It would appear that more than just the commodity markets have grown uncomfortable with the prospects for a quick resolution to the U.S./Chinese trade spat. Up until last weekend, the equity markets had been steadily climbing, primarily on positive signs that the global economy was on the rebound, as well as the belief that the trade war would soon be over and we actually saw the S&P 500 climb to a new high and high close last week in response. This may have been a classic case of counting the chickens before they hatched and after the relations appear to have soured over the weekend, so has the trade in equities. While not a wipeout per se, but at this point, we have erased most of the gains for the past five weeks and have longer-term technical indicators on the cusp of turning negative. I would not say this will have an impact on what happens during the negotiations that have begun again this morning, but the White House does appear to pay quite a bit of attention to the equity markets, using them as a barometer for how the world measure their performance.
CONAB released updated estimates for Brazilian crops this morning which breakdown as follows; Total soybean production of 114.313, which is up from their last figure of 113.823. Take note that they are below the USDA and most private estimates at this time. They also reduced the bean export projection for this crop year by 2 MMT to 68 MMT. They are calling for total corn production of 95.254 MMT, which is up from 94.008 last month and is also lower than the USDA and many private figures. They kept their export projection unchanged at 31 MMT.
Of course, tomorrow the USDA will release the May estimate and here again, are trade survey averages. U.S. corn production for this year, 14.841 billion bushels derived from an average yield of 175.3 bpa. Beans production is estimated to come through at 4.1985 billion from an average yield of 49.8 bpa, and total wheat is expected to tally 1.910 billion, of which 1.277 billion will be winter wheat. For ending stocks figures, in corn, the trade is expecting 2018/19 stocks of 2.058 billion and 2.132 billion for the 2019/20 crop year. In beans, the average estimate for 2018/19 is 923 million and then for 19/20, 925 million. Old crop wheat is expected to come in around 1.096 and then slip to 1.060 for 2019/2020. Looking at South American, the average estimate for the Brazilian crops put beans at 117 MMT and corn at 96.7 MMT. Argentine beans are estimated to be 55.7 MMT and corn 48 MMT. Last but not least, global ending stocks estimates for 2018/19 have corn at 315.7 MMT, beans at 108.75 MMT and wheat at 276 MMT and for 2019/20, 305.75, 110.2 and 277.3 respectively.
Weekly export sales have been released this morning and if you thought last week was bad, wait until you get a load of these. For the week ending May 2nd, we sold 287,600 MT or 11.32 million bushels. Not only was this 51% below last week and 60% below the 4-week average, but it also set a marketing year low. The top sales were made to Colombia with 112.6k MT, Japan at 33.4k and then Guatemala with 30.5k. Now, if you thought that was poor, over in beans, we actually record a negative 149,100 MT or -5.48 million bushels. There were sales made to the Netherlands of 141.7k MT, South Korea of 57.1k and Colombia of 21k but of course, several reductions, the largest being unknown destinations of 263.5k MT. While at least positive, wheat sales were very light at only 90,600 MT or 3.33 million bushels. Nigeria was the top buyer with 46.8k MT, followed by the Philippines at 30k and then Colombia with 29k. Take note that this morning in the daily system, the USDA reported sale of 107k MT corn to Colombia and 369,000 MT beans to unknown.
Needless to say, with all the dour and anxious news around this morning and a drier weather outlook to boot, grain and soy markets are under pressure.