For fear of jinxing it, I want to say it quietly, but if we are not careful, we could see prices for the grain and soy markets close higher this week. Granted, I suspect that much of the strength we have witnessed, including this morning, can be attributed to pre-report short covering. After three weeks in a row of fairly substantial selling and erasing 60% of the summer rally, that seems like a reasonable thing to do, particularly in light of the ongoing uncertainties pertaining to the size of crops this year. While we could witness a little more short-covering between now and Monday, I really would not mind seeing prices just lay flat between now and then. As we wait though, here again, are the trade survey estimates;
Corn acreage planted is expected to be 87.8 million, which would be down 3.9 million from the currently in use figure. With an average projected yield of 164.9 bpa, this is expected to produce a crop of 13.170 billion bushels, which would be down 705 million from the last estimate. Backing into the number, this means the trade is expecting a harvested acreage of 79.87 million or 90.9%. Looking at beans, the expected planted acreage came through at 80.95 million, up just 950,000 from the current estimate. The average yield is expected to be 47.5 bpa, bringing us a crop of 3.793 billion, which would be 52 million bushels lower than the July figure. This means the average estimate for harvested acreage is 79.85 million, or 98.6%. The average estimate for All Wheat production is 1.927 billion bushels. Of this 1.295 billion is winter, 810 million is hard red, 256.5 million soft red, 227.5 million white, 571 million other spring, and 57.5 million durum. As far as domestic ending stocks, the average estimates for 2018/19 have corn at 2.389 billion, beans 1.066 and for the 2019/20 crop year corn is expected to drop to 1.595 billion, beans to 816 million and wheat at 998.5 million. Finally, for the world ending stocks numbers, 2018/19 corn is expected to show 329.84 MMT, beans 113.27 MMT and wheat 275.02 MMT. Then for 2019/2020 corn at 290.09, beans of 104.77 and wheat at 284.08.
During the month of July, it would appear that China was on a commodity import spree. Not only were bean imports at the highest level in a year at 8.64 MMT, but they were also big importers of iron ore, copper, coal, and crude oil. Now, you could interpret this in a couple of different ways. It could be they just needed to replenish depleted supplies. Someone who is cynical could suggest they anticipated the drop in the Yuan and wanted to buy ahead. Or it could be indicating that their economy has now adjusted to the ill effects of the trade war and is beginning to show signs of growth once again. I certainly do not have any specific insight to this, but if it is the latter, it could help explain at least a portion of their current stance. Do note though that exporters in South America report that China has recently become a bit more price resistant.
It is Thursday morning, and for most weeks that means weekly exports sales, but once again we have little good news to report. In fact, the only positive news was in wheat where we sold 487,700 MT or 17.92 million bushels. This was toward the upper end of estimates and was 27% above the previous week and 17% above the 4-week average. The Philippines were the top purchaser with 76.6k MT, followed by Mexico at 71.4k and then Japan with 68.5k. Soybean sales were at the low end of estimates with a total of 101,700 MT or 3.74 million bushels. This was 29% below last week but sadly still 25% above the 4-week average. China was the top buyer with 126.2k MT, followed by the Netherlands taking 112.9k and then South Korea with 49k. There were sales of 318.3k MT reported for the 2019/2020 crop year though. At the bottom of the list though is corn where we only made sales of 42,600 MT or 1.68 million bushels. This was 70% below last week and 82% below the 4-week average. Saudi Arabia was the best buyer with 59.3k MT, followed by Mexico with 42.9k and then El Salvador at 30.4k, but cancellations of over 160k took away the majority of that. Do you think the strong dollar could be haunting us?