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27 Nov 2018

#Grain #Futures Comments

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-Continued weakening Chinese soybean imports seen through Q1 2019
-COT data shows fund net selling across grains/oilseeds
-Focus remains on Ukraine/Russian tensions
-South American forecast remains favorable
 
Grain markets were mixed overnight, with soybeans managing small gains into the break in a minor rebound from yesterday’s notable weakness, while corn was near unchanged and CBOT wheat was slightly lower. The market continues to await the end-ofweek Trump/Xi meeting.
 
 Chinese soybean traders have expressed ideas that overall soybean imports will continue to decline into the first quarter of 2019 given the currently high domestic stocks held at ports and concerns over African swine fever reducing overall feed demand as hog producers may be leery to replenish herds post slaughter. China’s soybean imports in December are thought to potentially decline to around 6 MMT from 9.6 MMT imported in December last year, while total 1st quarter 2019 imports are seen potentially as low as 11-12 MMT vs 19.6 MMT in Jan-Mar 2018. Chinese soybean stocks current held at ports are around 7.5 MMT vs 6.1 MMT at this time last year, 5.6 MMT two years ago and are said to be the highest in a decade for this point of the year. SBM stocks are also said to be the highest in multiple years, as well.
 Indonesia announced the export tax on crude palm oil will remain at zero for December, as has been the case since May 2017, as current prices remain below the threshold which triggers a tax to be applied. This is separate from the export levy, which was just announced will be temporarily eliminated to make palm oil exports more competitive, that is used to support the country’s biodiesel industry.
 Ukraine’s acting ag minister said if Russia commits any additional aggressive actions in the Azov Sea, there could be some limited impact on grain exports from the region. There is also concern freight and insurance rates for shipping in the region could increase, as well.
 Yesterday afternoon’s holiday-delayed CFTC COT data for the week ended 11/20/18 showed funds net sellers across the grain/oilseed complex and are net short in all markets except for a minor net long still held in SBM as of last Tuesday. On the week funds were net sellers of 25.8k contacts in corn, moving back to a small net short of 7.8k, sellers of 5.2k soybeans (net short 60.2k), 9.1k SBO (net short 79.2k), 1.2k SBM (net long 0.9k), 11.2k CBOT wheat (net short 37.8k), 3.9k KCBT wheat (net short 5.2k) and 0.7k MPLS wheat (net short 6.6k).
 Yesterday afternoon’s final Crop Progress report of the year shows 6% of the U.S. corn crop was still left to be harvested vs 4% average at this time and 6% of the soybean crop left, as well, vs 2% average at this time. For soybeans, 6% remains to be harvested in ND and WI (0% and 2% avg, respectively), while OH still has 9% remaining vs 1% avg, KY 20% vs 9% avg, MO 15% vs 5% avg and KS 8% vs 3% avg. For corn, it’s going to be a long, slow finish for the ND harvest as 20% remains in the field still vs 7% avg, while 10% is left in SD vs 3% avg, 6% in NE vs 3% avg and 6% in KS vs 1% avg.
 U.S. winter wheat conditions declined 1% last week to 55% g/e and remain above last year’s crop at this time of 50% g/e, but spring conditions are really what matters regarding yields. Overall conditions heading into the winter months are below the mostrecent 5-year average, but are in line with the 10-year average. KS still has 4% of area unplanted vs 0% avg and OK 5% vs 0% avg, while MO has 11% remaining vs 5% avg and AR 15% remaining vs 3% avg. 
 
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