Floor Talk, January 10, 2020 (Report Day)

[marketeye]

At the close:

At the close, the March corn futures finished 2 1/2¢ higher at $3.85 3/4. May futures ended 2 3/4¢ higher at $3.92 3/4.

March soybean futures settled 2 1/2¢ higher at $9.46. May soybean futures finished 2 1/2¢ higher at $9.59.

May wheat futures settled 2 1/2¢ higher at $5.64 3/4.

In the outside markets, the NYMEX crude oil market is $0.44 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 133 points lower.

Mike

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At midsession:

At midsession, the March corn futures are 1 1/4¢ higher at $3.84 3/4. May corn futures are 1¢ higher at $3.91.

March soybean futures are 2 1/4¢ lower at $9.41 1/4. May soybean futures are 2 1/4¢ lower at $9.54 1/2.

March wheat futures are 3/4¢ higher at $5.63.



March soymeal futures are $1.70 per short ton higher at $302.50.

 March soy oil futures are $0.39 cents at 34.25¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.39 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 98 points lower.

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At 11am:

USDA SAYS:

The U.S. farmers grew a bigger 2019 corn crop than the trade and the government thought.

As a result, the CME Group’s farm markets fell hard and then recovered Friday, following the 11:00am CT release of the USDA’s January Crop Production, Supply/Demand, Quarterly Grain Stocks and WASDE Reports.

U.S. 2019 Corn Production

For 2019 corn yield, the USDA pegged it at 168 bushels per acre, compared with the average analyst estimate of 166 bu./acre vs. 167 last month.

USDA estimated the U.S. 2019 corn output at 13.692 billion bushels vs. the trade’s expectations of 13.513 billion bushels and the USDA’s December estimate of 13.661 billion.

U.S. 2019 Soybean Production

The USDA says the U.S. 2019 average soybean yield ended at  47.4 bushels per acre vs. the trade’s expectations of 46.6 bushels per acre and December’s estimate of 46.9 bushels per acre.

The 2019 U.S. soybean production totaled 3.558 billion bushels vs. the trade’s expectations of 3.51 billion bushels and the USDA’s  December estimate of 3.55 billion.

In 2018, the U.S. farmers grew a soybean crop totaling 4.428 billion bushels.

U.S. Ending Stocks 2019/2020

For corn, U.S. stocks at the end of the marketing year (Sept. 1) are estimated at 1.89 billion bushels vs. the trade’s expectations of 1.77 billion bushels and the USDA’s December estimate of 1.910 billion.

The soybean ending stocks are pegged at 475 million bushels vs. the trade’s expectations of 431 million bushels and the USDA’s estimate in December of 475 million.

For wheat, U.S. ending stocks are 965 million bushels vs. the trade’s expectations of 970 million and the USDA’s previous estimate of 974 million.

Dec. 1 U.S. Quarterly Grain Stocks

The USDA pegged corn stocks, as of Dec. 1, were pegged at 11.389 billion bushels vs. the trade’s expectations of 11.47 billion.
For soybeans, Dec. 1 stocks were pegged at 3.252 billion bushels vs. the trade’s expectations of 3.19 billion.
USDA pegged the U.S. wheat Dec. 1 stocks at 1.834 billion bushels vs. the avg. trade estimate of 1.914 billion bushels.

U.S. Winter Wheat Seedings

USDA pegged the 2019/2020 U.S. winter wheat acreage at 30.8 million vs. the trade's expectation of 30.66 million and the USDA's final 2019 estimate of 31.15 million.

World Crop Production

Brazil's 2019/2020 corn output at 101 million metric tons, soybean output at 123 million metric tons.

Trade Reaction

--Jack Scoville, PRICE Futures Group, says that investors have their minds on geopolitical events, while awaiting Friday’s reports.

“It was a mixed report, with U.S. corn and bean production higher instead of lower. But, the quarterly stocks data was positive for corn and wheat and not for beans. The world data is kind of positive as well. A very interesting market reaction makes me wonder if the market was talking bullish and leaning bearish going into the numbers, especially on the corn and to a lesser extent the wheat. Even beans have moved to unchanged, after trading lower after the report. A very interesting reaction,” Scoville says.

--Jason Roose, U.S. Commodities, says that the market may have had this negative news dialed in.
Initial reaction in today's January USDA Crop Report was negative, with U.S. corn and bean yields increasing slightly, U.S. ending stocks reduced by 20 million bushels with world ending stocks also reduced slightly, and feed usage raised 250 million bushels,” Roose says.

Roose added, “With very little risk premium in the grain market, the trade may add premium with uncertainties in South America weather. The key to this report was how much of the negative news was dialed in.”

--Sal Gilbertie, Teucrium Trading, says that this was not a market moving report.

“But, it does emphasize the fact demand is rising globally for all grains, and we are using more coarse grains than we are producing for the second consecutive year. There will be questions as to the accuracy of harvested acres and for corn demand from ethanol producers moving forward, but the big question will be what adjustments the USDA will make to assumptions for the February WASDE after the signing of the U.S./China trade deal next week,” Gilbertie says.

What say you?

Mike

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At 8:45am:

In early trading, the March corn futures are 1/4¢ higher at $3.83 3/4. May corn futures are unchanged at $3.90.

March soybean futures are 2 1/4¢ lower at $9.41 1/4. May soybean futures are 2¢ lower at $9.54 1/2.

March wheat futures are 2¢ higher at $5.64.



March soymeal futures are unchanged at $300.80.

 March soy oil futures are unchanged at 34.64¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.50 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 28 points higher.

Separately, the USDA’s Weekly Export Sales Report Thursday shows weak demand figures.

Corn= 161,900 metric tons vs. the trade’s expectations of between 350,000-700,000 mmt.

Soybeans= 358,900 metric tons vs. trade’s expectations of 400,000-800,000 mmt.

Wheat= 130,600 mt. the trade’s expectations of between 200,000-550,000 mt.

Soybean meal= 74,200 mt. the trade’s expectations of 75,000-250,000mt.

Al Kluis, Kluis Advisors, says that investors will play their cards close to the vest until this morning’s USDA reports are released at 11:00am CT.

“We started off stronger with the de-escalation of the US and Iran tensions. However, by the end of the day, traders took advantage of the higher markets to position. We should trade sideways or mixed until the release of the USDA report at 11:00 am CT. Once we get the numbers, we will trade off them going forward, ” Kluis stated in a daily note to customers.

Kluis added, “Once past the report, pay attention to the demand for US corn and soybeans. If corn exports do not start picking up soon, then we will likely see some reductions in overall demand.”

Mike

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Ouch! USDA's Weekly Export Sales look dismal. The report was released, this morning, delayed by one day.

Wheat:  Net sales of 80,600 metric tons for 2019/2020--a marketing-year low--were down 74 percent from the previous week and 87 percent from the prior 4-week average.  Increases primarily for Nigeria (45,500 MT, including 24,500 MT switched from unknown destinations and decreases of 1,500 MT), Mexico (20,100 MT, including decreases of 2,800 MT), Italy (20,000 MT), Indonesia (17,800 MT, including 19,000 MT switched from unknown destinations and decreases of 1,200 MT), and the Philippines (10,300 MT), were offset by reductions primarily for unknown destinations (70,000 MT). 

For 2020/2021, total net sales of 50,000 MT were for the Philippines.  Exports of 352,400 MT were up 4 percent from the previous week, but down 20 percent from the prior 4-week average.  The destinations were primarily to Nigeria (74,000 MT), the Philippines (64,300 MT), Taiwan (51,300 MT), Malaysia (36,400 MT), and Panama (25,200 MT).   

Optional Origin Sales:  For 2019/2020, the current outstanding balance of 56,000 MT is for the Philippines.   

Export Adjustments: Accumulated exports of hard red spring wheat to Mexico were adjusted down 340 MT for week ending December 19th and 476 MT for week ending December 26th.  These exports were reported in error.   

Corn:  Net sales of 161,900 metric tons for 2019/2020--a marketing-year low-were down 70 percent from the previous week and 83 percent from the prior 4-week average.  Increases primarily for unknown destinations (89,700 MT), Japan (61,400 MT, including 40,900 MT switched from unknown destinations and decreases of 7,600 MT), Colombia (21,800 MT, including decreases of 4,200 MT), El Salvador (15,900 MT, including 1,900 MT switched from Guatemala), and Honduras (7,100 MT), were offset by reductions primarily for Mexico (41,500 MT).  Exports of 514,600 MT were up 15 percent from the previous week and 1 percent from the prior 4-week average.  The destinations were primarily to Mexico (265,400 MT), Japan (89,800 MT), Colombia (82,400 MT), Canada (25,100 MT), and Honduras (23,700 MT).     

Optional Origin Sales:  For 2019/2020, options were exercised to export 128,000 MT to South Korea from othe than the United States.  The current outstanding balance of 368,900 MT is for South Korea (260,000 MT), Egypt (58,900 MT), and Israel (50,000 MT).  

Soybeans:  Net sales of 355,500 MT for 2019/2020 were up 8 percent from the previous week, but down 59 percent from the prior 4-week average.  Increases were primarily for Indonesia (78,600 MT, including 68,000 MT switched from unknown destinations and decreases of 100 MT), Germany (75,800 MT), China (74,700 MT, including 66,000 MT switched from unknown destinations), the Netherlands (67,200 MT, including 60,000 MT switched from unknown destinations), and South Korea (58,700 MT, including 55,000 MT switched from unknown destinations), were offset by reductions for unknown destinations (73,000 MT), Taiwan (500 MT), Pakistan (400 MT), and Malaysia (200 MT). 

For 2020/2021, total net sales of 3,400 MT were for Japan.  Exports of 1,118,800 MT were up 4 percent from the previous week, but down 8 percent from the prior 4-week average.  The destinations were primarily to China (353,800 MT), Egypt (128,500 MT), Mexico (102,500 MT), Indonesia (98,100 MT), and Germany (75,800 MT).   

Exports for Own Account:  For 2019/2020, the current exports for own account outstanding balance is 2,100 MT, all Canada. 

Export Adjustments: Accumulated exports of soybeans to the Netherland were adjusted down 75,789 MT for week ending December 19th.  The correct destination is Germany and is included in this week’s report. 

Soybean Cake and Meal:  Net sales of 74,200 MT for 2019/2020--a marketing-year low--were down 22 percent from the previous week and 47 percent from the prior 4-week average.  Increases primarily for Ecuador (35,500 MT), Canada (7,400 MT, including decreases of 1,800 MT), unknown destinations (6,000 MT), Honduras (4,600 MT), and the Philippines (4,100 MT), were offset by reductions for Guatemala (900 MT) and Japan (200 MT).  Exports of 148,100 MT were primarily to the Dominican Republic (35,600 MT), Mexico (35,100 MT), Canada (23,100 MT), Colombia (13,000 MT), and Guatemala (12,400 MT).

What say you?

Mike

[timetippingpt]

Kind of curious, how does someone report 816,000 MT of wheat exports to Mexico, "in error".  Seems like a pretty big error made in 2 seperate reports....someone playing a game? 🙂

[timetippingpt]

I'd say it takes a Phd in Statistics, and a tenured govt employee, to produce such ridiculous numbers and have someone believe them. Yields are higher than expected but stocks are lower than expected....hmmmmm.......a tisket a tasket....someone's playing in the basket.

Of course, it is the same all over, Iran didn't shoot down that plane despite the clear video evidence. :-()

And, despite the exact report he wanted, Al's puts are going to expire worthless it would seem.

[illinifarmer]

Shocking !! First year ever in history with as many unplanted pp acres and by far the latest planting and harvest most have ever experienced and this ridiculous ignorance of marketing.  Shame on you people!  How screwed up is it when we have become accustomed to this false reporting and market suppression year after year.  Purdue was put in by this administration and hasn’t fought or helped the farmers an inch.  Farmers must, I urge you all take a look at the last 3 years and consider what sacrifices you’ve made for a republican office and take a minute and tell yourselves never again! Sad, disgraceful display of leadership really embarrassing.!.!

[marketeye]

illinifarmer,

Not saying that I disagree with you. I understand that you are frustrated. But, we can't have vulgarity in your posts. I replaced the vulgarity with a kindler, gentler word. Just so you know.

Thanks,

Mike

[samalan1140]

What a bunch of liars!!!

[freedom1493]

In all seriousness, did anyone expect "real numbers" to come out today from the govt?

A favorite old movie quote is from the movie Independence Day:

"President Thomas Whitmore:
I don't understand, where does all this come from? How do you get funding for something like this?

Julius Levinson:
You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat, do you?"

[timetippingpt]

illini....PLEASE....it is pErdue....NOT our beloved pUrdue....

[Canuck_2]

Not sure why people get so upset with the numbers. If you do not like them then do not trade them.  If you do not think they are accurate then encourage people to give accurate info if surveyed and be sure to answer the surveys.  Life will go on and the market will trade according to what those trading it perceive whether you like it or not.  Do not fight the market just capitalize on it when it is right for you.

[r3020]

If the numbers are off as much as you think it will at some point be reflected in the basis. The end user will bid what ever is needed to cover his needs. If he now thinks there is much more out there than there is he will not conserve. He will wait until he realizes there is a shortage. Unreasonably high numbers released now will help the producer in the long run. USDA can only hide the truth for a time. In the end supply/demand/basis will win. Always has. Always will.