Ag Market View 9.16
Soybeans, soymeal, soyoil, corn and wheat traded higher. News of China buying US soybean triggered new fund soybean buying. US stocks were higher. Crude was higher.
Soybean futures had an outside day and traded over Tuesday high. This is a bullish technical signal despite the fact Funds are near record long and futures are overbought. Managed funds are now long over 200,000 soybean contracts. Word that China had bought 15-20 US soybean cargoes today pushed prices higher. USDA announced 327 mt US soybean were sold to China. Some are estimating China 2020/21 soybean imports near 98 mmt versus 96 last year. USDA is 99. Some are over 100. US could ship 33 mmt versus 16 last year. Same group estimates Brazil exports at 58 mmt versus 71 last year? Argentina 7 mmt versus 9 last year. Weekly US soybean export sales are estimated near1,500-2,800 mt versus 3,161 last week. USDA estimates US 2020/21 soybean exports near 57.8 mmt versus 45.7 last year. Reports China hog herd is up 32 pct and sow numbers are up 37 pct. This could increase their demand for soybean imports. Bulls could see final US crop 50 mil bu lower than USDA and export up 35 mil bu. This suggest a carryout closer to 375 than USDA 460 and 610 estimated in August.
Corn futures traded higher and followed the higher trade in soybean and soymeal. Managed funds are adding to their net long corn futures position. Dry US August weather and drop in planted acres has helped rally futures. Outside day trading above Tuesdays high is a positive technical signal despite fact futures are overbought. US farmers continue to be a reluctant seller of cash until they get into fields and see actual yields. Feels like market is trading a US corn yield closer to 174-176 versus USDA 178.5. Since 1974. USDA has increase US October corn yield 26 times and dropped the yield 17 times. Average change has been 2 pct of 2.5 bpa. Bulls also look for higher final US corn exports than USDA 2,325 mil bu. Their US 2020/21 corn carryout is near 2,100 mil bu versus USDA 2,503. Some are estimating China 2020/21 corn imports near 15 mmt versus 7 last year. USDA is 7. Others are closer to 20. US could ship 9 mmt versus 2 last year. Same group estimates Brazil exports at 2 mmt versus 0 last year. Ukraine 4 mmt versus 5 last year. Increase grain flow from last year to satisfy increase exports could have implications to spreads and basis and has US fob corn values sharply higher.
Wheat futures continue to dance around near season highs. Today futures closed higher. USDA September numbers were bearish. USDA raised World crop 4 mmt to 770. Most of the increase was in Canada and Australia. Futures though rallied with higher Russia prices. Russia prices gained on lack of farmer selling there. Continued dryness in Europe, Russia and Argentina also supported prices. US wheat export prices remain a premium to Black Sea and East Europe. Weekly US wheat export sales are est near 300-700 mt versus 484 last week. USDA estimates US 2020/21 wheat exports near 26.5 mmt versus 26.2 last year. Total Word trade is estimated near 189.4 mmt versus 190.3 last year. World stocks are estimated at a record 319.3 mmt versus 299.7 last year. Farm Futures estimated US 2021 winter wheat acres up 2 pct to 31.3 million. 2021 US spring wheat acres were estimated near 11.6 million or down 4.8 pct. Recent rains have improved soils across US south plains for 2021 planting.
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