Thursday, Aug 16, 2018

Financials: Stocks are up 0.5%, crude is up 10cts, and the dollar is down 100pts. The Chinese Commerce Ministry said they will be coming over to the US later this month for talks. They said the visit is at the invitation of the US and will be led by David Malpass, undersecretary for international affairs at the Treasury. Wilbur Ross is heading to North Dakota next week to talk about tariffs on steel, aluminum, and soybeans. Qatar offered Turkey $15B to help stabilize finances. The Turkish volatility helped DB make $35M the last few weeks, while a trade at Barclays lost $19M in 3 days this week. The MSCI Emerging Mkt Index has lost about 20% since January. American refineries ran at 98.1% capacity last week, the highest rate since 1999. They processed a record 18.2M bpd of crude & other oils. Constellations Brands (owners of Corona) said they will be investing $4B in Canopy, a Canadian marijuana producer. The hedge is essentially against slowing beer sales. Both Heineken and Molson Coors are rolling out non-alcoholic THC beverages. Uber posted a loss of $891M in Q2 which is slightly better than their $1B loss last year. After paying out fees to drivers, it generated revenue of $2.7B. Walmart’s shares were up 10% after comps rose 4.5% and e-commerce sales jumped 40%. Comps at Sam’s Club were up 5% vs. estimates of 2%. The company raised guidance by 12cts for the year and said they will be aggressively rolling out grocery pickup across the country. JCPenny wasn’t as lucky with shares down 23% following a 7.5% drop in sales, lower margins, and lower forward guidance.

Corn: Overnight volume 40k and OI 3k. Export sales continue to show Spain rolling out of US sales. BAGE estimates Argentine will plant a record amount of corn at 5.8m ha, +7.4% vs LY. There is a lot of harvest expected to start the week after Labor Day. Etoh grind YTD is near 5650 vs 5600 USDA.

Beans: Overnight volume 72k and OI +1k. Beans were up 15 immediately following the China trade news. Amazing how sensitive the market is on something that hasn’t even happened yet. The Brazilian farmer sold 200kmt and would suspect he’ll sell more given the rally today & weak currency. China bought several Mar cargoes from Brazil and bought two more old crop cargoes from Argentina. New crop spreads were mostly unchanged despite the China news. Continue to recommend getting hedges out to the Jan with X/F trading -12^2. New crop DP rates are starting to surface with STL posting 48-cents to Jan 1, this will back up beans this fall into the interior.

Wheat: Futures are up 6-7 following the Chinese trade news. Spreads are mostly firmer on the news as well. Export sales were finally up at 803kmt, a marketing year high. Mexico was the main buyer at 247kmt. When comparing HRW vs. German/Baltics to Saudi we’re about $16/mt out of the running on C&F basis. Turkey lifted import taxes on wheat, barley, and rice but this will likely be serviced by Russia as they are in a trade squabble with the US.

T-Storm: If rain is average until Aug 31 in the Corn Belt (1.88”), Aug would be #17 driest since 1895 (Jul.-Aug. #25). Three systems and two cool fronts bring t-storms to most corn and beans over the next 5-days, producing generalized totals of 0.50” to 1.50” in northern areas of the Corn Belt and Plains, and 1.00” to 2.00” elsewhere; it is notable that rainfall over the last 2-days was less than expected as cloudiness kept the air unexpectedly stable, but the upcoming setup is conducive to at least some significant totals, especially today in and adjacent IA. A period of unseasonably cool and mainly dry weather begins from NW to SE Sun/Mon, followed by a warmer period with some t-storms over Aug 25-30.