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18 Apr 2019

#Grain #Futures Comments

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-US/China trade talks to continue - deal announcement possible in May
-Trade estimates for USDA Cattle on Feed report
-Export Sales generally solid
-Argentine soybean crop estimate above USDA
 
Argentine markets are closed today and tomorrow, European markets Friday and Monday, with U.S. markets closed tomorrow. Grain markets will re-open Sunday night. Overall price action remains defensive as wheat continues to see pressure amid good overall HRW crop conditions, while SRW conditions have been improving. Corn planting will certainly remain slow over the next two weeks at least given regular rain events expected across the belt, but the earlier concerns of potential significant flooding have not materialized, while most areas may see occasional breaks in rains to at least allow some field work to progress. Far from perfect, but not worst case either…
 
 Yesterday afternoon, wire services reported US Trade Representative Lighthizer is tentatively scheduled to go to Beijing the week of April 29 for the next round of face-to-face talks with Chinese officials. Negotiators are reportedly aiming for having a deal in place to allow for a signing ceremony sometime in late May or early June.
 Argentina’s first official estimate of this year’s soybean crop was 55.9 MMT, sharply recovering from last year’s drought-hit crop of 37.8 MMT and compares to the USDA’s last estimate of 55.0 MMT. Their estimate of the corn crop, which they state reflects the amount of production for use by farmers on their land for feed and as well as for all other purposes, was 55.0 MMT, up from last year’s 43.5 MMT. This is different than other estimates which reflect the expected “commercial” production of the crop. Accordingly, the USDA is currently estimating this year’s crop at 47.0 MMT vs 32.0 MMT last year.
 USDA’s Cattle on Feed report will be out this afternoon. The average estimate of on feed as of April 1 is 101.7% of last year (100.4- 102.2 range of ideas) at 11.928 million head. March placements are estimated at 103.4 (97.9-106.0 range) at 1.986 million head, while March placements are estimated at 96.9 (95.7-98.4 range) at 1.783 million head.
 U.S. soybean sales were 382k tonnes (14.0 million bushels), which were at the bottom end of market expectations of 350-800k tonnes, but were up modestly from last week's 9.9 million bushels. While sales met the roughly 14.0 million bushels/week in "needed" sales in order for 2018/19 exports to potentially reach the USDA's 1.875 billion bushel export target this week, concerns about maintaining that pace are significant.
 Corn sales last week were quite respectable at 948k tonnes (37.3 million bushels), rising solidly from the previous week's 21.6 million bushels and were the highest in six weeks, but were still below last year's same-week sales of 42.9 million bushels.
 Old crop wheat sales last week of 318k tonnes (11.7 million bushels) were within market expectations of 200-400k tonnes and were up a bit from the previous week's 9.9 million bushels and well above last year's net cancellations this week of 2.5 million bushels. New crop wheat sales last week of 228k tonnes (8.4 million bushels) were in line with expectations of 150-300k tonnes and brought 2019/20 total commitments to 60 million bushels vs new crop sales at this time last year of 51 million.
 Soybean meal sales of 295k tonnes were the highest "known" sales of at least the last 8 weeks and may have been the largest of the last 16 weeks based on the averaging of total sales over the 6-week government shutdown period. Additionally, they were at the top end of market expectations of 125-325k tonnes and up from the previous week's 152k as well as last year's same-week sales of 165k. Soybean oil sales were also solid at 24.2k tonnes, at the upper end of market expectations of 8-30k tonnes and compared to last week's 33.9k and last year's 28.1k  We would also note another 23.5k tonnes of pork was sold to China this week, bringing their total purchases so far this year 166k tonnes vs obviously very small sales last year of just 20.4k tonnes.  
  

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