, as volumes are set to skyrocket 2020-2022 with minimal volumes currently available (and likely will not be for the foreseeable future).

The soybean market bounced right back as our choppy back and forth trade continues. Nothing has changed other than technically, we re-tested the uptrend and held. $8.75 is somewhat of our middle ground for the moment with a breakout of the formation likely to be determined by this weekend’s news out of Buenos Aires. Southern Hemisphere weather remains benign and an early harvest in Brazil is on track. China is close to bridging that gap without US beans but then again, if a deal is reached, US bean purchases would likely supersede Brazil’s availability regardless, to a certain degree. The products both bounced back after making or testing new contract lows yesterday.

In trade war news, following President Trump’s more sobering rhetoric about new tariffs yesterday afternoon, some were speculating that insiders knew ahead of time that the renewed tariff threats were coming and sold the soybean market in anticipation. The market bounced right back today because it makes too much economic sense for both sides to move negotiations forward with a face to face meeting to break the stalemate being the perfect opportunity. Elsewhere in the news, Bloomberg reports that the 2019 biofuel mandate targets (RVO) will be released on Friday although targets are expected to be left unchanged relative to the public proposal released this spring.

The wheat complex was unable to carry any momentum it had established after Monday’s price action into trade overnight, as the markets battled both sides of unchanged throughout the evening. As we moved into the day session the markets never had a chance, with futures immediately selling off, then remaining on the defensive throughout the day.  Much of the market’s struggles today probably came from two influences. First, SovEcon raised their estimate for Russian wheat exports by 500 MT up to 34.7 MMT. Keep in mind, yesterday’s data from the Russian Ag Ministry put Russian wheat exports since the start of their marketing season at only 19.80 MMT, meaning they still had plenty of wheat around, and now they have even more. Second may have come from the results of the Algerian tender. Not that we did not win any business because we were not expected to.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday November 26th, 2018

December closed down 3 at $3.56 and March 19 closed down 2 ½ at $3.68. January beans closed down 18 ¾ at $8.62 ¼ and March 19 closed down 18 ½ at $8.76 ¼. December wheat closed up 7 ¾ at $5.07 ½ and July 19 closed up 4 ¾ at $5.25. Crude oil closed up $1.21 at $51.80.

Corn futures seemed to be caught between elevated Russia-Ukraine tensions and pessimism over a China trade deal. The China bears seemed to win out. Corn struggled to fight off a $.20 decline in soy. As for futures, they finished with losses, closing at their lowest point in almost four months.

CFTC Commitment of Traders data, published a day late due to the holiday, uncovered more fund selling in corn than expected.  Through Tuesday the 20th, large non-commercial (aka “Large Spec” or “fund”) traders were viewed net sellers of 27,509 corn futures and options. Most of this (25k) was liquidation of existing longs, continuing the trend of speculators trying to “get back to even” in corn. Index funds were also seen net sellers of over 7,000 corn on the week. On the other side of this, the commercial has been actively adding new shorts and new length. When including recent price action, we would estimate funds are heading into tonight net short 75,000 combined corn futures and options.

The weekly crop progress report, the final one of the year found 94% of the U.S. corn crop was harvested, advancing just 4% wk/wk, which was on par with the prior year, but behind average.  The market was expecting closer to 95%, and the report would imply just under 5 million acres left to harvest. At this point, much of those acres could be left out in the field as “cheap storage”? This is especially true after a winter storm blanketed many Midwestern states with up to one foot of snow. By contrast, early South American growing weather remains mostly good, though some emerging dryness needs to be monitored in affected areas of Brazil (it is beneficial in water-logged portions of Argentina).

The soybean market sold off on a lack of fresh trade war headline support which left the market struggling with its own burdensome fundamentals. Technical selling accelerated the slide after breaching the $8.75 initial support area on Jan beans where moving average convergence had been tested but buoyed the chart for most of the month. The products both fell to new contract lows where meal found a bid and bounced back by $2 while oil was unable to find its footing and closed right on its low. Oil was bothered by the 4% break in Malaysian palm oil today which put that market right back on its lows. The palm oil selloff came on word that Indonesia would remove its export tax entirely starting in December which increases competition at a time when Malaysian stocks are already building from disappointing export demand and increased production.

Soybean export inspections were better than expected at 1.105 mmt and better than last week’s 1.070 mmt.  The problem is we are down from 1.724 mmt this week a year ago and inspections for export to date stand at just 12.152 mmt compared to 21.054 mmt this time last year.  This represents a 327 million bushel deficit to last year’s export pace in bean where the USDA is currently projecting exports to fall by 229 million bushels.  In trade war news, no news was not good news today.  G-20 summit Friday with Trump-Xi dinner meeting on Saturday which makes for a spicy Sunday opening.

Escalating tensions between Russian and Ukraine along with a couple fresh tenders gave the wheat complex a boost today. Not too often do you see beans down more than twenty cents and corn down more than three cents, yet wheat posting modest gains. We have seen in the past that when tensions rise between Russia and Ukraine the wheat complex tends to firm. This morning it was reported that Russia opened fire on Ukrainian ships off the coast of Crimea capturing three vessels, and that Ukraine’s President called an emergency session of his war cabinet and has asked parliament to vote on whether to impose martial law on the country for 60 days. The vote looks to have passed and starting martial law starts Wednesday morning. By no means does this mean that Ukraine will take any offensive measures of their own, but the situation does need to be monitored.

On a brighter note, more export demand has surfaced with Algeria in tomorrow, Iraq announced they will be in next week, and we already know that Bangladesh is in next week as well. This morning the USDA reported a sale of 120 TMT of SRW wheat to Egypt. Many believe this is part of the GASC tender from last week, but remember a couple months ago when Iraq bought 200 TMT of US wheat than a day or two later the USDA also reported a private sale of 200 TMT of wheat to Iraq? Well, that turned out to be two separate tenders.

The last weekly crop condition report of the year showed winter wheat planting moved up 2 to 95% complete vs 99% this time last year and 99% normal. The only SRW states that are still behind is Arkansas, Missouri and North Carolina. The HRW states that are behind are Texas, Oklahoma and Kansas. Emergence was seen at 86 pct vs 91 pct this time last year and 92% normal. Overall conditions were off only one from last week to 55% G&E, but that could have been much worse as Illinois was off 11, Texas, Arkansas and Colorado were each off 8 to 9 and Nebraska, Oklahoma, Michigan and Ohio were each off 4 to 5. P&VP conditions were up two to 13% vs 11% last week.

Anna Kaverman

anna@mercerlandmark.com

FOR THE WEEK ENDED 11-23-18

CORN – Holiday shortened weeks can breed volatility, but that wasn’t the case in the corn market this week.  Without attention grabbing headlines of its own, corn eased lower throughout the week to prices not seen since October 1st.   Political comments between the US and China kept ears to the ground for the next whisper of direction. The USDA announced the cancellation of 201 tmt of US corn to unknown to add to the negative tone in the first half of the week.  Huge losses in the energy markets also lent pressure to the corn market.  Crude oil fell to its lowest point since October 2017.  Farmer sales have dwindled to a dribble, but basis levels continued to firm.  Ethanol margins are taking a toll on the aggressiveness at some ethanol facilities, or at least slowing the grind.  There were reports of ethanol plant closings due to negative margins.  Funds were sellers during the week, pushing their estimated net position to a small net short.

With corn harvest at 90% as of November 18th, there was still approximately 1.4 billion bushels of corn left in the field.  Farmers are pushing to finish up, but later yields are expected to suffer.  Many are already expecting a slightly lower yield on the December WASDE report on December 11th.   Soybean harvest was 91% complete, suggesting over 400 million bushels were still in the field.

Weekly corn export inspections were near the bottom of estimates at 31.4 million bushels.  We need 45.5 million bushels per week to hit the USDA’s 2.45-billion-bushel export target.  We haven’t hit the average needed in four of the last six weeks.  Weekly export sales were decent at 34.5 million bushels.  We are 13% ahead of last year’s pace with 956.8 million bushels of sales on the books.  The USDA is forecasting year on year exports to be virtually unchanged from last year.  We need to average 36.1 million bushels of sales per week to hit the forecast.  Weekly ethanol production fell 25,000 barrels per day to 1.042 million barrels per day.  Stocks were down 700,000 barrels to 22.8 million barrels.  Net ethanol margins as of November 21st improved 2 cents per gallon for the week to a negative 14 cents per gallon.

For the week, December corn dropped 5 ¾ cents to settle at its lowest point since September 28th at $3.59, March corn fell 5 ½ cents to $3.70 ¼, and December 2019 corn was 2 ¾ cents lower at $3.95 ¼ per bushel.

OUTLOOK:  Corn is suffering from slower export sales and inspections (shipments), the anticipation of a big increase in US corn acres next spring (an increase of 6-7 million acres?), and the resulting uptick in 2019/2020 ending stocks.  Weakness in the energy markets and strength in the US dollar added to corn’s struggle to find a reason to rally.  Anticipation of early corn planting in Brazil may reduce the risk their corn will pollinate in the worst heat of their summer.  Corn prices have retreated to an area that has provided support in the last two months. Can it hold once again with the meeting between President Trump and President Xi approaching?  Political events heading into the G20 Summit will likely take center stage into the end of the month.

SOYBEANS – The meeting between President Trump and Chinese President Xi is nearly upon us.  They are scheduled to meet at the G20 summit in Buenos Aires on December 1.  Words continue to fly between the two countries.  This week, unlike corn, beans traded sharply lower to begin the week after comments from Vice-President Pence at the Asia-Pacific Economic Cooperation Summit were deemed less than complimentary to China.  With the negative political rhetoric, beans plunged to test technical support near its 50-day moving average.  Technical support held and verbiage quieted in trade leading into the Thanksgiving holiday.  Both corn and soybeans upheld the seasonal of closing higher the day before Thanksgiving.  It’s felt both sides would like to agree to a loose framework agreement, at the least.  But neither wants to be seen as being forced to accept the others’ terms.  The results of the US investigation into China’s technology trade practices indicated China had not made any progress in this area.  This was a major issue that led to the first tariffs that we put into place on Chinese goods.  If no agreement is reached in the coming week, President Trump seems prepared to implement an additional $250 billion in tariffs on Chinese goods effective January 1.

Weekly export sales were 25 million bushels, at the mid-range of estimates.  Sales are running 32% behind last year’s pace at 831.5 million bushels.  The USDA is expecting year on year export sales to fall 10.7% this year to 1.9 billion bushels.  We need to average 27 million bushels per week to achieve the projection.  Weekly export inspections were 38.8 million bushels, down about 50% from last year and the lowest in six weeks.  We need to average 34.9 million bushels per week to achieve the USDA’s 1.9-billion-bushel forecast.

The CME is considering launching a new soybean contract based on Brazilian soybeans.  The current contract offered on the B3 exchange in Brazil has no volume.  According to Terry Duffy, the CME chief executive, they are seeing how “we can cooperate on a derivatives product between a Brazilian exchange and the CME.”  The Brazilian exchange was not named.

Argentina’s efforts to reach an agreement with China to export meal into China have hit a snag.  China wants to inspect Argentina’s crush plants, and Argentina is not too keen on the idea.  Argentina had hoped to have something to announce by the G20 Summit. AgroConsult updated their Brazilian crop prospects with comments Brazil’s soybean production could reach 123 mmt to 129 mmt if current favorable weather conditions continue.  Their current outlook for soybean production is 120 mmt versus USDA at 121 mmt.  Last year, Brazil produced 119.3 mmt.  Safras is predicting Brazil’s soybean crop at 121.1 mmt.  They currently are forecasting a corn crop of 95.3 mmt with exports of 31 mmt.  The USDA is at 94.5 mmt with 29 mmt of corn exports.

For the week, January soybeans tumbled 11 ½ cents to $8.80 ¾, March was 11 ¼ cents lower at $8.94 ¼, and November 2019 soybeans were down 7 ¼ cents at $9.30 per bushel.

OUTLOOK:  Let’s assume the US reaches some sort of agreement with China at their meeting and we avoid adding another $250 billion in tariffs on Chinese goods in January.  This would likely spur an upside spike in soybean prices.  How high could it go, and more importantly, will it last?  Even if an agreement looks favorable, the Brazilian soybean crop is off to an excellent start and could surpass last year’s record production.  Early soybeans could be available for export as soon as January.  There were also reports of Russian soybeans being imported into China.  Russian exported over 800 tmt of soybeans into China in the 2017/2018 marketing year.  World soybean stocks to use ratio is forecasted at a record high 32%.  China is already cutting their feed protein by 0.50%.  Combined with China’s African swine fever problem, China’s soybean imports could be reduced by 3-4 mmt from the USDA’s current 90 mmt outlook.  In 2017/2018, China imported 94.13 mmt of soybeans.  Where does this leave us?  Next week’s summit will give us a much better idea, before then we could expect more rangebound trade.

Wheat- The USDA estimates US winter wheat seeding is 93% complete versus 97% on average. Emergence is estimated at 81% versus 88% on average. The crop is rated 56% good/excellent, up 2 from last week. Last year was rated 53% good/excellent. Egypt’s GASC tendered on Wednesday. They bought 60,000 tons of Russian, 60,000 tons of Romanian, and 120,000 tons of US SRW for January shipment. This is the second consecutive tender the US has been able to connect to Egypt. US was cheapest overall on a FOB basis, but with freight calculated in, the US offers lost some of the advantage. The Variable Storage Rate calculation for Chicago SRW wheat will come in under 50% meaning the storage rate will decrease from $0.00365/bushel/day to $0.00265/bushel/day effective December 19th.  Wheat inspections beat the high end of expectations this week by posting the best inspection number of the year. Inspections are still behind the USDA total by 121 million bushels however. The inspection gap has widened every single week this year.

Anna Kaverman

anna@mercerlandmark.com

FOR THE WEEK ENDED 11-16-18

CORN –  Reminder that the CME will close at its normal time on Wednesday, November 21, then won’t reopen until Friday, November 23 at 9:30 due to the Thanksgiving holiday.  On Friday, November 23, grain and soy markets will close early at 1:05 pm. December options also expire on Friday, November 23rd.  Have a safe, delicious, wonderful Thanksgiving Day!

Corn remained in the same trading range it’s been in since September.  Looking just at the March 2019 contract since the beginning of September, it has traded from $3.54 ¾ to $3.90 ½ per bushel.  The average closing price has been $3.77 per bushel.  March corn was down 5 ½ cents this week at $3.75 ¾, December 2018 was off a nickel at $3.64 ¾, and December 2019 corn was 4 ½ cents lower at $3.98 per bushel.

Corn news on its own was thin this week.  Instead, corn took a backseat to any news that drove the soybean market.  Players were content to trade within the established trading range that we’ve been in for months.  It was a little surprising that going into the weekend prices broke below the short term 50-day moving average support level in the March contract at $3.77 per bushel.  Corn has taken the follower role of soybeans and price direction will be at the discretion of political winds.  If China and the US were to make up, corn could benefit from the opening of the DDG and sorghum markets into China.

Weekly corn export sales were at the top of expectations and the highest in five weeks at 35.1 million bushels. We need to average weekly sales of 36.1 million bushels to hit the USDA’s 2.45-billion-bushel target. Total export commitments are up 15% over last year and the USDA is forecasting year on year exports to be flat. However, our weekly increase over last year has been shrinking every week. New crop corn sales are abysmal with only 4.2 million bushels on the books versus 39.5 million committed by this time last year.  Weekly ethanol production fell a miniscule 1,000 barrels to 1.067 million barrels per day.

OUTLOOK:  Corn broke through short term support as we headed toward the holiday-shortened trading week for Thanksgiving.  Not much has changed for the corn, besides some glimmers of hope for a loose agreement with China when leaders meet later this month.  Limiting a significant rally in corn include, an expected increase in US corn acres this year, weak ethanol prices and margins, early Brazilian planting, lots of US corn to sell, and competitiveness of Ukraine corn.  Direction will likely still depend on politics, but in the short term the onus will be on corn to find a reason to push back toward $3.85 in the March corn.

Not a great correlation, but December corn has closed higher the week of Thanksgiving in 6 of the last 10 years by an average of 7 ¼ cents.  December Chicago wheat has closed higher the week of Thanksgiving in 5 of the last 10 years by an average of 6 cents.

SOYBEANS – January soybeans traded back to prices not seen in a couple of weeks on news early in the week that China had issued a written response to the US on trade issues.  This was interpreted as a good sign for Chinese/US relations and the upcoming meetings at the G20 summit conference at the end of the month.  No one was sure whether the response was any different from conversations in May and July, but any communication was viewed as positive.  This effect was short-lived on the market however.  Poor weekly export sales, favorable weather in Brazil for planting and crop development, and the inability for January soybeans to trade over $9.00 were seen as stumbling blocks.  However, we live from one tweet to the next, and on Friday, early losses were reversed when President Trump said, “China wants to make a deal on trade, but it is not acceptable yet.  The US may not have to impose further tariffs on China.”  He also indicated he was hopeful the US will make a deal with China, but the US has to have reciprocal trade.  The Dow surged higher on the news.  Presently, the US has not cancelled plans to raise the current 10% tariff on $200 of Chinese goods to 25% on January 1st.

Brazil’s weather continues to be conducive to a great crop with favorable conditions over virtually the entire country.  An early harvest for soybeans also usually means an early second corn crop that could miss the worst summer conditions for pollination.  Brazil’s soybean planting as of November 9th was 69% complete versus 57% on average.  Their first corn crop planting was 78% complete, right on the average. Argentina has been wet, but the next week looks better with drier weather, then rains return.  Argentina’s corn planting was 52% complete versus 38% on average.

China’s African Swine Fever woes rose this week when a wild boar was found to the have the fever.  The largest pig producing province of Sichuan also confirmed its first case this week. This province produced 66 million head last year of China’s 700 million produced. The spread to the wild boar population will make it more difficult to control the spread of the incurable disease. Weekly soybean export sales were disappointing at 17.3 million bushels.  Total commitments are running 32% behind last year when the USDA is forecasting year on year exports to be 10.7%.  We need to average 26.7 million bushels per week to achieve the USDA’s 1.90 billion bushels export forecast.  Argentina was a buyer again this week, bring their total purchases to 1.4 mmt.  China has just 375 tmt of bean sales on the books with the US versus 18.2 mmt last year. Export news flashes this week totaled 575 tmt and will be included in next week’s sales.

OUTLOOK:  We’re trading headlines, so be cautious.  While most everyone would like to see China and the US resolve their trade differences, the US still has a carryout approaching one billion bushels, South America is off to a very fast start to their soybean crop, and our exports are suffering.  For the week, January soybeans were 5 ½ cents higher at $8.92 ¼, March rallied 5 ¾ cents to $9.05 ¾, and November 2019 managed to gain ¾ cents to $9.37 ¼ per bushel. A better correlation: January soybeans have closed higher the week of Thanksgiving in 8 of the last 10 years by an average of 24 ¼ cents.  From the beginning of September through November 15th, January soybeans have traded a range of $8.26 ¼ to $9.06 ¼, with an average settlement price of $8.68 ¼ per bushel.

Wheat

China and Russia are having discussions to review the condition of Russian wheat to increase exports into China. Iraq is also sending officials to Russia to discuss wheat quality issues and determine whether or not the condition of the wheat meets expectations. The majority of Iraq’s wheat imports currently come from the US, Canada and Australia. Egypt’s strategic reserves of wheat are enough to cover the country’s needs for 4.3 months, the supply minister was quoted as saying.  But by late in the week there was strong speculation the Egypt would be in the market for a tender very soon. Winter wheat planting was at 89% complete, down 5% from last year’s pace. Winter wheat conditions rose 3% to a 54% good/excellent rating.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday November 13th, 2018

December closed down 4 ¾ at $3.66 ½ and March 19 closed down 4 ½ at $3.77 ¾. January beans closed down 5 at $8.78 ¼ and March 19 closed down 5 at $8.91 ¾. December wheat closed down 12 at $5.07 ¾ and July 19 closed down 6 ¼ at $5.35 ¼. Crude oil closed down $4.24 at $55.84.

The corn market was negatively influenced by wheat today where that market gave back a large part of its rally and dragged corn back down through last week’s low where we are testing support.  Recently, corn has struggled from a combination of slowing exports, a weakening ethanol margin environment and last week’s application of revise Chinese corn stats to the world carryout in the WASDE. Add to all of that we are in a negative seasonal timing as harvest hits, the market has handled itself ok. Weekly corn inspections for export totaled 1.136 mmt, down from 1.284 mmt last week and compares to 407 tmt this week last year.  Year to date inspections total 11.106 mmt compared to 5.959 mmt this time last year representing an increase of 203 million bushels from last year’s pace. The USDA is currently projecting corn exports to increase by 25 million bushels year over year.  Elsewhere in the news, Corn harvest progress came in at 84% compared to 76% last week while beans were 88% compared to 83% last week.

The soybean market had a back and forth, two-sided trade but ultimately could not sustain its rally and settled with an outside day lower with the products not faring much better.  Beans have enjoyed recent support from a more positive tone in trade rhetoric from both the US and China. News broke that US Treasury Sec Mnuchin and the Chinese Vice Premier Liu had a positive phone conversation that could lead to a visit to Washington by Liu ahead of the G20 summit on the 30th of this month. That news was followed by additional positive news around the wires that talks on trade and other matters were actively taking place. This change in tone is certainly welcomed after months of stalled talks but as today showed, the board needs some concrete positive developments to grab hold of beyond the two sides making nice in the media in order to get the long-awaited relief rally. The degree of and sustainability of that rally is dependent on the amount of trade that is included in a deal.

The USDA flashed a sale of 277 tmt of old crop beans to unknown.  Bean basis at the Gulf has been firming so perhaps we will see some stronger buying interest ahead of the G20 as importers sense the window for cheap US beans could be closing? Weekly bean inspections totaled 1.302 mmt compared to 1.244 mmt last week and compares to 2.185 mmt week last year.  Year to date inspections sit at just 9.908 mmt compared to 17.054 this time last year representing a reduction of 263 million bushels from last year’s pace.  The USDA is currently projecting bean exports to fall short of last year’s pace by 229 million bushels.

Heading into today, trade was looking for a sign as to whether yesterday’s strong start to the week was demand induced or was it a reaction to Friday’s awful finish to the day when we saw the back months of Chicago wheat fall. If it was demand induced, we probably would have seen some stabilization after a sluggish overnight. If it was the latter, we warned people we could see double digit losses today. Why? Because rallies in wheat are going to have to be led by demand. Cannot stress that enough. Unless you are in the know, or an announcement is made by the USDA, most times it is very difficult to tell the difference if indeed business is getting done, or if some other trigger prompted the move.

Probably the most influential headline news coming into the session today was that Russia keeps trying to open doors for further export trade, and after successfully negotiating with Brazil and China to increase trade, we can now probably add Iraq to the list. The Iraqi Trade Minister will send a trade delegation to Russia before the end of 2018 to discuss the quality of Russian wheat and its suitability for Iraqi purposes for import. Keep in mind, Iraq usually only imports wheat from the US, Canada and Australia, and their needs are quite significant, with this year’s wheat imports totaling close to 4.5 MMT.

Anna Kaverman

anna@mercerlandmark.com

FOR THE WEEK ENDED 11-9-18

CORN – Be careful what you ask for…we wanted to see the November WASDE numbers and boy, were they a surprise!  Just when you think that China only affects our soybean market, they surprise you in the corn market. Action in the corn market leading up to the November 8th WASDE report was uneventful.  Prices rose slightly early in the week and were a penny higher for the week into the report’s release.

The USDA’s US numbers were slightly friendly on their face.  The shock came from the world carryout number which nearly doubled what it was a month ago.  Let’s first recap what the US balance sheets for 2018/2019 showed.  The US corn yield was lowered 1.8 BPA to 178.9 BPA from October’s 180.7 BPA forecast.  This was below the 180.0 BPA trade guess and was construed as friendly, but it is still a record yield.  As a result, US production fell 152 million bushels from 14.778 billion bushels to 14.626 billion bushels.  This was within the range of estimates, but well below the 14.721-billion-bushel average trade guess.  On the demand side, feed/residual was cut 50 million bushels and exports were slashed 25 million bushels to 2.45 billion bushels.  Resulting ending stocks were down 77 million bushels to 1.736 billion bushels versus 1.773 billion expected and compares to 2.14 billion carryout in 2017/2018.  The stocks to use ratio fell 0.5% to 11.5%.  The average farm price was raised 20 cents on the low end and left unchanged on the high end for a range of $3.20 to $4.00 per bushel.

Now for the kicker.  World ending stocks exploded to 307.51 mmt!  At first I thought it was a mistake, but it wasn’t.  This compares to last month’s 159.35 mmt forecast and the average trade estimate of 158.82 mmt.  This all came at the expense of China doing a 10-year revision of their balance sheets which they released a day before our WASDE report.  One of the biggest changes was a 43.2 mmt increase in 2017 production to 259.1 mmt.  China’s stocks went from 58.5 mmt last month to 207.5 mmt this month.  The USDA did make a comment on their release that they included historical revisions to area and production published by China’s National Bureau of Statistics.  The revisions were based on the results of China’s Third National Agricultural Census.  The Brazilian corn production estimate was unchanged at 94.5 mmt and Argentina’s was raised 1.5 mmt to 42.5 mmt.  If you exclude the increase in China, the global carryout would have decreased 830 tmt.

Corn prices whipsawed higher, and then lower, upon the report’s release.  By the end of the session, corn had posted a key reversal higher on the daily chart.  However, prices fell to end the week.  China imports and exports very little corn.  Does anyone have a good grasp on what they produce, use, and store?  So, do their revisions make a difference?  China’s supplies are not readily available to the world marketplace, but it does give them usage options domestically, which they’ve always had.  The USDA indicated they would separate China’s numbers out beginning in May.

Weekly export sales were a moot issue at 27.6 million bushels.  We are running 16% ahead of last year and the USDA is projecting year on year exports to be relatively unchanged.    Weekly ethanol production was up 9,000 barrels per day at 1.068 million bpd.  Stocks were 500,000 barrels higher at 23.2 million barrels.  Margins continue to be ugly at a negative 10 cents per gallon.

OUTLOOK: Now that the report has been digested, the focus will be on South American planting weather and demand for US corn.  December corn was down 1 ½ cents for the week at $3.69 ¾ per bushel, after trading a decent $3.66 to $3.79 weekly range.  We may be setting up for further consolidation, but in a slightly higher range from $3.60 to $3.90 per bushel as we head into the holidays.  Taking a longer-term view, this year’s 1.736-billion-bushel carryout is big, but it’s still a year on year decline of 404 million bushels.  March corn was 2 cents lower this week at $3.81 ¼ and December 2019 was down 1 ¼ cents at $4.02 ½ per bushel.

SOYBEANS – Soybeans sparked higher to begin the week, but then eased lower ahead of the November WASDE report.  Most traders were anticipating a bearish report, and that’s what they got.  The US 2018/2019 balance sheet lowered the soybean yield 1 BPA to 52.1 BPA, which remains a record yield.  The average trade estimate 52.9 BPA.  Production took a 90 million bushel hit from last month to 4.60 billion bushels versus estimates for 4.676 billion bushels.  Exports were slashed 160 million bushels to 1.9 billion bushels!  This was enough to push ending stocks well above traders’ expectations. The crush was increased 10 million bushels and residual was lowered 2 million bushels.  Ending stocks surged 70 million bushels higher than last month’s 885 million to a whopping 955 million bushels!  This is over double the 2017/2018 carryout of 438 million bushels.  The stocks to use ratio increased from 20.7% to 23.3%.  The average farm price was narrowed to a range of $7.60 – $9.60 per bushel.

World ending stocks were a record 112.08 mmt compared to the 110.91 mmt trade forecast.  Last month, ending stocks were pegged at 110.04 mmt.  China’s soybean imports were dropped 4 mmt to 90 mmt compared to last month.  Argentina’s 2019 soybean production outlook fell 1.5 mmt to 55.5 mmt and Brazil’s production was left unchanged at 120.5 mmt.  Weather in Brazil has been favorable for soybean planting and there are expectations that soybeans may be available in January to feed China’s appetite.  Early soybean planting can also lead to early second crop corn planting.  If so, corn may pollinate ahead of the worst summer heat and promote higher production.

Weekly export sales were just below expectations at 14.3 million bushels.  Total commitments stand at 802.4 million bushels, down 31% from last year.  Year on year soybean exports are forecasted to be down 229 million bushels or a 10.7% yearly decline.  Accounting for the reduced export forecast, we need to average 26.5 million bushels per of sales from November through August.  This would be a record sales pace.  Unless a political fix is accomplished with China, the export category could be lowered in future reports.

President Trump is currently set to meet with China’s President Xi before the G20 summit later this month in Argentina.  Reportedly, the US is drafting a framework for an agreement.  There have been differing opinions from China on whether they will be open to an agreement, while simultaneously voicing they will not be dictated to on their policies by the US.  Brazilian bean basis plunged this week on concerns there that a US-China agreement may be reached.  Safras pegged Brazilian farmers new crop sales at 31% compared to 33% sold on average.  AgRural put Brazil’s soybean planting at its fastest pace ever at 71% complete versus 41% on average. In other news, China imported 6.9 mmt of soybeans in October, a record for the month of October.  This is an 18% increase compared to last year.  So far this calendar year, China has imported 76.9 mmt of soybeans.  It’s estimated 95% of those supplies originated from Brazil.

OUTLOOK: For the week, January soybeans fell just a penny at $8.86 ¾, March was unchanged at $9.00, and November soybeans gained 3 ½ cents at $9.36 ½ per bushel.  Politics will continue to sway the markets but ending stocks of 955 million bushels are definitely not bullish.  Ending stocks climbing to 1.0 billion bushels is still a possibility.  South American weather has gotten Brazil’s crops off to a very good start.  Unless their weather turns negative, we can expect to come up against strong competition for exports into 2019.  Sustained rallies may be difficult without an agreement with China to reestablish exports.

Wheat

There was confusion on Russian wheat exports this week as Russia’s IFAX was quoted lowering Russian grain exports to 35 million tons. However, the Deputy Ag minister of Russia is now quoted as saying their 39 million ton export estimate is still intact. USDA crop progress showed winter wheat planting at 84% complete compared to the 5-year average of 90% complete. The USDA also reported winter wheat condition at 51% good/excellent, down from last week’s 53% good/excellent. Wheat export sales were surprisingly good with the 2nd best total of the marketing year. The big buyers this week were SE Asian destinations, excluding China. On the latest WASDE report, the USDA didn’t do much for changes to the wheat balance sheets this time through. They increased wheat seeding usage overall 7 million bushels to drop our carryout to 949 million bushels. They dropped the Australian wheat crop 1 million tons to 17.5 million tons while at the same time slightly increasing the EU crop and leaving the Black Sea wheat production estimates unchanged.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Thursday November 8th, 2018

December closed up 1 ¼ at $3.73 ½ and March 19 closed up 1 ½ at $3.85 ¼. January beans closed down ½ at $8.79 and March 19 closed down ¼ at $8.92. December wheat closed down 2 ½ at $5.07 ¾ and July 19 closed down 2 at $5.39 ¾. Crude oil closed down $.96 at $60.86.

The November WASDE is officially in the books, and it was one of the strangest reports in recent memory. The market was confused, to say the least, finishing in the middle of a $.12-$.13 range.  Ironically, the market settled out about where it started ($.01 better). Managed Money traders were viewed net buyers of about 10,000 corn today, which would leave them net even the corn market.

Everyone was watching the yield today, which did not disappoint.  The real change, however, came in the world stats, which nobody was really expecting much out of. The USDA shocked the market by adopting wholesale the data published by the Chinese yesterday, which made massive (+20%) revisions to production and stocks data going back a full decade. The net impact of this was to nearly double the bottom-line USDA world carryout number for 18/19. We would be hard-pressed to remember a similar occurrence, and some news outlets were forced to triple check their numbers before putting it out for public consumption. In the end, the numbers are the numbers, but they are still heading in the same direction. Lower, relative to levels seen over the prior two years. The new USDA 18/19 world carryout projection is 307.5 mmt, which compares to 159.4 mmt in October and 340.9 the prior year (and 350.3 in 16/17).

Domestically, the USDA did not disappoint the corn bull, taking another large chunk out of yield. They pegged the 2018 U.S. corn yield at 178.9 bpa, which compares to 180.7 in Oct and the high water mark of 181.3 bpa in Sept. The yield is still a record, and the production is still the second largest on record at 14.626 billion, but it is a rather remarkable retreat from the 183-184 bpa ideas many in the trade were espousing in early October. The USDA focused most of their efforts east of the Mississippi. They shaved 6 bpa off South Dakota, 6 bpa off Iowa, and 7 bpa off Minnesota.  As for the balance sheet, the USDA trimmed 50 MB off residual demand and 25 million off exports, which limited the downtick on carryout to 1.736 BB, which was not too far off from trade expectations (1.773 avg) but remains well below last year’s 2.140 bil. On the world scene, the USDA raised Argy and Ukraine production, while lowering the EU.  Net/net, excluding the wild China revisions, world corn production expectations were raised slightly from October.

The soybean market settled slightly lower for a fourth consecutive day with the bull spreads weaker as new crop gained on old. The price action was dynamic however as the market closed $.15 off the session low in what was a wild trade around the USDA crop report and WASDE. The report highlighted the increasingly bearish supply side realities one more time although a bigger reduction than expected in the bean and corn yields along with some controversy and confusion surrounding the world corn carryout number led to the markets bouncing back off their lows. In the case of corn that was fundamentally justified although beans seemed to be more along for the ride than having anything friendly in the numbers to support a recovery.

The US soybean yield was reduced to 52.1 bpa from 53.1 bpa last month which was a deeper cut than the avg. trade est. at 52.9 bpa. While they increased the pod count they lowered the pod weight for a second consecutive report. This took the crop size down to 4.600 bb from 4.690 bb last month. The carryout was raised to 955 mb from 885 mb and the avg. trade est. of 898 mb despite the smaller crop because they also lowered exports by 160 mb to 2.060 bb and seed use by 7 to 96 mb to more than offset a 10 mb increase in crush to 2.080 bb.

The changes to the products were very interesting with the S&D adjustments tightening oil supplies while building meal supplies although the price action today didn’t necessarily reflect that.  US oil ending stocks were reduced by 201 mln lbs to 1.915 bln lbs as beginning stocks were lowered by 126 mln. Meal ending stocks were raised by 50 to 450 tst coming on an increase in beginning stocks by 153 and production by 197 which was partially offset by a 250 increase in exports. The world soybean carryout was increased by 2 mmt to 112.08 mmt which was 1 mmt bigger than the trade est.  World oil carryout was unchanged at 3.64 mmt while meal was raised slightly to 12.10 mmt.

It was crop report day, and at least for wheat, the report was not expected to be too impactful. The USDA gave a little something for both the bull and the bear. We saw a slight reduction in US carryout, and an increase in World carryout. The initial knee-jerk reaction to the report was positive as the US numbers were announced first. In wheat, KC once again took the brunt of the selling. It did not help that HRW wheat stocks were raised slightly, while HRS, SRW and White wheat stocks were all lowered some. Late in the day the markets tried to rally some, but again, we saw limited follow through and prices weakened into the close.

Looking ahead, not a whole lot has changed. The wheat market is going to have to be a demand driven market. Although we do not see much in the export lineup, the sales reports are telling us that demand is there at these current levels. The Asian flour mills have been around looking for wheat especially with the problems the Aussies are having, and Brazil is looking for wheat for Jan just to name a few. So we know the chances are pretty good that the opportunity is there

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday November 7th, 2018

December closed down 1 at $3.72 ¼ and March 19 closed down 1 ½ at $3.83 ¾. January beans closed down 4 ¾ at $8.79 ½ and March 19 closed down 4 ¼ at $8.92 ¼. December wheat closed down 1 ¾ at $5.10 ¼ and July 19 closed down 4 ½ at $5.41 ¾. Crude oil closed down $.52 at $61.82.

Corn featured another disinterestedly lower session of trade, as the mid-terms offered no surprises and traders position for tomorrow’s major crop report. Managed Money traders were viewed net sellers of almost 10,000 corn today, which would likely leave them small net shorts heading into tomorrow.

Make no mistake it’s all about the report tomorrow. The November WASDE is normally a “tweaker” report, as everyone has been exposed to reams of “real” data on harvest since Aug/Sept. The average analyst guess is for the USDA to continue taking yields lower after surprising the trade with lower October numbers.   The forecast is for 180 bpa yields, which compares to 180.7 in Oct, and 176.6 final last year. This is expected to trim carryout back a notch too. Analyst guess for domestic 18/19 carryout is 1.77 billion vs. 1.81 bil in October and 2.14 bil the prior season. World carryout will likely also be an afterthought. Analysts are expecting world ending stocks to hold steady, as other countries offset the expected dip in US carryout expectations. For corn, at least, the focus will be on U.S. production, whereas for beans, by contrast, it will likely be equal split between U.S. supply and demand.

The U.S. mid-term elections are in the books, and offered little feature to the grains given the expected split verdict (GOP controls Senate, Dems control House). Outside markets reacted positively, with the Dollar trading to a two week low and equities firm. A surprise either way may have had a bearing on trade negotiations, potentially, but this likely changes nothing. Corn seemed to be more preoccupied today with some interesting revisions coming out of China. In one fell swoop, the gov’t there raised 2017 production to 259 mmt from 216 prior. Imagine if the USDA raised their estimates of US production by 20% on a random Wednesday morning – pandemonium!  The relative unreliability of Chinese statistics contained the reaction to this development.

The soybean market settled lower for a third consecutive day on pre-positioning ahead of tomorrow’s USDA report. Trade volumes continue to be very light with uncertainty over how to quantify near term risk/reward. On one hand you have potential for a breakthrough in trade negotiations with China starting with the G20 summit later this month that has the potential to spike prices and thus prevents an aggressive stance on new sales while the current statistical realities of the market keep fundamental buyers on the sidelines.

The grain markets’ focus of the moment is on tomorrow’s USDA crop report which will feature another look at the US corn and soybean yields where slight reductions are expected. This is more significant for corn considering the tighter supply situation while shaving a little off the bean yield doesn’t change the burdensome bean supply situation. On top of that, we are also expecting a cut in bean exports on the demand side of the ledger, so our carryout may still go up. There is no reason to downgrade Southern Hemisphere production prospects either with a favorable start to their planting and development. On a longer-term basis, we have to solve our acreage issue, most likely through lower prices. China tariffs or no, we would still be fighting this burdensome supply situation because we have planted 90 mln bean acres the past two years and grown near record and record yields.

Elsewhere in the news, the US is set to impose new duties on Chinese aluminum sheet products. China’s top grain producing province Heilongjiang is slashing subsidies for farmers to plant corn and nearly doubling the subsidy to plant beans. The 2018 subsidies are set at $25.79/acre for corn and a whopping $330/57/acre on beans. This is a dramatic effort to shift production in soybeans. Chinese Ag Ministry acknowledged another African swine fever outbreak was recorded in central province of Hubei.

The wheat complex saw mixed price action overnight. That trend continued throughout the day, with the spread between the classes extending. The Mpls/Chicago spread had a big outside day lower move today, maybe implying that in tomorrow’s report we will see similar adjustments in carryout in each class of wheat as we saw last month. Hard to imagine that the USDA will lower SRW carryout for a second consecutive month, but we could easily see HRW and HRS carryout go up a little again.

Looking ahead to the crop report tomorrow, the bull will be once again hoping for World production downgrades, but how much of a reduction could we possibly expect. Australia is the obvious reduction, as the USDA will no doubt lower production there by 1.5 to 2.0 MMT from 18.5 MMT down to maybe 17.0 or 16.5 MMT. Everywhere else though is a toss of the dice. Can they lower Argentina? Sure. Will they finally lower the EU that is so long overdue? They should, but they probably will not. Russia’s wheat production continues to rise. Look for the USDA to offset any reductions with an increase in Russia’s crop estimate and maybe give us slightly higher yields out of the FSU. With that being said, look for World wheat ending stocks to be similar to last month’s 260.18 MMT.

Anna Kaverman

anna@mercerlandmark.com