COMMENTARY 8/3/18

Most areas expected to be a little drier than normal over the next two weeks especially in the spring wheat areas.  Some scattered showers for the NW portion of the corn belt.

CORN

UP 3

Corn spent much of the day in the green despite wheat trading lower, supported by a drier 2 week weather outlook. There was a NEW sale announced today, of 130K MT to Vietnam. Freight is moving higher with nearby movement as we’ve rallied almost 30 cents from the July low and SOME producers have been taking advantage.  Crop conditions and weather have everyone feeling their oats despite the sense of urgency for what the calendar says.  Local yield speculation ranges from 150-250bpa.  Informa’s est is still unchanged at 176 yield to make a 14.392 bill bu crop.  They lowered their EU est 1.5 MMT (now below the USDA’s). Farm Future’s est our crop at 175.4 and a 14.36 bill bu crop. USDA is 174.0 and 14.23 bill.  Ukraine is expecting a record crop.

Bloomberg Trader Bias:  Bullish 53% TW (56% LW), Bearish 13% TW (28% LW), Neutral 33% TW (17% LW)

 

BEANS              

 

UP 4

More stress as the two powerful world leaders dual.  Now China is putting tariffs of 5-25% on $60 bill additional US exports. The US is already recently scheduled to put tariffs on $200 bill more on China’s exports but talks have resumed with China. The Shanghai composite index was down 0.97%. If China so much as blinks, their financial markets may breakdown. OilWorld, today, says China will have to buy at least 15 MMT of US beans this year. If dispute continues, China will likely try to decrease bean imports BUT increase meal imports by 2 MMT. Informa cut its EU rapeseed production 1.5 MMT to 19.5.  (Rapeseed meal is a substitute for bean meal….but world supply is also shrinking)  Argentina and Brazil are exploring possibilities of export more meal to China. It is another unknown as to how far that will get due to potential impact on crushers.  Bean oil accounts for about half of the 37-38 MMT annual veg oil consumed by China.  Less than 4% of that is from bean oil imports.  Better news:  Farm Future’s est for the US crop is 49.8 bpa yield and a 4.420 bill bu crop.  The USDA is at 48.5 and a 4.310 bill.

Bloomberg Trader Bias:  Bullish 40% TW (28% LW), Bearish 33% TW (28% LW), Neutral 27% TW (44% LW)

 

WHEAT

DOWN 4

Mixed and taking profits into the weekend after yesterday’s Ukraine/global production fueled rally.  Wheat was up to three year highs yest debate continues as to who in the Black Sea region may or may not limit exports. Ukraine claimed they were going to limit exports but today reneged.  Informa reduced the EU wheat crop another 5 to 140 and raised the Argentine crop 1 to 20.0 MMT.

Bloomberg Trader Bias:  Bullis, 46% TW (56% LW), Bearish 14% TW (28% LW), Neutral 21% TW (17% LW)