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Weekly Grain Movement – More questions than answers

China still holds massive book of outstanding sales

A lackluster round of export data from USDA Thursday morning raised additional questions about China, according to Farm Futures senior grain market analyst Bryce Knorr.

“China picked up a couple more loads of old crop soybeans, keeping its huge book of outstanding sales at 210 million bushels,” he says. “With eight weeks left in the 2018 crop marketing year that means those buyers must ship out some 26 million bushels a week through the end of August. More likely, many of the purchases will be rolled to 2019 crop delivery, with an outside chance some get cancelled if trade negotiations with the U.S. flame out.”

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New crop soybean demand is also uncertain, Knorr adds, because the new crop book is less than 100 million bushels – the smallest tally in 15 years.

Soybeans found 4.9 million bushels in old crop sales, plus another 4.8 million bushels in new crop sales, for a total of 9.6 million bushels for the week ending July 4. That was only half of analyst estimates of 18.4 million bushels and far behind the prior week’s total of 37.8 million bushels.

Soybean export shipments fared better, at 25.4 million bushels but still fell behind the weekly rate needed to match USDA estimates, now at 35.5 million bushels. For the 2018/19 marketing year, China leads all destinations for U.S. soybean export commitments, accounting for 30% of the total. Other top destinations include the European Union (15%), Mexico (10%), Egypt (5%), Japan (5%) and Indonesia (5%).

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Corn exports found 19.9 million bushels in old crop sales that were partially erased by reductions of 4.3 million bushels in new crop sales for a total of 15.6 million bushels. The total slightly bested the prior week’s effort of 13.1 million bushels but fell below trade estimates of 18.7 million bushels.

“Today’s numbers for corn were in line with trade ideas, which weren’t much,” Knorr says. “This increases potential for USDA to lower its estimate of 2018 crop exports in today’s WASDE report, raising old crop carryout as demand rationing takes hold due to higher prices.”

Corn export shipments reached 44.7 million bushels last week. Mexico is the top destination for 2018/19 corn export commitments, accounting for 31% of the total. Other leading destinations include Japan (25%), Colombia (9%) and South Korea (7%).

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Wheat exports reached 10.5 million bushels last week, meantime. That was fractionally better than the prior week’s tally of 10.2 million bushels but below trade estimates of 14.7 million bushels. The weekly rate needed to match USDA forecasts crept up to 13.3 million bushels.

“Wheat deals continue to be erratic – good some weeks, tepid others,” Knorr says. “For the second straight week, the total was barely above 10 million bushels. While that’s not terribly unusual for the start to the marketing year, total commitments are 7% behind where they should be.”

Wheat export shipments reached 24.3 million bushels, climbing above the weekly rate needed to match USDA forecasts, which is now at 17.1 million bushels. The Philippines is the top destination for U.S. wheat export commitments a month into the 2019/20 marketing year, with 14% of the total. Other leading destinations include Mexico (13%), unknown destinations (9%), Japan (8%), Nigeria (7%), Taiwan (5%) and Algeria (5%).

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