-USDA reports large corn sale and HRW/HRS sales to China
-ASF outbreaks reportedly surging again in southern China
-Good rains across good portion of corn belt last 24 hours, outlook less threatening
-USDA reports today at 11:00 AM CT – trade estimate summary included
USDA’s Crop Production and WASDE reports will be out today at 11:00 AM CT. Our pre-report commentary can be found on Market Insights at https://portal.rjobrien.com/MarketInsights/Blog/Read/40680. A summary of the average trade estimates is on the last page.
Good rains were seen across much of IA, southern MN, the northern half of IL and all of WI and MI over the last 24 hours (map on following page). The 6-14 day outlook ideas remain mixed between the models, but with some indicating prospects for decent rains, it’s not a worst-case “dome of doom” type scenario.
USDA reported 1.365 MMT of corn sold to China in the daily reporting system, with 765k tonnes for old crop and 600k tonnes for new crop. They also reported 130k tonnes of HRW and 190k tonnes of HRS sold to China for 2020/21 delivery, as well, confirming talk in recent days.
There are reports African swine fever outbreaks are surging in parts of southern China again following flooding rains in mid-June. Many farmers simply buried dead infected pigs, with the widespread floodwaters allowing the disease to spread anew into other pig operations. A consultant said pig inventories in Sichuan, Guangdong, Guangxi and Jiangxi could decline as much as 20% through next May as a result of the resurgence in ASF if heavy rains continue. Hog prices have been surging, accordingly, up more than 25% over the last month and are back near record highs of last October in
China’s monthly balance sheet revisions featured increases in 2019/20 soybean and corn imports, putting them more in line with existing USDA estimates. China raised old crop soybean imports 3 MMT to 94 MMT, the same as USDA, and corn imports by 2 MMT to 6 MMT (USDA 7 MMT) citing increased imports from the U.S. due to the Phase One trade deal. For corn, the rest of the balance sheet was unchanged, resulted in China now expecting old crop ending stocks to decline 11.6 MMT from last year vs the previous estimate of a 13.6 MMT decline. Similarly, the added soybean imports were simply carried through, as well, with 2019/20 ending stocks now expected to rise 4.9 MMT from last year vs a 1.9 MMT increase previously estimated. For 2020/21, the corn and soybean balance sheets were left completely unchanged, including the expected change in new crop
ending stocks, which is difficult to understand given the change in old crop stocks ideas. Their new crop balances reflect expected soybean imports of 93.6 MMT and corn imports of 5.0 MMT.
Russia’s ag ministry said they see this year’s wheat crop being up to 75 MMT (USDA 77.0 MMT/73.6 MMT last year) and a total grain crop around 125 MMT. They plan to add 2.5-3.5 MMT to the country’s new state reserve stockpile, but that no purchases will be made for that initiative until the 2021/22 marketing year. Previous state reserves were depleted this year as supplies were solid into the domestic market amid the COVID-19 outbreak.
The Malaysian Palm Oil Board reported end June palm oil stocks were 1.901 MMT, slightly below the average estimate of 1.936 MMT (1.837-2.034 MMT range of ideas) and down from May’s 2.030 MMT and last year’s June stocks of 2.411 MMT. June palm oil production was much larger than expected at 1.886 MMT vs average expectations of 1.783 MMT (1.651-1.849 MMT range) and up strongly from 1.651 MMT in May and 1.511 MMT last year. June palm oil exports of 1.710 MMT were larger than average expectations of 1.650 MMT (1.369-1.729 MMT range) and up sharply from 1.369 MMT in May and 1.397 MMT last year.
French soft wheat harvest is now 10% complete vs 4% last week and 6% last year, while crop conditions slipped 1% good/excellent last week to 55%, the lowest since 2016. Corn crop conditions were unchanged at 83% g/e and compare to 78% g/e last year.
Bulgaria lowered their estimate of this year’s wheat crop to 4.5-4.9 MMT from 5.0 MMT previously and is down notably from last year’s 6.2 MMT.
The models remain in fairly good agreement for the rest of the week with rains focused on the eastern Midwest today, but look to fall mainly across WI, MI, the northern ¼ of IL, the northern 1/3 of IN and most of OH with totals of .50-1”. Amounts elsewhere look to be under .25” in these states and things look to be fairly quiet elsewhere. An area of rains is now expected to impact SW MN and the western ½ of IA and MO late tonight into tomorrow morning and bring .50-1”+. A few showers look to bring less than .50” to SE MN, S. WI, N IL and N IN Saturday night and early Sunday, with things quiet in most of the region for Monday and Tuesday. The 6-10 period continues to see the GFS noticeably wetter than the European. The idea is for waves of showers and thunderstorms to roll across the top of ridging across the central US. The European keeps most of the activity confined to areas north of I-80, as well as into central IN, with totals of .40-1” and coverage of around 75%. Totals elsewhere would be generally less than .40”. The GFS sees rains of .50-1”, with areas of 1”+, to fall in most of IA, WI, MI, IN, OH and the northern 2/3 of IL. The 11-16 day outlook remains mixed between the models. The GFS sees a west to east upper air flow to bring close to average rains and temps to the Midwest through the period. The European sees ridging to produce limited rains in most of the region, with above average temps. The GFS may have a slightly better handle on things, but may be a bit too aggressive with the rains.