Morning Highlights
Morning Highlights

Joe Lardy

Jul 17, 2020

Grains

President Trump to sign an executive order to make Hong Kong a country on its own, that it will be treated the same as mainland China. China was said to retaliate against the US, stating that outside countries should not be able to medal in other countries affairs.

 

Corn

Ukraine’s corn crop estimated at 36.6 mmt, up from 35.4 mmt previously. Exports are expected to be near 29.0 mmt versus 28.0 mmt previously. China sold another 4.0 mmt of their state reserve corn. Total sales since May are thought to be near 32.0 mmt. The price of their corn auctions is just over $7.00/bushel.

Corn conditions fell more than expected on July 13th, down 2% from the previous week to 69% good/excellent.  Corn was 29% silking versus 32% on average with 3% in the dough stage, right on the average.  The USDA announced China’s biggest single-day corn purchase ever at 69.4 million bushels on Tuesday and another 5.2 million bushels on Wednesday.  Since July 10th, China has bought a total of 128.3 million bushels of US corn.  As a good chunk of the corn belt heads into pollination, the weather forecasts for the next 10 days look less concerning with more rain chances. Weekly ethanol production was up 17,000 bpd to 931,000 bpd.  This is still down 12.7% from last year.  Ethanol stocks were steady at 20.6 million barrels and down 12% from last year.  Margins improved a penny to 32 cents per gallon.  Gasoline demand at 8.6 million bpd was down slightly from the previous week, but stocks were higher than anticipated.  The four-week average of gasoline demand is only down 8.8% from a year ago.

 

Wheat

German wheat harvest expected to be down 2.6% to 22.46 mmt, but up from previous estimates of 22.21 mmt. Rains over the past couple of weeks have improved conditions, after seeing extended dryness during the springtime. The US climate prediction center suggests a 54% chance that Argentina’s wheat areas will experience a mild LaNina from September to December. If realized, this would come at the time their wheat crop is in its critical yield-setting stage. Harvest is expected to begin in December.

 

Soybeans

 

The ag attaché in Brazil predicts their 2020/2021 soybean production at 130 mmt, well north of the USDA’s 126 mmt outlook.  Exports were pegged at 84 mmt versus 78 mmt this year.  In Argentina, the ag minister said there are no plans to increase export taxes.  He suggested they need to increase production to increase tax revenue instead of raising taxes.

Soybeans were rated 68% good/excellent as of July 13th, down 3% from the previous week.  This was slightly lower than expected.  There were 48% blooming versus 40% average.  There were 11% setting pods compared to 10% on average. Very good daily export sales this week totaled 7.25 million bushels for old crop and 48.4 million bushels for new crop.  Of the totals, 4.85 million old crop bushels and 33.3 million new crop bushels were to China, the balance to unknown.  China imported a record 11 mmt of soybeans in June with the majority coming from Brazil.  July imports are forecasted at 10-11 mmt with Brazil again the main source. The June NOPA Crush report was viewed as friendly with a crush of 167.3 million bushels versus 162.2 million expected.  Soyoil stocks were lower than anticipated at 1.778 billion pounds compared to the estimate of 1.813 billion pounds.

Livestock

Cash cattle trade was largely $1 to $2 higher than last week. Margins are still ridiculously high at $250/head which is down about $50 from last week.  

Energy

The Russian Energy Minister Alexander Novak stated yesterday that oil demand in August would see a significant increase and improve to 10% of the levels seen prior to Covid-19. The Minister also made comments that Russia will not increase exports when they begin to ramp up production, but rather focus on their domestic demand.

According to GasBuddy, retail demand for U.S gasoline was seen falling by 5% for the week ended July 11. Demand was also seen falling the week prior. The current national average price of retail gasoline according to AAA is $2.200. Prices a month ago at this time were $2.105 while prices a year ago were running at $2.793. Since Monday we have seen an increase of prices by once cent due to the recent decrease in gasoline supplies.