-FSA program acreage data supports markets, but caution warranted
-USDA reports more soybean sales to China/unknown
-China corn auction fully sells again, but price lower again
-New crop soybean export sales huge – total sales at historic highs
The USDA issued their first report of prevented plantings claims of the year yesterday and will continue to update these numbers on a monthly basis. Through July 31, 5.375 million acres of corn was claimed as prevent planting, with 1.223 million acres soybeans and 1.195 mil acres wheat. Total prevent planting claims so far are 8.991 million acres among all crops. Last year’s disastrous situation saw 11.4 mil acres of corn, 4.5 mil acres soybeans and 2.2 mil acres of wheat claimed as prevent plant area. This represents another year of historically high prevent planting claims as the five years prior to 2019 averaged 3.8 mil acres in total claims, with corn averaging 1.4 mil, soybeans 0.8k and wheat 1.0 mil acres. The lion’s share of corn prevent plant claims this year are in the Dakotas and Delta with 1.75 mil acres in ND, 898k in SD, 501k in AR, 289k in LA and 562k in MS, with these 5 states accounting for 4.0 mil of the 5.375 mil acres in total claims so far. In the June 30 Acreage report, the USDA’s sum of total major crop planted acreage this year was 246.5 mil acres, which was obviously up from last
year’s debacle of 237.8 mil acres, but 5.5-7.4 mil acres below the 252.0-253.9 mil total acres in 2015-2018. The large prevent planting claims obviously helps explain the lower than expected acreage numbers reflected in the June 30 report. While the 9.0 mil acres in total prevent plant claims so far may call into question the USDA’s corn acreage estimate of 92.0 mil acres, keep in mind total major crop planted acreage from 2012-2014 was 255.9-257.9 mil acres, which should be used as the measuring stick when looking at total acreage comparison. This year’s estimated total major crop acreage of 246.5 mil acres was 9.4-11.4 million acres below the range of acreage from 2012-2014, allowing the 9.0 mil acres in total prevent planting claims to fit within that total acreage base. Also keep in mind, in last year’s horrendous situation, only an additional 365k acres in total prevent planting claims was added from the first reporting in early August to the final numbers, with corn adding 223k acres and soybeans 111k. This year is different, though, as penalties for late filing were removed due to COVID-19, which could result in increased later claim filings than usual. However, we would still be cautious making any implications that corn and/or soybean acres are materially lower than current USDA estimates reflect based on the FSA data yesterday as the typical comparison of reported program acres so far to USDA current acreage estimates may not be valid given the late filing allowance.
USDA reported new crop soybean sales of 197k tonnes to China and 202k tonnes to unknown this morning. They also reported 110k tonnes in corn sales to unknown, with 30k old crop and 80k new crop.
China’s weekly corn reserve auction saw another 100% sale rate with 4.0 MMT bought this week, bringing total reserve corn sales so far to 47.9 MMT vs 20.1 MMT so far by this time last week. The average selling price, though, declined for the 2nd consecutive week to 1959 yuan/tonne ($282, $7.16/bu) and was down roughly $9/tonne from two weeks ago.
Strategie Grains lowered their estimate of the EU soft wheat crop to 128.0 MMT from 130.3 MMT previously and compares to last year’s very strong 147.2 MMT crop. They also lowered their 2020/21 wheat export estimate to non-EU destinations to 23.1 MMT from 25.3 MMT last month and will be down sharply from last
year’s 35.6 MMT. The corn crop was ticked higher to 67.4 MMT from 66.6 MMT last month and compares to last year’s 64.2 MMT.
Iraq’s annual wheat purchase program from local producers ended with more than 5 MMT of wheat having been bought. The government needs 4.5-5.0 MMT of wheat annually for its subsidized food program so they are seen as being self-sufficient this year.
Germany’s farm cooperative association lowered their estimate of this year’s wheat crop to 21.5 MMT from 22.5 MMT previously and is down from last year’s 23.1 MMT. The winter rapeseed crop estimate was estimated at 4.0 MMT vs last year’s 3.4 MMT.
The Czech Republic raised their estimate of this year’s wheat crop to 4.71 MMT from 4.55 MMT previously, putting the crop in line with last year’s 4.81 MMT.
Two South Korean feedmills passed on overnight corn tenders totaling 134k tonnes citing prices being too high.
After buying only 120k tonnes of Russian wheat in their tender earlier in the week, Egypt tendered again for wheat yesterday after the close for Oct 1-10 shipment.
Please see our Market Insights post at https://portal.rjobrien.com/MarketInsights/Blog/Read/41114 details on today’s USDA Export Sales report.
Soybean sales were very large with old crop sales of 577k tonnes (20.9 mil bu) above expectations of 100-550k and new crop sales huge at 2.839 MMT (104.3 mil bu) sharply above expectations of 1.1-1.8 MMT. We would note USDA stated 356k tonnes of the old crop sales were late reported and were to China, which implies they were not made during this week’s reporting period and should have been included in previous sales data. Total new crop commitments are now at 661 million bushels vs 164 million last year at this time and are now right in line with all-time high new crop sales as of early August of 658-665 mil bu for the 13/14 and 14/15 marketing years.
Old crop corn sales last week were 377k tonnes (14.8 mil bu), within expectations of 100-400k tonnes, but were the largest in four weeks. This week’s activity included 77k tonnes of old crop sales to China. New crop sales were only 553k tonnes (21.8 mil bu), which were within market expectations of 300k-1.0 MMT but generally uninspiring.
U.S. wheat sales last week were 368k tonnes (13.5 mil bu), in the lower portion of market expectations of 250-800k tonnes and were the lowest in five weeks.
Old crop soybean meal sales were 182k tonnes, at the bottom end of market expectations of 150-450k tonnes, but still sharply above the minor 36k tonnes/week we estimate sales need to average in order to reach the USDA’s export projection. Old crop soybean oil saw minor net cancellations of 2.5k tonnes, but strong new crop sales of 48.7k tonnes vs expectations of 0-5k tonnes.