Grain Notes 2/22/19 PM Comments 

The corn and bean markets each closed fractionally mixed as the market continues to digest the rhetoric being reported regarding a US/China trade deal.  Sonny Perdue tweeted in an Oval Office meeting today that China has agreed to buy an additional 10 million metric tons (367 million bushels) of US beans as a sign of good faith.  The time frame is unknown.  The market showed its frustration on the lack of specifics from these talks by closing basically unchanged.  As the US and China continue to negotiate, 2 items on the short list of remedies include China removing tariffs on US ethanol and DDGs.  A Trump advisor said the President will follow through on adding the new tariffs March 1st, despite China asking for an extension. Ag Secretary Perdue also added there will be no additional aid payments to farmers even if the US/China trade war continues.  The USDA released the rest of their numbers from the Ag Forum and they were pretty uneventful.  Corn acres were up 3 million to 92 million acres and soybean acres are expected to be 85 million acres, down 4 million acres.  The market received the weekly export sales report this morning, which brings the export totals up to date since the government shut down and the numbers confirmed the slow down in exports for corn as well as for soybeans.
 
For the week corn was up 2 cents in both the July and December futures. July and November soybeans were also 2 cents for the week.

  • The Ag Forum corn yield on 92 million planted acres was 176 bushels/acre.  This resulted in a carryout of 1.675 billion bushels.  Interesting to note that in 5 of the last 5 years the final corn yield was larger than the Ag Forum estimate by an average of 4.4 bushels/acre.
  • For soybeans, the acres were down 4 million acres to 85 million acres.  The yield used is a fairly conservative at 49.5 bushels/acre.  This still results in a final carryout of 845 million bushels and assumes a 50 million bushel increase in exports. 
  • The soybean numbers from the Ag Forum presents US farmers with a oversupply of soybeans for the second year in a row and continues to put into question why soybean prices are able to stay above $9 given the negative fundamentals.
  • South American weather has become a non-event.  Most estimates for Brazil’s soybean production range from 113 to 116 million metric tons.  The USDA is at 117 million metric tons, but the USDA ag attaché in Brazil has lowered their forecast to 115.5.
  • The export sales report released today covered the period of January 10th to present and for the 6-week period export sales totaled 238.4 million bushels.  This was in-line with trade expectations.  Total sales commitments are 1.5 billion bushels of the 2.45 billion-bushel USDA export forecast.  For the year corn exports are only 800,000 metric tons (31.5 million bushels) ahead of last year. Exports need to average 31.8 million bushels per week to hit USDA's year end estimate.
  • Bean export sales were also disappointing  as weekly exports for the last six weeks have averaged a disappointing 40 million bushels per week or 240 million total bushels.  Year to date bean exports are 275 million bushels behind last year.
  • Other trade talk in the market is that China was looking for US corn. There was also chatter about China lifting the tariff on US ethanol and DDGs and promising to buy $30 billion of additional US agricultural commodities.  More likely, it could be $30 billion in total, which likely would include pork, ethanol, DDGs, along with soybeans.  In 2017, China imported $21.8 billion of US commodities.
  • The trade war is forcing China to look for additional suppliers of grain.  They will now allow imports of corn and barley from Uruguay starting this month. China auctioned off over 100 million tons of corn last year.  That was up very sharply from the 57 million tons auctioned off in 2017. 
  • Brazil's first corn crop is 45% harvested while the second corn crop is 64% planted.