#Grain #Futures Comments

-South American crop estimates begin to move back higher
-China buys US soybeans, but may be too little too late
-Optimism for Russian grain crop
-USDA reports today at 11:00 AM CT
-USDA reports soybean sales to China/HRW to Iraq

 

USDA’s Prospective Plantings report and quarterly Grain Stocks report will be out today at 11:00AM CT. A summary of the average trade estimates is on the following page. This week’s US/China trade talks were deemed “constructive†as both sides return to Washington next week for the next round.

 

 China returned to the U.S. soybean market yesterday, with traders estimating state agencies bought anywhere from 1.5-2.5 MMT of soybeans and expected to be for LH July-August shipment. While the additional purchases are obviously a welcomed development, putting their total purchases now around 13 MMT vs 28.7 MMT at this time last year, the fact the shipment period was for the very end of the 2018/19 marketing year is concerning as it likely signals any additional purchases made in the weeks/months ahead may not fall into the old crop balance sheet as demand needs over the coming months have already been covered with South American supplies or existing U.S. sales on the books. Without at least another 5 MMT in old crop soybean purchases by China, we feel the USDA’s 1.875 billion bushel export projection is clearly too high.

ï‚· USDA confirmed some purchases were made this morning in officially reporting the sale of 816k tonnes of soybeans to China for 2018/19 delivery. Sales of 150k tonnes of HRW wheat to Iraq for 2018/19 delivery were announced, as well.

 Upon completion of their recent crop tour, Agroconsult raised their Brazilian crop estimates, with the soybean crop now expected to be 118.0 MMT vs their previous estimate of 116.4 MMT and is solidly above CONAB’s latest official estimate of 113.5 MMT and modestly above USDA’s 116.5 MMT. Last year’s crop was 119.3 MMT. A recent wire service survey indicated average industry expectations for the crop at 114.2 MMT. However, Agroconsult lowered their estimate of this year’s Brazilian soybean exports to 67 MMT from 70.2 MMT previously (USDA 69.5 MMT and 84.2 MMT last year) citing increased competition from Argentina and the U.S. Agroconsult also raised their estimate of Brazil’s safrinha corn crop to 70.6 MMT from 68.9 MMT previously and is solidly above CONAB’s 66.6 MMT, as well as a recent wire service survey showing average expectations at 66.2 MMT, and is up sharply from last year’s 53.9 MMT. They see Brazilian corn exports this year at 31 MMT vs 32 MMT previously estimated and compares to USDA’s 29.0 MMT estimated and last year’s 25.4 MMT. In a very early look to next year, they also expect another increase in Brazilian soybean area to 36.6 million hectares (90.4 million acres) from this year’s 36.0 mil hectares (89.0 million acres).

ï‚· The Buenos Aires Grains Exchange raised their estimate of the Argentine corn crop to 46 MMT from 45 MMT previously as yields are proving better than expected. They said the crop is now 12% harvested, with the soybean crop 2% harvested. They maintained their estimate of the soybean crop at 53 MMT. USDA was last at 46.0 MMT for corn and 55.0 MMT for soybeans.

 The head of the Russian Grain Union, a farmers’ lobby group, said this year’s total Russian grain crop could set a new all-time record in surpassing 2017’s 135.5 MMT if weather conditions remain favorable throughout the growing season. He estimated around 5-6% of winter crops are in poor condition, which is a typical level, while commenting that private estimates that have been floating around of this year’s grain crop in the 119-127 MMT range are too low.

ï‚· Ukraine has exported 13 MMT of wheat so far, vs 14 MMT at this time last year, with milling wheat exports hitting 8.4 MMT. Corn exports have totaled roughly 20 MMT vs 12 MMT at this time last year.

 French winter wheat conditions declined this week to 82% good/excellent from 85% g/e last week and compares to last year’s 78% g/e at this time.

ï‚· The EPA is expected to make decisions on the 2018 small refinery biofuel waiver requests sometime in April. There are currently 39 waiver requests on file for the 2018 compliance year, while the EPA has granted 35 waiver requests for 2017 with 1 still outstanding.