- Chicago values are lower across the board, with spot soybeans falling below $8.00 for the first time since late 2008. Overnight news regarding China’s change to trade talks, along with there simply being few hours remaining before US tariffs on Chinese goods more than double have weighed on world raw material and equity markets.
- US and Chinese negotiators will attend a dinner together just hours prior to the US’s midnight tariff deadline. We are hopeful that a deal is struck amid elevated tensions, but the odds of a deal have been in retreat since Sunday.
- The Dow at midday was down 200 points. EU financial markets look to close nearly 1% lower. The implementation of US tariffs can be reversed if progress is made tonight, but remains deal or no deal in the short term.
- The primary issues are that tariffs on US ag goods, along with Swine Fever, will likely keep China’s total ag demand growth limited to nonexistent in 2019. It is the impact on the world grain/oilseed balance sheets that is so disheartening longer term.
- Other news is mixed. CONAB this morning raised its Brazilian soybean production forecast to 114.3 million mt, up 0.5 million mt from its April estimates. Total Brazilian corn production was lifted 1.2 million mt 95.3 million. CONAB’s corn harvest forecast was lower than market expectations, and compares to the USDA’s 96 million. However, the direction of the change implies S American corn surpluses are getting larger, not smaller. Favourable rainfall will impact Parana in Southern Brazil, a key safrinha area, in the next five days.
- US export sales through the week ending May 2 included 11.3 million bu of corn, vs. 23 million the prior week; net soybean cancellations worth 5.5 million bu, vs. positive sales of 12 million bu the prior week; and new crop wheat sales of 15 million bu, vs. 11 million the previous week. For their respective crop years to date, the US has sold 1,825 million bu of corn, down 10% from this week a year ago; 1,653 million bu of soybeans, down 18% from a year ago; and 939 million bu of old crop wheat, up 9% from a year ago and a normal 99% of the USDA’s forecast.
- New crop wheat commitments, excluding outstanding old crop sales, sit at 94 million bu, up 36% from last year and the highest in early May since 2015. New crop HRW commitments total 18 million bu, up 50% from this week a year ago. Gulf wheat is looking to compete for new crop world market share, unlike recent years. Gulf HRW for June-July arrival is $10- 15/mt below comparable EU origin.
- The midday central US GFS weather forecast is unchanged and features both the best planting window of the season so far and also the return of soaking rain to the Plains and Western Midwest beyond May 18. 5-7 days of dryness lie ahead for all areas. But following another round of soaking rainfall across the Upper Midwest and Illinois overnight, national planting progress will stay sluggish in the weeks ahead. Daily showers return to the Plains and far W Midwest May 18- 25. Cumulative totals through this period are estimated in a range of 1- 4″. Favoured areas will include KS, MO and IA. WASDE on Friday is likely to keep corn yield above 175 bushels/acre, but there is widespread talk that the USDA should already lower its yield expectation by some 3-4 au/acre.
- New crop balance sheets excluding Chinese demand imply a longer term dull, neutral marketplace.