- Chicago futures are higher at midday based on US corn sale to China and hope that there is additional demand to follow. Chicago corn, soybean and wheat futures are rising on the return of China for US corn amid a cold weather threat for the E Midwest on Friday/Saturday mornings. Funds are buyers on midday short covering, but end users see no reason to chase a rally. We look for a firm Chicago close. Corn, soybeans and wheat have been trading in the same range for over 2 weeks awaiting new crop weather developments. Until more is known about late May and June weather, we look for the same range trade to persist.
- Chicago brokers estimate that funds have bought; 11,200 contracts of corn, 4,100 contracts of wheat, and 7,400 contracts of soybeans. In soy products, funds have secured 3,200 contracts of soyoil and 2,400 contracts of soymeal.
- USDA confirmed that China purchased 686,000 mt (27 million bu) of US corn that was largely split in an old and new crop position. The purchase is said to be part of the 1.5 million mt of TRQ allocation that was offered several weeks ago.
- We hear that there may another 200-300,000 mt of US new corn purchases that are working. To date and including the announced sale today, China has secured 1.25 million mt of old crop and 819,000 mt of new crop US corn. No one other than USTR/China knows their annual purchase (Feb 2020 to Feb 2021) pledges, but rumours peg the amount between 15-20 million mt of US corn in total. Note that China will not secure all the US corn at once, it will be a process into February 15. COFCO was the cash buyer in the Gulf overnight.
- China is also rumoured to be booking US soybeans for private crushers in a new crop position with tonnages sold estimated at 4-6 cargoes. China appears to be returning to the US soybean market and will be a more regular soybean buyer in coming weeks. Brazil is quickly selling/shipping soybeans, and the US will have an open opportunity to fill world demand from September through January.
- Moreover, China was a buyer last week of US sorghum (65,000 my), US cotton (217,500 bales), US cattle hides (200,100 pieces), 1,400 mt of US beef and 40,200 mt of US pork. The Chinese are a continuing to secure US meat/sorghum.
- US export sales for the week ending April 30 were 9.0 million bu of wheat, 24.0 million bu soybeans and 30.5 million bu of US corn. For their respective crop years to date, the US has sold 962 million bu of wheat (up 23 million/2%), 1,478 million bu of corn (down 347 million/24%), and 1,459 million bu of US soybeans (down 190 million or 11%). WASDE should cut their 2019/20 US soybean export estimate by 25-50 million bu and corn by 25 million bu on Tuesday’s report.
- Stats Canada estimated that its 2020 all wheat seeding would rise 3.3% to 25.4 million acres, canola seeding would fall 1.6% to 20.6 million acres, while oat acres soared 6.3% to 3.8 million acres. Canadian total wheat stocks rose to 17.8 million mt, up 1.6% from last year. The Stats Can report was neutral to slightly bearish. The market is back to reacting more to weather/economic forecasts.
- The Central US weather forecast is wetter for the E Midwest that was offered by either the overnight GFS or the EU models. Our view is that the midday is once again too wet and errant. Limited rain will impact the Midwest allowing swift seeding progress for the next week. Cold temperatures on the weekend begin to moderate early next week. Near to above normal temperatures are forecast in the 9-15 day period.
- Chinese buying of US ag goods sparks modest short covering rallies in Chicago. However, it I s hard to have confidence on the US or world economic outlook with 33.5 million Americans unemployed while India’s unemployment surges to 122 million. Research maintains that China’s demand for US soybeans will become more regular in coming months.