AgResource Daily Farm Marketing Advice for Thursday: 1/Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec 2018 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec 2019 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop is March 2018 corn futures reach $3.72.
It’s been mixed and dull morning, with better than expected export sales supporting corn & beans, and with weak sales and a lack of fresh news weighing on US wheat futures. Crude has recovered its overnight losses, gasoline futures continue higher, and even ethanol has joined the rally.
However, there is more evidence that world wheat cash prices are unlikely to erode anytime soon, as a host of world import tenders have been released this week, and some details are starting to trickle in. Ethiopia has been offered wheat at $299/MT, including freight. Ethiopia paid $275/MT for optional origin wheat in September. EU wheat basis on Wednesday rallied slightly, and Russian offers are unchanged – and have been unchanged for weeks. Jordan & Saudi Arabia are also in the market this week for large tonnages. Taiwan is seeding 86,000 MTs of US wheat for Dec/Jan arrival.
US export sales through the week ending October 19th included 51 Mil Bu of corn, vs. 49 Mil in the prior week; 78 Mil Bu of soybeans, vs. 47 Mil the week before; and 13 Mil Bu of wheat, down 10 Mil on the week.
The week’s corn sales featured mostly enlarged demand from traditional importers Japan, Mexico and South Korea, but also included 14 Mil Bu sold to an unknown destination.
For their respective marketing years to date, the US has sold 638 Mil Bu of corn, down 30% from last year but a rather normal 34% of the USDA’s forecast; 966 Mil Bu of soybeans, down 17% from last year, also in line with the USDA’s forecast, but barely; and 557 Mil Bu of wheat down 6% from a year ago. The pace of corn sales so far in October has exceeded expectations.
China’s import quotas for 2018 are unchanged from 2017, and include 7.2 MMTs of corn, 9.6 MMTs of wheat and 5.3 MMTs of rice. Feedgrain imports in Sep rallied slightly amid improving margins there. China also aims to embark on a more robust ethanol blending program, with a 10% blend targeted by 2020. This would of course require elevated corn consumption, but would also cap feed imports amid higher DDG production.
Also weighing on rallies is ongoing weakness in major exporting currencies. Brazil’s real is down again to new 3-month lows. Australia’s dollar is inching lower, and following Canada’s decision to leave interest rates alone, the Canadian dollar has fallen 2% this week.
Midday GFS South American Weather Update: The midday South American forecast is again slightly wetter in Argentina over the next 10 days, and mixed but uneventful in Brazil. Spotty dryness will persist in small pockets of Mato Grosso do Sul, Goias and Minas Gerais in Central Brazil into mid-November, but otherwise monsoonal rains will expand northward beginning next week, and certainly enough moisture will fall to accelerate bean planting and germination. Weather concerns in Brazil have eased, but note Argentine planting progress will be updated after the close.
AgResource Market Comment: It’s clear that funds are – and will be – reluctant to take new positions until winter weather patterns are better known. In the meantime, we’ll continue to use fund short covering, and chart-based rallies, to extend old and new crop sales.
