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Where the margin is 2020

Where the margin is 2020
February 6-7, 2020, Moscow

IKAR in Mass and Industry Media


Very good US corn yields on the cards; spring wheat ratings cut

Farminguk.com, 06.08.15


Beans, meal and oil all closed lower to start the week. Whilst July is usually the key yield determining month for corn, for beans it's August. The US crop therefore isn't "home and hosed" yet, but the weather outlook through to the middle of the month looks largely favourable.

Any hotter than normal temperatures are largely confined to the south east, and moisture is there, but not excessively so. The USDA raised soybean good to excellent ratings by one point from a week ago to 63%, in line with trade expectations if still 8 points behind a year ago. The proportion of the crop at the blooming stage was up 10 points on a week ago to 81% versus 83% for the 5-year average.

The proportion of the crop setting pods was up 20 points to 54% versus 49% for the 5-year average. The USDA's FAS in Argentina said that high levels of inflation and the weak peso will encourage a shift from corn and wheat plantings into even more soybeans for the 2016 harvest.

Planting of that usually begins in October. Weekly export inspections came in at 148,498 MT, up 22% on a week ago. South Korea's NOFI were said to have cancelled a tender for 55,000 MT of South American soymeal for October/November shipment due to high prices. Aug 15 Soybeans closed at $9.77 1/2, down 3 1/4 cents; Nov 15 Soybeans closed at $9.35 1/2, down 4 3/4 cents; Aug 15 Soybean Meal closed at $351.40, down $3.20; Aug 15 Soybean Oil closed at 29.85, down 13 points.

Corn

The corn market closed around 4-5 cents lower. "Cool July temperatures in the critical corn pollination stage is as influential in boosting yields as heavy rainfall," said Martell Crop Projections. US corn got both this year. The trade is therefore thinking that some very good yields could be on the cards again this year, even if they can't quite match last year's record 171 bu/acre. Fund money is now caught heavily on the wrong side.

They dumped nearly 37k lots of their length in the week through to Tuesday night, but are still net long the best part of 250k contracts according to Friday's Commitment of Traders report. Further liquidation could therefore lie ahead. Crude oil closing not much better than $45/barrel didn't help today either. The USDA held steady with their corn crop ratings at 70% good to excellent, although there was a small switch of one point from the former into the latter.

There's continued talk of Brazilian corn being shipped/sold into the US. South Korea's KFA bought 65,000 MT of optional origin corn for Jan shipment and the country's MFG seeks 70,000 MT of the same. The USDA's FAS in South Korea estimated the country's corn import needs at 9.8 MMT in 2015/16, down slightly on 10.0 MMT in 2014/15. They said that they expect the US to increase it's market share of that business from 36% to 41%. The USDA's FAS in Argentine said that corn plantings there for next year's harvest could fall 15%, with production down 21% to 21 MMT.

The official USDA estimate is currently 25 MMT. Exports next season could drop to a 7-year low of only 11.5 MMT versus the USDA's current 15 MMT, they added. Weekly US export inspections of 920,708 MT were down 17% on a week ago. Sep 15 Corn closed at $3.66 1/2, down 4 1/2 cents; Dec 15 Corn closed at $3.76 1/2, down 4 3/4 cents.

Wheat

The wheat market closed mostly lower across the three exchanges. Weekly export inspections of only 298,048 MT were down by a third on a week ago, setting the tone. The USDA pegged the 2015 US winter wheat harvest at 93% complete versus 85% for the 5-year average. Spring wheat harvesting was put at 8% done, up 6 points on last week, but 3 points behind the norm.

Spring wheat ratings were cut one point to 70% good to excellent, and are now exactly the same as a year ago. A good crop is expected there. Russia said that their 2015 wheat harvest was 32.6% complete on 8.7 million ha producing a crop of 30.8 MMT to date. Yields have now slipped below last year's 3.62 MT/ha at this stage and are said to be averaging 3.55 MT/ha. There's talk of the Russian government being asked to make changes to the current wheat export duty, following the rouble sliding to a 7-month low against the US dollar today.

They are said to have ordered the preparation of proposals to do so, without giving any indication as to what these might be. A Bloomberg report said that the Moscow-based Institute for Agricultural Market Studies estimated Russia's July wheat exports at 1.3 MMT, the worst start to a new marketing year since 2009. The Russian Ag Minister forecast this year's wheat harvest at 58 MMT. SovEcon today increased their estimate by 1.5 MMT to 57.5 MMT.

The USDA's FAS in South Korea estimated the country's 2015/16 wheat import needs at 4 MMT, the same as a year ago. Around 2.5 MMT of that would be milling wheat and 1.5 MMT feed wheat, they said. The USDA's FAS in Argentina said that the country's 2015/16 wheat crop would fall to 10.2 MMT versus the USDA's own official estimate of 11.5 MMT. Exports in 2015/16 would drop to 5 MMT versus the USDA's 6.2 MMT, they added. Sep 15 CBOT Wheat closed at $4.99, down 1/4 cent; Sep 15 KCBT Wheat closed at $4.89, down 3 1/4 cents; Sep 15 MGEX Wheat closed at $5.17, down 6 1/2 cents.



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