by ADMIS Research Team
January soybeans traded at 909 down 4 ½ cents on the day but well off the early session lows at 897. January soybean meal also recovered trading at $312.80, down $1.10 on the day after trading down to $309.20 down $4.70 at one point. Skepticism has reemerged that China will quickly resume buying US soybeans after the agreement of a 90-day truce this past weekend. This morning’s news that the CFO of major Chinese telecommunications company, Huawei, was arrested in Canada over potential violations of US sanctions on Iran and is to be extradited to the US has added to an already elevated increase in US/Chinese trade tensions. News of the arrest has seen negative press reports in China.
The average estimate for Brazil’s 2018-19 production for the Conab report is 122.4 million tonnes (119.5-125.0 million range) versus 118.0 million last month and compared to last year’s 119.8 million tonnes. Argentina’s soybean production is estimated at 55.7 million tonnes versus 55.5 million in the November USDA report and compared to 37.8 million last year. Brazil consultancy Celeres sees Brazil’s 2018-19 soybean production potential at 130.0 million tonnes compared to the recent USDA estimate at 120.5 million tonnes. The traditional export window for US soybeans (October-December) is closing quickly, and the focus of the market will soon shift to the record South American crop. The burdensome supply issue will not get resolved by an end to the tariffs. The open interest in soybeans went down 1,723 contracts on Wednesday with soybean meal up 600 contracts and soybean oil down 6,039 contracts.
March corn recovered some of the early losses and traded down ½ cent at 383 ½ at mid-session. The market was down as much as 4 ¼ cents trading at 380 earlier in the session. US exporters announced the sale of 198,120 tonnes of corn to Mexico this morning. Ethanol production for the week ending November 30 averaged 1.069 million barrels per day. This is up 2.00% vs. last week and down 3.52% vs. last year. Total Ethanol production for the week was 7.483 million barrels. Corn used in last week’s production is estimated at 110.43 million bushels. This crop year’s cumulative corn used for ethanol production for this crop year is 1.4 billion bushels. Corn use needs to average 108.6 million bushels per week to meet this crop year’s USDA estimate of 5.65 billion bushels. Stocks as of November 30 were 23.03 million barrels. This is up 0.44% vs. last week and up 2.16% vs. last year. Ethanol Iowa cash margins are at -.82 cents the lowest seen for the year. The open interest in corn went down 935 contracts on Wednesday.
Egypt bought 350,000 tonnes of wheat with 290,000 tonnes from Russia and 60,000 tonnes from Ukraine at an average price of $253.14 per tonne CNF. The US was absent from this Egyptian wheat tender. The prices were basically unchanged from the November 22nd tender which was bought at an average price of $252.97. Some traders felt that due to Egypt’s recent credit crunch, offers would be higher than the last tender. Egypt’s GASC failed to secure letters of credit for at least 16 cargoes that have been recently purchased. Reports have at least half of the cargoes in question securing letters of credit according to the finance minister. There remains eight cargoes for December 11-20 shipment that have not received letters of credit.
Stats Canada reported total wheat production at 31.8 million tonnes versus the average estimate of 31.45 million tonnes and up 6.0% from last year’s 29.9 million tonnes. Durum wheat was seen at 5.745 million tonnes versus the average estimate of 5.75 million and compared to last year’s 4.96 million. Barley production is seen at 8.38 million tonnes versus the average estimate of 8.14 million tonnes and last year 7.89 million tonnes. The UN Food and Agriculture Organization pegged the global 2018-19 wheat production at 725.1 million tonnes down 0.4% from last month’s estimate on smaller harvests in Turkey and Russia. They see higher world wheat prices to spur increased winter plantings in the US, Europe, Russia and Ukraine. The open interest in Chicago went up 5,336 contracts on Wednesday with Kansas City up 3,883 contracts.
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