Weekly market review
The USDA announced a second round of Market Facilitation Payments this week with the following payments; corn at 1 cent per bushel and $1.65 a bushel for beans on the remaining 50 percent of production. Producers have until January 15th to apply if they have not already done so but have until May 1, 2019 to prove production.
Export inspections for the week ending December 13th, stayed consistent with the previous week’s levels on corn coming in at 34.8 million bushels. It was up slightly from last week by 345,000 bushels. Soybean loadings were at 35.8 million bushels, up 1.7 million bushels from the previous week. Wheat inspections were at 25 million bushels, up 8.5 million bushels from a week ago. Export sales for the same period were 77.7 million bushels for corn, 104.2 million bushels for soybeans and 11.5 million bushels for wheat. Mexico and Japan continue to be the big takers for corn and China purchased 54.7 million bushels of old crop soybeans.
The corn and soybean trade continues to lug forward hoping for more export sale announcements made to China. The rumor of a 3 million metric ton corn sale last week has traders expecting some purchase activity to happen in early January, but nothing has been official at this time. Corn export inspections are running 6 percent ahead of what’s need to meet the USDA projection. The soybean market has been under slight pressure as traders are becoming more aware that supplies are still abundant despite China returning to the US export market. Wednesday, the USDA confirmed a 44 million bu. sale to China, bringing the estimated monthly total up to roughly 136 million bu. Discussions continue to circulate of the possibility of another 5 to 6 MMT, which if realized would still leave the export figure below the USDA’s forecast.
Many traders and analysts have been discussing the strong likelihood that the USDA has overestimated soybean export demand, and many are wondering why futures values remain as solid as they have. Some believe the recent developments with China have led to hopes of larger unforeseen purchases to come and the technical structure have kept values supported.
South American weather is lending a little support to the soy complex as some heat and dryness is in the forecast for central Brazil and excessive moisture for regions in northern Argentina. It is still early in the growing season but as the first maturing beans in Brazil become ready for harvest in January, soil moisture going forward is more critical. Brazil weather is overall favorable but the fact that certain growing areas have seen only 50-75 percent of average rainfall over the last 60 days, has kept risk premium in the soybean market. Precipitation is in the forecast for many of the dry areas, but it has been in recent weeks while very little actually developed.
More new cases of African Swine Fever continue to be reported in China giving little indication that the spread is under control. Since the disease continues to spread, its creating tight pork supplies especially since farmers are not willing or able to repopulate their herds. Pork prices are expected to rise and China will likely buy significant amounts of pork on the world market, due to the tight supplies, especially since the high demand period of the Chinese New Year is coming up. The disease has cut China’s weekly soybean crush pace by 15 percent in the past month from the pace of last year. It is at the lowest level reported in the past 4 years. USDA is estimating an average reduction of only 4 percent.
November NOPA crush numbers released Monday were almost 1.5 million bushels below the average trade estimate at 167 million bushels, down 5.3 million bushels from October. While crush for November was disappointing, but the total crush since September 1 is more than 35 million bushels ahead of last year’s pace.
There has been talk that China could soon approve their reserve group to buy U.S. beef, pork, corn, sorghum, ethanol and DDGS, but not until after the first of the year. The markets will continue to watch and see if China is going to keep buying U.S. soybeans and if possible future purchases of other agricultural goods, all of which has been offering some support to the markets.
The weekly Ethanol report showed steady production at 1.046 million barrels per day, and stocks up nearly a million barrels at 23.873 million barrels, the largest since mid-October despite recent plant shutdowns. Poor margins are the key reason to the steady production numbers as more plants are slowing down.
For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page