-All about the weather as long-term forecast remains wet
-Export Sales mostly uneventful
-EU wheat/corn crop ideas bumped lower
The forecast over the coming two weeks continues to look very wet, particularly across the west. Given the forecast, Monday’s Crop Progress planting update will be critical to see just how much was able to get done this week ahead of the return of some very heavy rains to come. The forecast clearly will keep market participants speculating on the degree of acreage reductions from the March Intentions report, while there are starting to be some shifting ideas on soybean acres, as well, with potential reduced area being cited rather than picking up lost corn acres given the prolonged wet forecast. It may be a bit early for that just yet, but the tone has definitely shifted over the last week to finally putting some risk premium back in the market. Thankfully, the old crop balance sheets provide plenty of breathing room for reduced new crop acreage ideas, particularly amid the lackluster demand situation, but the potential impact of the psychological shift in market attitude should not be underestimated.
Strategie Grains slightly lowered their estimate of the EU soft wheat crop to 143.9 MMT from 144.8 MMT previously, but remains solidly up from last year’s poor crop of just 127.2 MMT. Some areas in eastern Europe saw fairly dry conditions earlier in the growing season, resulting in the pull back in their crop estimate, but improved rains of late have stabilized conditions and keep overall crop prospects quite good. The EU barley crop is now seen at 60.3 MMT vs 61.0 MMT previously and 55.8 MMT last year, while corn production is estimated at 62.9 MMT vs 63.1 MMT previously/61.6 MMT last year.
China’s Xinhua News Agency reported that soybean planted area in Heilongjiang and Jilin provinces, as well as central Henan province and Inner Mongolia Autonomous Regions is expected to increase around 10% from last year as greater emphasis is put on domestically producing soybeans. Expanding soybean production in China has been occurring in recent years, with these ideas no surprise, but total area/production still reflects a very small portion of their total demand. China produced just 16 MMT of soybeans last year vs total demand of around 103 MMT.
USDA Ag Secretary Perdue said they are eyeing an expedited additional farmer aid package of $15-$20 billion, which will likely be handled similar to the previous $12 billion package last year.
Taiwan bought 65k tonnes of optional U.S. or Brazilian corn at +97.85 cents CZ9 c&f for July-August shipment.
Please see our Market Insights post at https://portal.rjobrien.com/MarketInsights/Blog/Read/35977 for details on today’s USDA Export Sales report.
U.S. soybean sales were reported at 371k tonnes (13.6 million bushels), which were at the upper end of market expectations of 100-400k tonnes. However, that reflection of sales activity is better than it actually was as USDA revised last week’s net cancellations further to -9.9 million bushels from the original reporting of -5.5 million bushels, putting effective sales this week at 9.2 million bushels (~250k tonnes) instead. Total soybean sales over the last two weeks were just 3.7 million bushels (~100k tonnes) combined.
U.S. corn sales last week of 553k tonnes (21.8 million bushels) were a bit above rather modest market expectations of 200-500k tonnes and were up from the previous week’s marketing year low 11.3 million bushels. However, they were still well below last year’s same-week sales of 38.7 million bushels and, more importantly, were still below the roughly 22.7 million bushels/week “needed” pace.
New crop wheat sales of 419k tonnes (15.4 mil bu) were above market expectations of 150-350k tonnes and similar to last week’s 15.2 million, with 2019/20 total sales now at 109 million bushels, solidly above last year’s new crop sales at this point of just 71 mil bu, but are comparable to new crop sales the prior two years of 100 mil and 108 mil bu in early May.
U.S. soybean meal sales last week of 196k tonnes were within market expectations of 100-250k tonnes and were the best in three weeks, while SBO sales of 11k tonnes were in line with expectations of 5-25k tonnes, as well.
A minor disturbance looks to bring totals of generally less than .50” and coverage of around 55% to areas generally north of I-80 later today and tomorrow, but otherwise, conditions will be mainly dry across the region for the next 2 days. An area of low pressure then looks to bring rains to the region by Saturday night into Sunday and Monday. The models remain in good agreement with the details and see totals of 1-2”, with areas of 2”+, to fall in much of MN, IA and the northern ½ of MO. Totals in the rest of the Midwest look to be in the .50-1.5” range with some 1.5”+ amounts also likely. The only areas to see less than .50” fall are the southern 1/3 to ½ of IL, IN and OH. By Tuesday and Wednesday of next week, a similar low pressure system is indicated to move into the Midwest and the models are also in good agreement with the details regarding this system. Current ideas call for the potential .50-1.5”+ to fall, with nearly 100% coverage. Yet another low is now indicated to bring rains of most of IA, MN and WI by the very end of next week. Very early estimates on amounts are running in the .50-1”+ range.