Grain markets ended the day mixed on Monday:
Corn – 1 cent/bu (Mar @ 3.75 ¾ )
Soybeans + 7 ¾ cents/bu (Jan @ 8.97 ¼ )
Chi Wheat – 1 ¾ cents/bu (Mar @ 5.22 ¾ )
Cdn $ +0.00195 (75.585 cents)
WTI Crude Oil -0.20/barrel (59.00)
Soybeans were the star of the USA grain world again today, as aggressive Chinese buying of American soybeans allowed the bean complex to rally significantly. The Chinese government allowed buyer to book up to 1 million tonnes of USA beans with no import tariff, and traders announced the purchase of 5 cargoes this morning (300,000 tonnes) as a result. Shipment terms call for January/February 2019 delivery. The move was called a goodwill gesture by the Chinese, as trade negotiations continue on an hour by hour basis. In October, China had offered tariff waivers on up to 10 million tonnes of American soybeans, but those waivers had all been used up.
Tomorrow, the USDA will issue it’s December Crop Report. The December Report does not adjust USA production numbers; those numbers are generally “finalized” in the January Report. As a result, the December Report is typically anti-climatic, but the USDA could surprise by adjusting USA export numbers, and they most certainly will make adjustments to World Supply and Demand values. Below are the average trade guesses for tomorrow’s report:
USA 2019/20 Carryout (in Billion Bushels)
Ave Trade Guess Estimate Range USDA Nov 2019
Corn 1.191 1.890 to 1.960 1.910
Soybeans 0.476 0.455 to 0.500 0.475
Wheat 1.010 0.989 to 1.025 1.014
2019/20 World Carryout (in Million Tonnes)
Corn 295.52 292.00 to 298.20 295.96
Soybeans 95.46 93.90 to 96.80 95.42
Wheat 286.18 283.90 to 288.50 288.28
2019/20 South American Production (in Million Tonnes)
Argentine Corn 49.77 49.00 to 50.00 50.00
Argentine Soybeans 53.00 52.00 to 54.00 53.00
Brazilian Corn 100.93 100 to 101.50 101.00
Brazilian Soybeans 123.03 122.00 to 124.00 121.60
The fear with tomorrow’s Crop Report is will the USDA raise USA carryout numbers, given the slow pace of new crop exports so far this year, particularly for corn and wheat. On the world stage, the USDA could be expected to lower overall world wheat production, due to ongoing issues in many wheat producing exporters. It is likely too early in their growing season for the USDA to be making too significant a change to South American production levels.
Corn trade was VERY quiet today, as corn futures made no effort to follow the stronger soybean complex. We could see modest short covering in corn ahead of the report tomorrow, but it seems unlikely that the USDA will have much in the way for bullish surprises in the corn balance sheet. This afternoon the USDA released it’s weekly Monday Crop Progress Report, and that report showed that 92% of the USA 2019 corn crop has now been harvested (the range of trade estimates was 92 to 94% complete). States with the lowest completed percentages are North Dakota (43% done), Michigan and Wisconsin (both 74% complete), and South Dakota (83%). There is still well over a billion bushels of corn still in the field – again, not expected to be reflected in tomorrow’s Crop Report though.
Wheat trade was also very quiet today. Funds have slowly built a small long position in Chicago wheat futures, which always sets up the risk of a sell off, in the event of a bearish report, but with the potential for the USDA to make cuts to their Australian and European wheat numbers from November’s Crop Report, the likelihood of fund selling tomorrow morning is light.
On the day today, funds were credited with buying 11,000 soybean contracts (short 73,000 overall), selling 5,000 corn contracts (short 107.000 overall), and selling 3,000 Chicago wheat contracts (long 15,000 overall).