Need a dose of China-lax

Published on: 08:13AM Dec 10, 2019

I am at the National Grain and Feed convention this week, and yesterday, Ag Secretary Sonny Purdue told the audience here that President Trump does not want to implement the next round of tariffs on the 15th of December but wants to see “movement” from China to avoid them. It almost sounds like a digestive issue. While I am not sure it was in direct response, but China did purchase 300,000 MT of beans yesterday, the most in several weeks, of the 1 MMT Beijing that is going to allow tariff-free.  They also commented that they “hoped” to make a deal with the U.S. as soon as possible.  We shall have to see if that was movement enough or if there will need to be another dose of “laxative” to get things moving once again.

With the Chinese New Year rapidly approaching, the government there appears to be stepping up their efforts to get pork into consumers' hands.  This week, they will auction 40,000 MT from state reserves, which is four times the amount they had made available during any of the three previous sales back in September.

Providing a counterbalance to this semi-encouraging news this morning is what now appears to be a favorable start for the production year in Brazil.  According to AgRural, 93% of the intended beans are now planted, which is right on at the 5-year average, and the current weather outlook through the balance of December looks favorable.  We have all been warned not to count the chickens before the eggs have hatched, but a number of the estimates are pointing towards a record 123 MMT crop.  Full-season corn also appears to be progressing nicely with crop ratings in the major states in the 88 to 90% good/excellent range.  Argentine farmers have not been quite as fortunate, and dry conditions remain a concern.  According to the Buenos Aires Grain Exchange, soybean planting has reached 49.3% complete, with 68% of that rated good/excellent.  Corn planted reached 48.7% complete, up just 2.5% for the week, and of this 54.7% is rated good/excellent.  Dr. Cordonnier lowered his estimated for Argentine beans 1 MMT to 53 MMT and corn 1.5 MMT to 47.5 MMT this week.

As I commented yesterday, it has become a moot point for most, but the USDA reported that corn harvest had reached 92% complete.  This was up 3% for the week and is 8% behind average.  The three stand out states remain as Michigan and Wisconsin, both 74% complete and North Dakota at 43%.  If my calculations are correct, this would mean there are 452 thousand acres yet to harvest in Michigan, 738 thousand in Wisconsin, and 1.887 million in North Dakota.  Using the current USDA yield estimate, this would imply that there are over 456 million bushels yet to be harvested in those three states.  That was the last crop update until the spring of next year.

Wet weather has continued to create issues for French farmers as well. Not only has it kept corn harvest moving ahead at a snail’s pace, but it has also hindered the planting of winter crops.  The farm ministry now projects that winter wheat planted will be down 4.8% from last year and 5.6% from the 5-year average, winter barley down 4.3% for the year and 9.2% under the 5-year and rapeseed down 4.9% on the year and a whopping 26.8% below the 5-year average. Sacrebleu!

The final and ideally least important crop report of 2019 will be released later this morning, and here again, are trade estimates for ending stocks; For domestic corn, the average estimate is 1.861 billion bushels, compared with 1.91 last month.  Beans are expected to come through at 474 million versus 475 and wheat at 1.009 billion compared to 1.014 billion.  For the global ending stocks, the average estimate stands at 296.1 MMT for corn versus 296 last month, beans at 95.9 MMT instead of 95.4, and wheat at 286.9 MMT versus 288.3.