Soybean Morning Update & Commentary: Bean exports poor as expected, meal sales continue to impress.
USDA Weekly Export Sales:
Est. (combined) Actual (old/new crop)
Corn -500-+700 tmt -75 and +52
Wheat 126-600 tmt -45 and +245
Beans 50-950 tmt 115 and 1
Meal 150-550 tmt 341 and 51
Oil 0-15 tmt 6
Overnight grain markets were mixed with a limited range of trade. Trade volumes and participation are subdued and dwindling as the week progresses with farmers busy in the field, buyers taking a more relaxed approach, and the spec crowd cautious heading into a holiday weekend where a weather forecast shift has the potential to impact sentiment and price direction moving forward. US debt ceiling negotiations are ongoing and creating plenty of noise with no concrete results so far, which adds to the general risk off vibes. The outside markets offer a negative macro influence out of the gates with crude oil trading $1.40 lower and the dollar making a two-month up by .28 pts. Increasing dryness across the Midwest is helping to underpin prices for the row crops although the trade recognizes the early date with plenty of time for crops to flourish when rains return but there is some anxiety due to the tight old crop supply scene and awareness of how important this crop cycle is for domestic supply. Absent a new input or shift in the weather forecasts, we anticipate more choppy trade for the soybean market into the weekend. July beans are off by ½ penny headed into the break with new crop trading 5 ½ lower.
In the product trade, bean oil is firmer while meal continues to dig into new lows. The meal spreads are firm despite the flat price weakness and another positive export sales report could help underpin prices. The oil share spread is trading at a two-week high at 37.6%. Board crush margins are up 3 cents nearby to 92 cents/bushel with new crop up by 2 cents to $1.76/bushel.
Weekly export sales were lackluster as expected for corn at net negative 23 tmt and beans at 116 tmt. Meal sales were the pleasant surprise at 392 tmt while wheat at 241 tmt and oil at 6 tmt were within expectations. China canceled 332 tmt of old crop corn, they bought 68 tmt of old crop white wheat, 116 tmt of old crop sorghum, 25 tmt of old crop beans, and 65 trb of old crop cotton and 4 trb in the new crop.
Old crop soybean sales of 115 tmt were up noticeably from the previous week, but down 26% from the prior 4-week average. Increases primarily for Germany (58), Japan (54, including 52 from unknown), China (25), Indonesia (7), and Malaysia (5), were offset by reductions for unknown (38). New crop sales of 1 tmt with increases for Mexico (4), were offset by reductions for Japan (3). Exports of 287 tmt were up 52% from the previous week, but down 26% from the prior 4-week average. The destinations were primarily to Japan (61), Germany (58), Egypt (57 - late), Mexico (38), and Indonesia (22).
38 weeks into the marketing year, total old crop soybean commitments (outstanding sales plus shipments) reached 50.840 mmt (1.868 bb) which is 14% behind last year's commitments for this date. Total commitments are 93% of USDA's projected exports of 2.015 bb, compared to 99% for the 5 year average on this date. Old crop outstanding sales on the books of 2.9 mmt are led by Mexico with 616 tmt, Japan 339 tmt, and Egypt 181 tmt, while China has just 57 tmt and unknown with 1.3 mmt. Accumulated exports stand at 47.9 mmt compared to 49.2 mmt a year ago. New crop soybean sales on the books stand at just 2.6 mmt compared to 12.1 mmt at this time last year.
Old crop meal sales of 341 tmt were up 69% from the previous week and 68% from the prior 4-week average. Increases primarily for Poland (100), unknown destinations (47), Colombia (46, including decreases of 2), Mexico (23, including decreases of 16), and Guatemala (19), were offset by reductions for Belgium (2). New crop sales of 51 tmt were primarily for Canada (31) and Guatemala (12). Exports of 226 tmt were down 21% from the previous week and 6% from the prior 4-week average. The destinations were primarily to Vietnam (54), Colombia (46), Mexico (34), Canada (33), and Panama (13).
In the news:
• Malaysian Palm Oil Board on Thursday said next year's crude palm oil production could be down by 1.0 to 3.0 mln mt due to effects from El Nino conditions. This year's production is forecast at 19.0 mln mt. The industry group noted the last El Nino event in 2016 pushed production down by -20% from the previous year.
• On Thursday, the Egyptian Supply Minister estimated the country's vegetable oil strategic reserves at 5.0 months coverage
• An EU vegoil industry group, FEDIOL, on Thursday called on the EU to investigate what they deem as "abnormal" volumes of imported waste-based vegoil biodiesel. The group is questioning the authenticity of the classification of the biodiesel imports as coming from waste feedstocks.
• Euronext Paris August rapeseed futures on Thursday are trading +6.00 higher at 405.00 euros/mt
• Dalian July soybean futures traded -3 yuan lower ending at 5,074 yuan/mt; July soymeal lost -30 yuan ending at 3,490 yuan/mt
• Dalian Sept vegoil futures on Thursday traded lower, palm oil lost -18 yuan finishing at 6,658 yuan/mt, soyoil lost -42 yuan ending at 7,008 yuan/mt
• Malaysian June cash offers for RBD palm oil and olein on Thursday traded +$15/mt higher ending at $835.00/mt and $845.00/mt, respectively
• Malaysian August crude palm oil futures on Thursday traded +91 ringgit higher ending at 3,498 ringgit/mt
• Outside markets. Crude Oil -$1.47 ; Gold -$3.30 ; Silver -15.5c ; US $ index +24 pts
World Weather Inc. Highlights:
• Rain will bring dryness relief to Saskatchewan and northwestern Manitoba, Canada over the next several days
• Alberta, Canada's drought areas "may" get some needed rain in early June, although the GFS model run this morning has suggested significant rain may occur there this weekend and early next week - confidence in the GFS outlook is a little low
• U.S. Midwest weather will continue drier than usual for another week and then scattered showers and thunderstorms are likely, though resulting rainfall may continue lighter than usual
• West Texas received some welcome rain overnight and more is expected today and again Saturday night with a few other sporadic showers expected during the balance of the next two weeks
o Planting moisture is improving, but subsoil moisture will continue low leaving concern about the long term outlook for dryland crops
• U.S. hard red winter wheat areas will get periodic showers and thunderstorms over the next week to ten days with a little worry over crop quality in some of the wetter areas
• Northern Europe will be notably drier biased over the next ten days while the south continues to get waves of rain
• Russia's eastern New Lands are advertised to get some rain in early June after a dry finish to May
• Northern India will trend wetter than usual this weekend into early next week disrupting some fieldwork, but perhaps benefiting early cotton development
• China weather will continue well mixed for all crops
• Southern Australia rainfall will be timely in the next week to ten days, despite lighter than usual
• Early monsoon rainfall will be abundant in Kerala, India and along the coast of Myanmar during the next couple of weeks
• Interior Thailand crop area will get needed rain, but may continue to see lighter than usual rain amounts for a while
• Indonesia and Malaysia rainfall will be in decline next week and on into the first half of June
US Gulf steady +65
Sioux City, IA steady +15n
Mankato, MN steady +20n
Decatur, IL steady +50n
Claypool, IN steady +80n
Columbus, OH steady +1.25x