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Exports were not impressive for corn or wheat, decent for soybeans and cotton

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Export sales for corn came in at 494 KMT, a number nearly 1/3 of what we saw last week and well below expectations.  Soybean sales came in just above 1 MMT, based mainly on recent sales to CHina.  Wheat exports were not impressive, coming in at 280 KMT. Cotton sales were better at 155 K bales, we need to see 150k per week to stay on USDA pace. Sales numbers are bearish for prices, especially corn when you factor in ethanol production is slowing as well.


Corn and soybean markets are trading well with bullish trade rhetoric making it easier for longs to sleep right now. The corn trade has the Japanese trade “deal” pushing it to a certain degree while soybeans are supportive on China. China’s Commerce Ministry said last night that China has bought a significant amount of US soybeans and pork. These purchases were bought by the private sector using the waivers granted by the Chinese government last week.  Some talk in the trade has China buying upwards to 6 MMT (225 million bushels) for future delivery. Chinese leadership will be in the US on October 7, I think you can consider these both goodwill and needed purchases by the Chinese.  The question will be, how much more. Both participants are in the upswing of this trade cycle, we have seen this before.  Maybe this is the beginning of the end of this trade war.  Maybe it isn’t, we have been at this point at least 10 times in the last year.  I am baffled soybeans have not had more of a move considering the US weather changes and this news.  That may be more telling than anything.



Cooler than average temps continue to spread east as we have seen in recent model runs, they will be accompanied by wet weather. Neither is good for crop finishing.  There is no call for a major freeze outside of the more northern regions of the growing area but it isn’t exactly perfect. That said, the next few days in the Midwest will be summerlike and maybe that can help catch up.  I spoke to a producer in Central Illinois near Springfield yesterday who was shelling a field planted in mid-April.  He is seeing 260 yields where he did 285 a year ago, the kicker is it is coming out at 25% moisture.  Down in the SE, producers are finding production sub-par for both corn and soybeans.  I have heard some guys even talk about putting in insurance claims.



Monday we will get the Sep 1 grain stocks report. This is a quarterly report touching on the amount of physical corn, beans and wheat in this country (sorry cotton, you get to sit this one out).  These numbers for corn and beans are the “carry out” levels projected throughout the year finally realized.  Traders are looking for USDA to estimate Sept. 1 corn inventories at 2.428 billion bushels, up from 2.140 billion bushels. Soybean expectations are for a stocks number just below 1 billion, nearly 500 million above a year ago and 600 million above the year before that. The heavy supply sitting in the US is probably the reason why beans can’t rally.  US wheat stocks are expected to be around 2.3 billion, down from a year ago. If you are looking for a surprise it would be in wheat given the higher feed usage this summer combined with exports that have been better than expected.  This won’t change the story much but it is something.



Wheat markets are trying to rally, all the while we are hearing talk of 75-80 MMT crops in Russia next year. I have heard producers are expanding acreage in the Black sea, which is a bad sign for wheat.  Russia’s ag minister has raised his estimate of last year’s Russian wheat crop to 78 MMTs due to the late recovery in spring wheat yields. Most private firms have been forecasting a crop of 75-75.5 MMT. The Russian ag ministry estimate would allow for Russia to export 36-38 MMT of wheat in the current crop year, above last year. The rally in Minneapolis wheat should spread to the KC at some point, but I think you have to be ready to start fading some 2020 contracts in the near term.  Macro conditions and the dollar could change, but I don’t think that’s a bet I would be willing to make. The Japan trade story is friendly wheat, but it won’t dent carryout much given Japan buys specific kinds of wheat.



The Chinese Yuan has retraced over the last week from 7.15 to 7.07, a weaker Yuan is supportive for cotton.  But that can’t catch much of a bid.  Cotton bulls are disappointed only soybeans and hogs are getting love from the recent round Chinese purchases. The talk of a trade deal is keeping cotton from flushing.  I hate to be short like this at the bottom, but the lack of any upside push from Texas weather or trade talks has me expecting a 5 handle will be in the cards again soon. The Indian crop expectations are growing, China continues to sell from its reserve stockpile.  Some think they will need to replenish but the good news is the US has plenty of supply to meet the market as carryout looks to jump from 4.2 to 7.2 million bales.

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