-Ideas of Chinese 10 MMT tariff-free soybean import allotment appear confirmed
-Cattle on Feed report trade estimates
-USDA reports small soybean sale to unknown
-South American forecast remains favorable
-Next week’s U.S. forecast ideas extremely divergent
ï‚· Chinese officials held a meeting yesterday with state and private soybean crushers to announce the allowance of an additional 10 MMT of tariff-free U.S. soybean imports, confirming the overnight market talk Tuesday, and will be available for shipments through March. This essentially allows for purchases/imports of around 15.5 MMT (5.6 MMT already on the books) to occur prior to the harvest of the new South American crop and represents a typical trade pattern flow of U.S. exports to China. Purchases moving forward, though, will still be subject to price competitiveness which U.S. soybeans are still overprices relative to Brazil. However, as Brazil’s soybean exports continue to seasonally, U.S. sales/shipments should take place. The full shipment of the additional tariff-free allocation would put 2019/20 exports to China modestly above last year’s 13.3 MMT. In our opinion, exports of 15-16 MMT to China are largely accounted for in the USDA’s 1.775 billion bushel export projection, with additional purchases beyond this latest allotment possibly being needed in order to justify an increase in the USDA’s projection down the road. ï‚· Friday afternoon, USDA will release the monthly Cattle on Feed report at 2:00 PM CT. The average trade estimate of On Feed as of October 1 is 98.9% of last year (97.7-99.8 range of ideas) and would be the 2nd consecutive month of lower year-over-year on feed numbers in what would be the first such occurrence since November and December 2016. Sept 1 on feed was 98.7% of last year. The average estimate of September placements is 101.6% of last year (95.1-107.6 range) vs 91.0 in August, while September marketings are estimated at 100.9% of last year (98.2-101.5 range) vs 98.5% in August. ï‚· USDA reported the sale of 128k tonnes of soybeans to unknown for 2019/20 delivery this morning. ï‚· China imported 140k tonnes of corn in September, down from 230k in August, but above year ago Sept imports of just 40k tonnes, bringing 2019 calendar year-to-date imports to 3.87 MMT vs 2.92 MMT at the same time last year. China imported 162k tonnes of pork in September, putting year-to-date imports at 1.33 MMT, up 44% from last year. ï‚· Algeria is believed to have bought around 600k tonnes of milling wheat for December shipment at prices of $228-$229/tonne c&f, with France expected to be the likely supplier as usual. ï‚· French corn growers association AGPM estimated the country’s corn crop this year at 12.3 MMT, slightly below the recent Ag Ministry’s official estimate of 12.5 MMT, which reflected essentially unchanged production from last year. ï‚· India announced a 4.6% price increase for domestically-produced wheat in 2020 purchased for state reserves, which was the smallest increase in 5 years. India continues to struggle with extremely high stocks, sitting at 39.3 MMT at the end of September vs typical reserve stocks around 20.7 MMT. Despite extremely large stocks, Indian wheat is not competitive for exports given the high support prices paid to farmers. Weather Conditions across the corn belt look mostly dry through the end of the week, with Saturday rains expected for MO, IL, IN, MI and OH of .50-1†with mostly less than .35†expected elsewhere. Next week’s outlook remains quite uncertain as the models vary considerably. the European model indicates a powerful autumn storm to bring widespread precip to all of the Midwest, including at least an inch of rain for all areas and as much as 8-10†of snow for much of IA, the SE corner of MN and NW 3/4th of WI. The GFS indicates fairly quiet weather to occur the second half of next week, with just a few light showers producing generally less than .35â€. Below average temps are expected for the next 10 days. Rains of .50-1.5â€+ will fall across the northern Brazilian states of Mato Grosso, Goias and Minas Gerais, as well as into most of the Argentine growing regions in the next 5 days. Totals in the rest of the Brazilian growing regions look to be under .35†in the next 5 days. The 6-10 day period sees rains of .50-1.5â€+ to fall in most of the Brazilian growing regions, with totals of .35-1†in northern ½ of the Argentine growing regions and .25-.75†in the southern Brazilian growing regions.
