Restocking those shelves

Published on: 10:04AM Aug 07, 2020

After seeing many of the bean shelves become alarmingly barren a few months back, China has been on a mission to restock the larder.  Thus far, the import pinnacle was set in June when they unloaded 11.16 MMT, but they did not fall far from that pace in July with imports of 10.09 MMT.  This was 17% above the same month a year ago, and for the first seven months of this year, their total bean imports are now 17.7% above 2019. Of course, the lion's share of these to date have been sourced from Brazil. That will be changing soon, though, as supplies from the Southern Hemisphere dwindle, and as we have witnessed over the past several weeks, purchases of U.S. beans have increased dramatically and sales already on the books for the next marketing year sit at a six-year high.  They added to that pile again this morning as the USDA reported the purchase of another 456,000 MT.

With the crop-positive weather most are experiencing, it has been a rough week for corn and soy prices.  If we wrapped up the first week of August right now, we would find corn down a nickel, Chicago wheat down thirty cents and beans down eighteen.  While the weather does not appear to hold many surprises ahead, assuming you do not live along the eastern seaboard, we do have reports from Uncle Sam next week, and they always carry the potential for a shocker.  Here are a few of the just-released trade estimates; Corn yield of 180.4, which would be up nearly 2 bushels from the last number, resulting in total production of 15.17 billion, 170 million higher than last month.  The 2019/20 corn ending stocks are expected to increase 17 million to 2.265 billion, and the 2020/21 number is projected to grow 152 million to 2.8 billion.  The national bean yield is expected to come through at 51.3, which would be up 1.5 from last month.  This would result in production of 4.258 billion, up from 4.135.  The 2019/20 ending stocks are expected to slip 4 million to 616 million, but the 2020/21 ending stocks are pegged at 525 million, which is an increase of 100 million from the July estimate. All wheat production is estimated to total 1.833 billion, up 9 million from last month, and ending stocks are expected to climb 5 million to 942 million.

Looking around at global crop updates, it would appear that dry weather continues to impact several regions.  Corn conditions in France we lowered for a second week in a row, this time by 3%, taking the good/excellent rating down to 74%.  The warm, dry conditions have allowed farmers there to virtually wrap up the wheat harvest, and spring barley harvest jumped from 56% complete to 83%.  Dry conditions (as well as a few unwanted locusts) continue to create problems in Argentina, and the Buenos Aires Grain exchanged trimmed the area planted to winter wheat by 300,000 hectares (741k acres) and believe the crop will fall short of the 21 MMT previously projected.  This week's exception comes from the private Ukraine group ProAgro, who increased their estimate for the 2020 Ukraine grain crop to 76.15 MMT, which would eclipse the record harvest of 75.1 set this last year.  At this point, at least, they seem to stand alone with this assessment.

Finally, this week, we find slightly encouraging numbers in the July jobs data, as during the month, the US economy added 1.8 million jobs, and the unemployment rate dipped 9/10th of a percent to 10.2%, almost back down to the 2009 peak. We will dig a bit deeper into the figures in the weekly newsletter.