Soybean Morning Update & Commentary: Warming temps welcomed but crop is off to a terrible start.
Overnight grain markets traded higher on lower than expected crop conditions in yesterday's crop progress report. The impact of saturated/flooded fields and a cooler than normal start to the growing season is showing but more summer-like temps have arrived which will be favorable for crops.
Soybean planting is 85% complete vs. 77% last week and 100% this time last year - this would suggest there are still 12.7 million bean acres left to plant led by IL (2.2), IN 1.4), MO (1.8) and OH 1.7). Many of those acres will not be planted. Beans were only 71% emerged compared to 55% last week and 94% this time last year. The US corn crop condition fell from 59% gte last week to 56% while beans debuted at 56% gte - it's not pretty out there. Corn is 89% emerged compared to 79% a week ago and 100% this time last year.
Besides the prevent plant and failed acres this year, we have a major problem with crop development way behind normal - we just don't know how major the problem will be at this point. Stay tuned.
Friday has been market on our calendars for a long time, is going to be a busy/chaotic day.
• First notice on July futures, there are 1,030 corn receipts registered for delivery, 9 SRW, 5 HRW, 584 beans, 0 meal and 1,272 oil. We are not anticipating big corn, wheat or bean deliveries.
• End of the quarter which can mean that money flow and allocations will be an influence our trade.
• Quarterly stocks and acreage reports (range and avg. trade estimates below) although the acreage side of that will be rightly questioned and less meaningful than normal. There was a rumor making the rounds that the USDA is 'considering' issuing the yet to be planted acres by crop AND state in the June 28 report. I confirmed with the USDA contacts that this will not be the case. They simply do not ask the questions on the survey that would give them this data. The FSA in mid-Aug will publish the prevent plant and failed acreage as normal and the USDA will apply that data to the October crop report.
• The quarterly stocks numbers will highlight the heavy old crop supply situation with the story in corn and beans residing strictly in the new crop US production threat at this point.
• The G-20 summit is also taking place in Japan and President Trump and Xi will meet to discuss and hopefully revive trade negotiations. This meeting will take place Friday night/Sat when markets are closed.
6-10 Day and 8-14 Day Forecast - crops should respond favorably to the warmer temps - rains persist but with lighter totals than what we have just come through.
In the news:
• According to the government, Vietnam has culled nearly 10% (2.8 million) of its pig herd to contain an African swine fever.
• On Tuesday, SGS pegged Malaysian palm oil product exports in the June 1-25 period at 1.174 mln mt off -15.3% from their May 1-25 estimate.
• On Tuesday, AmSpec Malaysian pegged Malaysian palm oil product exports in the June 1-25 period at 1.173 mln mt off -14.0% from their May 1-25 estimate.
• Intertek Tuesday estimated Malaysian palm oil product exports over the June 1-25 period at 1.148 mln mt off -17.8% from their May 1-25 estimate of 1.397 mln mt
• Customs data from China pegged May soybean imports at 7.36 mln mt off -24% from the year ago month, imports over the January - May 2019 period were 31.75 mln mt off -12.2% from the year ago period.
• Customs data from China pegged May soybean oil imports at 54,477 mt off -7.4% from the year ago month, imports over the January - May 2019 period were 194,560 mt up +92.6% from the year ago period.
• Customs data from China pegged May palm oil imports at 610,496 mt up 49.2% from the year ago month
• USDA Monday weekly crop progress report showed Soybeans planted progress at 85% complete compared to last week's 77% and year ago week 100%
• USDA Monday weekly crop progress report showed Soybeans emerged progress at 71% complete compared to last week's 55% and year ago week 94%
• USDA Monday weekly crop conditions report showed Soybeans 54% good to excellent, 36% fair, 10% poor to very poor versus last week's NA% good to excellent, NA% fair, NA% poor to very poor Stats Canada Estimates
• Ahead of Wednesday's Stats Canada 2019 planting estimate report, analysts are forecasting Canola acres at 20.7 mln, that compares to the 21.31 mln acres in the April report and 2018 crop at 22.81 mln acres.
• Ahead of Wednesday's Stats Canada 2019 planting estimate report, analysts are forecasting Soybean acres at 5.7 mln, that compares to the 5.65 mln acres in the April report and 2018 crop at 6.32 mln acres.
• Analysts ahead of this Friday's USDA acreage report analysts are expecting US Soybean planted acres at 84.7 mln, that compares to the USDA March projection at 83.0 mln acres. The data will be released Friday, June 28 at 11:00 am CDT.
• Analysts are projecting US quarterly grain stocks report this Friday to show US soybean stocks as of June 1 at 1.870 bln bushels, on the year ago date stockpiles were 1.219 bln bu. The data will be released at 11:00 am CDT, Friday June 28th.
• Euronext Paris August rapeseed futures on Tuesday are trading +1.00 euro higher at 368.50 euros/mt
• Dalian Sept soybean futures fell jumped +29 yuan higher Tuesday finishing at 3,462 yuan/mt; Sept soymeal futures added +12 yuan to end at 2,908 yuan/mt
• Dalian Sept vegoil futures traded mixed Tuesday, soyoil rose +4 yuan finishing at 5,400 yuan/mt, palm oil lost -20 yuan ending at 4,296 yuan/mt
• Malaysian August cash offers for RBD palm oil and olein on Tuesday traded -$7.50/mt lower at $497.50 and $502.50/mt, respectively
Early spread action:
• Soybean bull spreads are firm.
• Board crush margins up 1 to $1.02/bushel.
• Oil share weaker to 30.6%.
Soybean Basis: Coming into the day, US fob soybeans are $11/mt discount to Brazil and a $8/mt premium to Argentina.
• US CIF Gulf up 21 to +75 - STL harbor closed again due to heavy rain
• Brazil fob offers off 3 to +92
• Argy fob offer steady +45
• Cedar Rapids steady -55
• Decatur, IL steady -15
• Claypool, IN up 5 to +10
Outside markets are quiet with the dollar trading +.06 to 95.55, crude oil -.08 to 57.82 and DJIA -18. The Brazilian real is steady. Malaysian palm oil closed -17 to 1,981 ringgit.
On the calendar:
• 6/28 USDA quarterly stocks and planted acreage
• 6/28 First notice on July futures
• 6/28-6/29 G-20 summit
• 7/4 markets closed for Independence Day
• 7/11 July USDA crop report