Ami Heesch

Sep 16, 2020

 

Kevin Stockard

Highlights                                           

  • The Organization for Economic Co-operation and Development now sees the world economy contracting 4.5% this year, after forecasting a 6% decline in June.
  • The Fed is expected to keep interest rates unchanged today and forecast rates close to zero through 2023. Analysts will be looking for comments on allowing inflation to go over the Fed’s current 2% target.
  • China’s onshore spot yuan topped 6.76 per dollar for the first time since May 2019.
  • The WTO has ruled that the U.S. violated international trading rules by imposing $200 billion in tariffs on Chinese goods in 2018 without “demonstrating that the measures are provisionally justified.”
  • The U.S. is removing tariffs on Canadian aluminum after Canada threatened retaliatory tariffs.
  • API showed crude oil inventories down 9.5 million barrels vs expectations of a 1.3 million build. Gasoline stocks were up 3.8 million barrels and distillates fell 1.1 million.
  • As of 6:58 am CT, crude oil is up 87 cents at $39.15/barrel, gold is up 6.40 at $1,972.60, DOW up 137 to 28,164, dollar index is down 204, and Euro is up 105 pts.

Corn 

  • China estimates their corn production could fall by 5-10 MMT due to typhoon damage, with total production estimated at 260.7 MMT.
  • ANEC raise their September Brazil corn export estimate from 5.7 MMT to 6.23 MMT
  • China is suspending imports of poultry from the OK Foods plant in Fort Smith, Arkansas, after a worker tested positive for Covid-19. It is the second U.S. plant to be blocked by China.
  • Taiwan bought Brazilian corn at $189.63 C&F. 

Outlook:  Dec futures down ¾ to down 4 ¼ overnight.. follow through selling from yesterday, as the Chinese demand story seems to be fading.  

Oilseeds 

  • Pork cutouts rose $4.55 yesterday as demand surges after China banned German pork due to African Swine Fever.
  • China’s Dalian no1 beans were down ¾ overnight, soymeal down 5.90, and soyoil unchanged. Malaysian markets are on holiday.
  • August NOPA crush was 165.055 million bushels vs a 169.468 million estimate, down from 172.794 million in July. Soyoil stocks totaled 1.519 billion pounds vs a 1.515 billion estimate, down from 1.619 billion.

Outlook:  Nov beans down 6 ½ to up 6 overnight..  despite more demand news, soybeans traded lower yesterday. Futures are back up this morning but the market is fragile above $10/bu. 

Wheat 

  • Egypt’s GASC is tendering for various wheat cargoes, including U.S. SWW and SRW, for Nov 10-20 shipment. They received 11 offers with Polish wheat the cheapest at $228.43/MT FOB, although freight may push them out of the running. Cheapest Russian offer is $234.99 FOB.
  • APK-Inform reports Ukraine is seeing its lowest soil moisture content in the last 10 years, with 60-70% of the winter planting areas at dry or near-dry top soil.
  • APK-Inform says Russian grain exports in August were up 35.8% from July, with wheat up 45.3% and corn down 22.9%. Turkey was the biggest wheat importer at 820.9k MT.
  • Turkey bought 440,000 MT of red milling wheat in yesterday’s tender, with prices ranging from $240-$248 FOB. South Korea bought 38k MT of wheat and Japan bought 105k MT. 

Outlook:  Dec KC wheat up 1 ¾ to down 3 overnight..  Traders will be watching for GASC tender results, although HRW looks to be $30+ too high.