-Chinese crush margins soaring amid soybean supply concerns
-Export Sales strong all around
-Argentine farmers expected to be tight holders of this year’s crops
-Ukraine has no plans to limit exports
-Trade estimate summary for March 31 USDA reports
USDA will release the quarterly Grains Stocks report and Prospective Plantings report next Tuesday, March 31, at 111:00 AM CT. A summary of the average trade estimates is on the following page. Our pre-report commentary/analysis can be found on Market Insights at https://portal.rjobrien.com/MarketInsights/Blog/Read/39522.
Ongoing concerns of having available soybean supplies to keep crush facilities operating moving forward have resulted in surging Chinese crush margins to the highest level in 8 years ($50.73/tonne – $1.38/bu) in Shandong province. Chinese port stocks of soybeans are said to be near 10-year lows as South American vessels have been slow to arrive.
Transportation limits/controls and weak prices (roughly $20/tonne below year ago levels) are leaving many Argentine farmers deciding to personally store as much of this year’s crop as possible as harvest progresses. Some expressed plans to sell only as much off the combine as needed to meet money flow needs, with plans to store the rest until at least September.
One of the major Brazilian towns previously at risk of limiting the movement of soybeans due to the coronavirus pandemic is no longer so as the decree to halt movement was amended to allow grain exports to continue indefinitely.
Ukraine’s ag minister said they have no plans to limit food/grain exports as a result of the coronavirus situation. However, Ukrainian wheat exports prices over the last week rose notably, as did other global values, amid concerns of slowing Russian exports, as well as farmers reportedly being tight holder of supplies given the overall uncertainty. Black Sea port 12.5% protein wheat export values rose $7/tonne since the start of the week to $207-$211 fob.
Indonesian palm oil/product exports in January were 2.39 MMT, down solidly from December exports of 3.72 MMT and year ago Jan exports of 3.25 MMT.
Please see our Market Insights post at https://portal.rjobrien.com/MarketInsights/Blog/Read/39530 details on the USDA Export Sales report.
U.S. corn sales were 1.814 MMT (71.4 million bushels), at the very top end of expected strong sales of 900k-1.8 MMT and were the highest of the 2019/20 marketing year so far. Strong sales were anticipated given the previous USDA daily announcements of sales being made to China, which were reflected in today’s data with 756k tonnes in total sales.
U.S. soybean sales last week of 904k tonnes (33.2 mil bu) were above market expectations of 400-800k tonnes, were a 13-week high and were notably better than last year’s same-week sales of just 9.1 million bushels. This week’s activity included 199k tonnes in sales to China, along with nearly 500k tonnes in new sales reported as unknown.
U.S. wheat sales were solid, as well, at 740k tonnes (27.2 mil bu), above market expectations of 200-500k tonnes as well as last year’s same-week sales of 17.4 million bushels, and were the highest in 13 weeks. This week’s activity included 200k tonnes to China, 170k HRW and 30k HRS, as well as 165k to South Korea and 144k to Japan. The 170k tonnes in old crop HRW sales to China were more than reported by USDA in the daily announcements as only 55k tonnes were included at the time.
U.S. soybean meal sales of 251k tonnes were within market expectations of 100-350k tonnes, recovering strongly from the previous week’s 80k tonnes and were the 2nd highest of the last 8 weeks. Soybean oil sales of 56k tonnes were well above market expectations of 8-30k thanks to 35k tonnes in sales to South Korea. Total commitments are now up nearly 52% from last year, the largest year-over-year gain of 2019/20, spurring the need for another USDA export projection increase.