Thursday, May 17, 2018

US Sold 132kmt of 17/18 Beans to Unknown

Financials: Stocks are lower, crude broke thru $72, the dollar is unch, and the 10yr remains at its highs of 3.10%. Today is Paul Ryan’s deadline for a NAFTA deal. His weekly press conference is this am so we’ll likely hear more about it. Reminder, the steel & aluminum tariffs are set to kick in on June 1 for Mexico & Canada. Ross noted “depending on where we’re at with NAFTA, the president will decide whether or not to extend their situation”. In related news, Japan is considering retaliatory tariffs on US exports worth $409M since they did not receive an exemption. Meanwhile, Merkel said the EU is willing to discuss reducing tariffs with the US so they can get a permanent exemption. The EU also reiterated its support for the Iran deal; however, several major companies such as Total are starting to wind down business with Iran. FBI Director Christopher Wray said he is “deeply concerned” about companies like ZTE that are “beholden to foreign gov’ts that don’t share our values”. At the same hearing, six other intelligence chiefs said they do not use nor would they recommend private citizens use ZTE products. The Senate passed a resolution in a 52-47 vote to overturn the FCC’s dismantling of net neutrality rules; however, it is not expected to pass the House. The Fed’s John Williams said the time is approaching where the Fed should phase out forward guidance and for it “to stop holding the markets hand”. Walmart’s e-commerce sales were up another 33% in Q1 and comps were up 2.3% in the US. "We are changing from within to be faster and more digital, while shaping our portfolio of businesses for the future," says CEO Doug McMillon. The SEC has set up a fake ICO (initial coin offering) called HoweyCoins to teach investors a few lessons. It has a sleek website, white paper, and pictures of promoters. If you click on the “buy coins now” button, it takes you to a page that tells you: “If you responded to an investment offer like this you could have been scammed -- HoweyCoins are completely fake!”

Corn: Overnight volume of 27k and OI +20k. Weekend rains expected to ease dryness in Brazil. Informa corn acres at 89 mln vs 88 USDA. Informa has been below the June USDA acreage report 8 out of the last 10 yrs. Farmer mvmt remains quiet as they are busy planting or waiting for highs to sell. The complaints of trucks being difficult to find seem to be increasing daily. GPRE expresses doubt that export RINs plan has `Legs' It’s doubtful that a potential plan to allow ethanol exports to qualify for Renewable Identification Numbers, or RINs, will be implemented, GPRE CEO Todd Becker says Wed in an interview on the sidelines of a BMO conference in N.Y.

BMO Conference Highlights:That, in addition to year-round sales of E15, would help ethanol margins expand to 30c-40c/gallon from 15c-20c currently ADM estimates that China has about 5b gallons of potential ethanol demand with its plan to have the biofuel account for 10% of its gasoline consumption by 2020

ADM Says China May Use Ethanol to Ease Trade Imbalance With U.S. China may increase U.S. ethanol imports to help ease tensions between the world’s two largest economies, CFO Ray Young says in a presentation at the BMO Farm to Market conference in N.Y.

 Bunge Chief Soren Schroder indicated there was a hole in world soy crush of 7 - 8 MMT due to lost capacity in Argentina.

Beans: Overnight vol at 23k and OI +6k. The REAL is making new lows. Processor bids continue their steady basis climb, about 15%/plants/day raising basis by 5c. China domestic meal trade finally showed some life at 200kmt. China import crush margins dropped $10-15 from last week to lows for year. Advance Trading, Inc research showing Oct – July China bean import pace +1.6mmt vs LY, suggesting USDA’s annual import est at 97mmt may be 1mmt too high. Weekly export sales of beans at 10mbu, below trade est, sbm at 376kmt well above est.

Wheat: After trading near the 50-day support for several days, futures rallied 9cts overnight. KN was up 14cts at one point. Dry weather in Aussie, Canada, and Kazakhstan the drivers of the rally. While maybe a little early, some analysts are starting to trim acreage estimates in Aussie. Export sales were dismal once again at just 7.1mbu for old & new crop. South Korea booked 130kmt of feed wheat. SovEcon revised their export estimate to 39.7mmt (WASDE 39.5) and noted its likely to exceed 40mmt as exports have yet to slow down this summer.

T-Storm: Large systems produce moderate to heavy rain within the northwest and southeast thirds of the central US through Sunday (including most spring wheat and the northwest ~25% of corn and beans), but only light totals within the central third (including wettest areas of / near northern IL, MI, and WI). A mild and somewhat stormy period follows as a warm front divides northern and southern areas next week, causing t-storms to affect varying areas at varying times with highest coverage and amounts most likely in the Corn Belt. Storms affect Brazil Fri/Sat, followed by sustained drying north and at least one week of drying south.