Blogging by the Bushel
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Thursday August 30th, 2018

September corn closed down ¼ at $3.41 and December closed unchanged at $3.56 ½. November beans closed down 4 ½ at $8.31 ½ and January 19 closed down 4 ¼ at $8.45. September wheat closed down 7 ¾ at $5.08 and July 19 closed down 6 at $5.61 ¾. Crude oil closed up $.55 at $69.72.

Corn prices remained steady Thursday amid some light technical maneuvering that failed to push prices very far in either direction during the session. Corn exports saw 6.9 million bushels in old crop sales, plus another 20.7 million bushels in new crop sales, for a total of 27.6 million bushels. That was nearly half of the prior week’s total of 51.7 million bushels and well below trade estimates of 39.4 million bushels. Corn export shipments reached 52.9 million bushels last week, leaving the rate needed to reach USDA forecasts at a mostly unmanageable 195.2 million bushels. For the 2017/18 marketing year, Mexico is the leading destination for U.S. corn export commitments, accounting for 25% of the total. Private exporters announced to USDA the sale of 4.0 million bushels of corn for delivery to Mexico during the 2018/19 marketing year, which begins September 1. China sold 102.9 million bushels of its state reserves of corn at auction Thursday, which was 65.9% of the total available for sale.

The soybean market was unable to sustain overnight strength and sold off at the start of the day session. Some of the sell pressure was tied to a mundane weekly export sales report, some was tied to another report of African swine fever in China, some was tied to the general bear stat environment that has a firm hold on the market. After the close we got another reminder that the trade war with China is not only unresolved but escalating.  Bloomberg reported that President Trump is considering enacting the threatened $200 billion in additional trade tariffs on China as soon as next week when the public comment period ends next Thursday the 6th.

Weekly export sales for grains were within trade expectations although on the lower end for beans at 111 tmt old crop and 592 tmt new crop.  New crop export commitments stand at 13.218 mmt which compares to 15.381 mmt this time last year and have fallen behind last year’s pace for the first time this year.  Old crop meal sales were net -22 in the old crop but very solid at 500 tmt in the new crop from unknown (280), Mex (84), Ecuador (30) and Ireland (30). China reported another breakout of African swine fever in the eastern Anhui province infecting 185 pigs on a farm. This marks the fifth breakout in the country and has led to concerns of a larger outbreak that will limit feed demand. US Ag Sec Perdue commented that the outbreak is probably bigger than what has been reported publicly.

Overnight trade saw prices initially rally, but it was Mpls that traded the strongest, with the Dec rallying to more than $.09 higher and in the process, moved above the $6.00 level. But, shortly after the European markets opened trade began to falter, with all three classes of wheat finishing the night around a $.05 off its highs. The selling continued as we moved into the day session, with the lows being made midday. Price action today was similar to what we saw a few weeks ago when the Russian wheat export restriction chatter first started. There is supposedly a meeting scheduled for September 3 between the Russian Ag Minister and exporters to discuss the situation. In the meeting next week, it is expected that the Russian Ag Ministry will curb total grain exports to 30 MMT and limit wheat exports to 25 MMT. If trade exceeds this total, there will be an export tax levied, and it will be large.

The export sales report was uninfluential to trade today. The reason we possibly saw price action struggle today is the fact that the 25 MMT that Russia will still export is similar to what they have exported each year prior to this past year. Also, keep in mind, the GASC tender this week did show that US HRW wheat is at least $45 away from being competitive to the rest of the World. Eventually, sales will come to the US. The larger concern right now may be what is the USDA going to do about their export expectations? They have Russian exports for this coming year pegged at 35 MMT. We now know that is not going to happen. The USDA may raise US export expectations 75 mil to 1.1 bil, but after the August crop report we mentioned that they might eventually be doing that anyways. Argentina will see their exports increase, and Canada is still a possibility. There has been talk that the Chinese are currently looking at Canadian wheat pretty hard. But that still leaves around 200 MB that needs to be accounted for.

Anna Kaverman

anna@mercerlandmark.com

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