- HEADLINES: FAS confirms record large US weekly corn sales of 290 million bu; China books estimated 37 million mt of US soybeans; Argentine weather dry.
- Chicago futures are mixed at midday with the soy complex higher while the grains sag. Corn scored a new contract high overnight at $5.58 basis March but retreated after the opening as a rumoured 2 million mt sale of US corn to China was not announced. As we have been reporting, most cash connected traders expect that additional US corn will be announced to China, it is just a question of timing.
- The tone of the soybean market is up as the US sells additional US soybeans to China (550,000 mt) while US white wheat sales exceed the WASDE annual estimate with 5 months remaining in the US wheat crop year.
- US 3 major crop sales last week amounted to 347 million bu, a record. The US sold a record large 293 million bu of corn, 30 million bu of soybeans and 24 million bu of wheat. Total US corn/soybean sales are just under 4.4 billion bu or more than entire 2020 US soybean crop. And more than half of the crop year remains.
- There is no evidence of demand rationing and it will be interesting to gauge how much the USDA will raise US 2020/21 soybean and corn export estimates next Tuesday, Somehow/someway the market must encourage demand rationing, especially in old crop soybeans. The fundamental price trends are higher until actual demand rationing can be confirmed through a China wash out or confirmation of soybean imports from S America (if there is loadout space available).
- Chicago brokers estimate that funds have bought 5,400 contracts of corn, 4,800 contracts of soybeans, while selling 3,200 wheat. In soy products, funds have bought 3,100 contracts of soyoil while selling 900 contracts of soymeal.
- FAS reported that for the week ending January 28, that the US sold 23.6 million bu of wheat, a record 293 million bu of corn, and 30.3 million bu of US soybeans.
- For their respective crop years to date, the US has sold 823.5 million bu of wheat (up 42 million or 5.3%), 2,209 million bu of corn (up 1,312 million or 146%), and 2,155 million bu of soybeans (up 970 million or 82%).
- China has booked 35.3 million mt of US soybeans on a known basis and shipped out 32.3 million. Including what we earmark for China in unknown destinations, they have secured 37.1 million mt of US soybeans in total and are on their way to taking 40-41 million mt for the 2020/21 crop year. This is nearly 1,500 million bu of US soybeans or equal to 90% of everyone in the 2019/20 crop year. The US soybean sales pace as of February 1 argues for a US soybean export estimate of 2,375-2,410 million bu, far above the WASDE forecast at 2,230 million bu and US end stocks forecast at zero or even a negative if the market does not ration US soy demand.
- In US corn, China has known purchases of 17.7 million mt or 695 million bu. Including another 2 million mt held in an unknown category, We estimate that China has taken 19.7 million mt of US corn. And there are rumours of China booking another 2 M million mtMTs which would take US corn purchases by China to 22 million mt or a big 865 million bu.
- US 2020/21 corn exports based on pace analysis argues for a range of 2,850-3,000 million bu, 300-450 million bu above the WASDE January forecast. Using a mid-point of the export range would drop 2020/21 US corn end stocks to 1,175 million bu, assuming WASDE does not raise US ethanol forecasts by 50-100 million bu amid the expanding demand for US unleaded gasoline as the US economy recovers. US 2020/21 corn end stocks of 1,050 million bu or less are valid, if China halts its US corn purchase pace now, and for the rest of the 2020 /21 crop year.
- An above normal rainfall pattern starts across all of N Brazil which persists into mid-February this weekend. The 11-15 day forecast is also wet which could hamper the start of the Mato Grosso/Goias soy harvest. An arid forecast is offered for the entirety of Argentina and most of RGDS in S Brazil. The wet weather for N Brazil is a worry.
- S American weather and early Brazilian soy yield results will drive Chicago ahead of the USDA’s February crop report. Our view stays bullish with corrections to be modest on the need for demand rationing. Weaker wheat values will not be sustained as US hard wheat cannot reach values that allow it to be fed.