May 03, 2018
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Contrary to recent beliefs, it can rain here in Northern Illinois as we were fortunate enough to receive anywhere from 1 to 3” of H2O overnight. From the looks of the weather maps, there was a solid line of moisture that stretched from Texas/Oklahoma reaching now up through Michigan and was truly a God-send for many. Granted, one rain does not a crop make, particularly for those down in the southwest who have been struggling with drought conditions, but I am sure any relief is welcome. Reports from the Kansas crop tour continue to reflect sub-normal wheat yields, and in Oklahoma, there is discussion of half a normal crop.
We are not the only region in the Northern hemisphere that is experiencing weather concerns right now, and Ukraine and Russia have seen an abnormally hot and dry month of April. The Ukraine weather bureau reports there has been no crop damages but considering they only received between 15 and 40% of normal precipitation last month, that may not be the case much longer if the pattern does not improve.
This is a little cautious optimism for U.S/China trade relations as the US delegation led by Treasury Secretary Steve Mnuchin landed in Beijing today for two days of discussions. While I do not believe anyone expects them to emerge with a stunning new agreement, I also think there is no question that each side understands the actions thus far are not beneficial to either nations trade. The price of beans in Brazil has rallied in response to the ongoing dispute which in turn has pushed crushers in China into negative margin territory. It would appear to me that the only winner in this war of words right now are the Brazilians who have not only seen a nice advance in price but have also just harvested another record soy crop.
Weekly export sales improved over last week, but nothing within the numbers would inspire much enthusiasm. The most solid number was in corn, and for the week ending April 26th, we sold 1,019,900 MT or 40.16 million bushels. This was 46% higher than last week and 16% above the 4-week average and at the upper end of trade expectations. A top of the list of buyers we have Mexico with 310.1k MT, followed by Colombia at 148.2k, and then South Korea taking 126k. This brings the marketing YTD tally up to 2.007 billion bushels or 90.2% of the projected 2.225 billion. Do keep in mind that this will mark the second year north of the 2 billion mark for corn exports, which is something we have not accomplished in a decade. Soybean sales were 12% higher than a week ago at 416,300 MT or 15.3 million bushels, but this was still 58% below the 4-week average. The low trade estimate was looking for 450k MT. Top sales went to Mexico with 126.2k MT followed by Vietnam with 74.2k and Taiwan with 68.6k. China canceled 133.7k MT. Marketing YTD we now stand at 2.013 billion or 97.5% of the targeted 2.065. China did buy 66k MT of new crop beans and the weekly total for the 18/19 crop year was 469.9k MT. Finally, over in the wheat sales come through at 234,800 MT or 8.6 million bushels. This was down 21% from last week but more than double the 4-week average. Keep in mind though that the 4-week average is barely 1/4th of the marketing year average. Regardless, with just 5-weeks left in the year, we have sold a total of 863.6 million bushels or 93% of the projection.
Grain and soy markets as a whole are struggling this morning, and without a fresh, positive influx of news rather soon, it would appear we are set for a correction to lower once again.
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