#Grain #Futures Comments

-USDA attache optimistic on Chinese soybean imports
-No USDA sales announcements
-Brazilian soybean, corn, ethanol exports strong
-HRW conditions quite good, SRW struggling
-Corn planting across south moving along

 

Wheat prices were a bit lower overnight following the favorable HRW crop conditions reported yesterday afternoon. Corn was little-changed, while soybeans were supported by US/China trade optimism as talks move back to Washington this week. Argentine markets on are holiday today.

 

 The USDA ag attaché in China continues to express optimism for increased soybean imports in 2019/20 despite the rampant African swine fever epidemic sharply reducing hog numbers nationwide. Citing the expectation for increased poultry, beef and aquaculture production, as well as higher manufactured feed usage due to hog production shifting to commercial operations, the attaché said they expect China to import 91.5 MMT of soybeans in 2019/20, up from 88.0 MMT in 2018/19 and compares to 94.1 MMT in 2017/18. With China’s total hog population at the end of February down nearly 17% from last year, reflecting a decline in actual hog numbers of more than 55 million head, and no end in sight for the epidemic, the attaché’s view seems quite optimistic. Additionally, China’s last “official†estimate of 2018/19, old crop, soybean imports was 85.0 MMT, moderately below the USDA’s 88.0 MMT expectation, indicating a lower “starting point†heading into 2019/20. Adding more uncertainty to the attaché’s increased soybean import expectation, while they don’t see a decline in soybean meal feed usage, their expectation for 2019/20 at 69.3 MMT is only marginally higher than 68.6 MMT estimated for 2018/19. The attaché estimated 2019/20 Chinese soybean crush at 90.0 MMT vs 89.0 MMT this year (USDA at 88.0 MMT). A modest increase in soybean oil domestic usage is expected in 2019/20 to 16.8 MMT from 16.5 MMT this year. The attaché also is not estimating a notable impact on China’s rapeseed imports in 2019/20, amid the ongoing Canadian dispute, looking for a modest increase to 5.7 MMT from 5.5 MMT in 2018/19.

ï‚· There were no USDA sales announcements this morning.

 Yesterday’s first USDA Crop Progress report of the year put the winter wheat crop at 56% good/excellent (9% poor/very poor) vs wire service reported expectations of 55% g/e and obviously reflected a much better crop than last year’s early April rating of just 32% g/e (30% p/vp). Heading into the winter, the crop was rated 55% g/e. HRW conditions are quite good, being the 2nd best of the last 9 years for early April, while SRW is just the opposite having the lowest overall conditions since we started calculating nationwide by-class conditions in 1999. So far, no issues with corn planting across the south are being reported with TX 51% complete vs 41% avg, AL 28% vs 14% avg, MS 33% vs 32% avg and GA 48% vs 37% avg, while AR at 13% complete is slightly behind average of 20%. For more details on the USDA’s Crop Progress report, see our Market Insights post at https://portal.rjobrien.com/MarketInsights/Blog/Read/35459.

 The corn export line-up out of Brazil’s Paranagua port is very heavy over the coming two months with 800k tonnes already set to be shipped during April-May vs zero exported during the same period last year. During all of 2018, Paranagua ports exported around 1.0 MMT of corn.

ï‚· Brazil exported 9.0 MMT of soybeans in March vs 8.8 MMT last year as their export program seasonally kicks into high gear. Brazilian soybean exports got a jump start in February at an all-time record for the month at 6.1 MMT, shattering the previous Feb record of 3.5 MMT in 2017. Brazilian ethanol exports are running at the strongest pace in recent years with Feb and March exports roughly double those of a year ago, while Jan-March total exports of 364 million liters (96 million gallons) are up nearly 47% from last year and the highest in three years for the period. Brazil exported 892k tonnes of corn in March vs 605k tonnes last year, the 3rd highest on record for the month.

ï‚· The Brazilian soybean harvest is 75% complete vs 72% last year and 70% average. Their 1st corn crop is 59% harvested vs 60% at this time last year, while planting of the safrinha crop is complete. As of March 28, the Argentine corn crop was 16% harvested vs 13% average and 22% at the same time last year. Around 2% of the soybean crop had been harvested at the same time vs average of around 6%.

ï‚· Brazilian ag consultant, Datagro, sees the country’s soybean crop at 113 MMT vs 112.1 MMT previously, but remains below other ideas of late which have started to creep back higher towards 115 MMT. They see soybean exports at 68.5 MMT vs 84.5 MMT last year, comparable to the USDA’s 69.5 MMT estimate. They see the total corn crop at 94.1 MMT vs last year’s 81.8 MMT, with exports rising to 32 MMT from 21.5 MMT last year, while the USDA last put the crop at 94.5 MMT and exports at 29.0 MMT.