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05 Dec 2018

#Grain #Futures Comments

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-Trade estimates for next week's WASDE report
-Brazilian soybean crop ideas moving higher
-Attache sees continued Argentine soybean imports, but strong production/exports/crush in coming year
-Malaysian/Indonesian palm oil stocks seen remaining historically high in coming year
-Notable further expansion in Brazilian ag area seen available
 
The market remains optimistic announcements will be made, at some point, regarding Chinese government purchases of U.S. ag products. Rumors remain widespread about the potential size of purchases and commodities involved, but there does seem to be a general feeling of not wanting to be on the short side of the market for the time being with such announcements anticipated to be coming. There are ideas initial soybean purchases could be in the 5-8 MMT range, although JCI recently said they could be as much as 10 MMT. There are also rumors/thoughts/ideas corn, ethanol, wheat could all be involved as well, which would appear to be more on a goodwill gesture than based on need in our opinion. At this point it remains pure speculation on when, which commodities and how much may be involved. The EIA’s weekly ethanol and energy reports, typically released on Wednesday, will be delayed until tomorrow, while Export Sales will be released on Friday and CFTC data pushed to Monday as a result of today’s federal observance of President George H.W. Bush’s passing.
 
 The average trade estimates of 2018/19 U.S. ending stocks, of those reflecting specific estimates for this month’s report, are: corn 1.738 billion bushels (1.700- 1.790 bil range) vs 1.736 billion last month, soybeans 945 million bushels (875-975 mil range) vs 955 million last month and wheat 956 mil bu (924-984 mil range) vs 949 mil last month. The USDA will release the WASDE report next Tuesday, December 11.
 The average trade estimate of Brazil’s soybean crop is 120.9 MMT vs 120.5 MMT last month, Brazilian corn 94.4 MMT vs 94.5 MMT last month, Argentine soybeans 55.7 MMT vs 55.5 MMT last month and Argentine corn 42.4 MMT vs 42.5 MMT last month.
 During the session yesterday, Brazilian ag consultant Celeres said this year’s Brazilian soybean crop could reach 123-130 MMT, which would obviously reflect a new record crop surpassing last year’s 119.8 MMT and could be notably larger than USDA’s current estimate of 120.5 MMT if it proves to be towards the upper end of their ideas.
 The CEO of large-scale Brazil grain producer SLC Agricola, speaking at an industry event, said he sees untapped Cerrado (grassland) area in Brazil, which could be used for ag production (soybeans, corn, sugarcane) at around 43 million hectares (106 million acres). Combined soybean/corn/sugarcane total area this year is estimated at around 64 million hectares (158 million acres), highlighting the potentially massive expansion availability of Brazilian ag production going forward.
 The USDA ag attaché in Argentina sees their soybean imports during the Apr 2018-Mar 2019 marketing year at 5.3 MMT, above USDA current estimates of 4.7 MMT, and still remaining solid for the Apr 2019-Mar 2020 period at 4.5 MMT, a bit larger than USDA current ideas of 4.2 MMT. The see this year’s soybean crop at 56.0 MMT vs USDA’s current estimate of 55.5 MMT and up sharply from last year’s 36.0 MMT crop, which is solidly less than the USDA’s current reflection of last year’s crop at 37.8 MMT. The attaché sees crush for Apr 19-Mar 20 rebounding to 42.0 MMT (USDA 44.0 MMT) from this year’s 37.6 MMT, while exports jump sharply to 12.0MMT (USDA 10.0 MMT) from this year’s minimal 4.1 MMT.
 The USDA ag attaché in Malaysia estimates their 2018/19 (Oct 18-Sep 19) palm oil production at 20.0 MMT (USDA 20.5 MMT), up slightly from last year’s 19.7 MMT, with exports at 17.2 MMT (USDA 17.9 MMT) vs 16.5 MMT last year. Malaysian palm oil stocks are seen remaining high at the end of 2018/19 at 2.7 MMT, slightly above USDA’s 2.6 MMT estimate and unchanged from 2017/18. The Indonesian attaché sees their 2018/19 palm oil production at 41.5 MMT (USDA 40.5 MMT) vs 39.5 MMT last year (USDA 38.5 MMT), while exports at 28.5 MMT, in line with USDA, and up from 27.0 MMT last year. Domestic usage is seen rising solidly to 6.7 MMT from 5.0 MMT last year due to the higher biodiesel blending mandate. Despite this, they see Indonesian palm oil stocks at the end of 18/19 rising to 3.65 MMT (USDA 3.17 MMT) from last year’s 3.23 MMT (USDA 2.478 MMT).
 Egypt’s GASC has not issued letter of credit for 16 cargoes of wheat (945k tonnes) previously purchased for shipping periods ranging from Nov 11-Dec 20, 2018. Exporters are unsure as to the exact situation behind the delay, but GASC has reportedly told some shippers they will not be issued until after Jan 1 and have asked for delays in shipping some cargoes bought for Dec 11-20 shipment until January.
 Ukraine said corn harvest has reached 34.1 MMT, with 3% of estimated area yet to be harvested, which is already above the USDA’s last official estimate of this year’s crop at 33.5 MMT. Accordingly, it appears their final corn crop could prove to be around 35 MMT in the end.
 Indonesia’s Biofuel Producers Association sees the country’s 2018 calendar year biodiesel exports at 1.6-1.7 million kiloliters (~435 million gallons) and rising to 2.0 mil kl (~530 mil gal) in 2019, while domestic consumption in 2019 is expected to jump to 6.2 mil kl (1.6 billion gallons) from an estimated 3.9 mil kl (1.0 bil gal) this year. With the new biodiesel blending mandates expected to notably increase domestic usage, they see Indonesia’s 2019 biodiesel production jumping to 8 mil kl (2.1 bil gal) from 5.5 mil kl (1.5 bil gal) this year.
 The Malaysian Palm Oil Board will release its monthly report on December 10. Average market expectations of November palm oil production are 1.923 MMT (1.867-2.024 MMT range) vs 1.965 MMT in October and 1.943 MMT last year. End November palm oil stocks are estimated at 3.016 MMT (2.977-3.099 MMT range), up sharply from 2.529 MMT in Oct, well above year ago Nov stocks of 2.554 MMT and would be, most likely, all-time record large in surpassing Nov 2015’s 2.911 MMT. Current data availability goes back to 2000. November exports are estimated at 1.405 MMT (1.380-1.534 MMT range) vs 1.571 MMT in Oct and 1.356 MMT last year. 

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