Headlines:
- World grains harvest upgraded to within an ace of record high
World grains production will come just 1m tonnes from its record high, the International Grains Council said, lifting in particular its forecast for output of corn, in which it ditched an estimate of a drop in stocks. The intergovernmental group hiked by 20m tonnes to 2.046bn tonnes its forecast for global output of coarse grains and wheat in 2016-17, taking the figure within an ace of the record high set two seasons ago. The upgrade reflected in part an increase of 6m tonnes, to 735m tonnes, in the estimate for world wheat output, as improved estimates for former Soviet Union and US crops offset a downgrade to expectations for the European Union harvest. “Wheat harvests are significantly exceeding expectations in the US and [former Soviet Union], but results have been poorer than predicted in parts of the EU, particularly in France,” the council said. Indeed, in the EU, “there is increasing evidence of yield and quality damage following untimely rains”. - South American soy crush margins under pressure, Bunge says
Soybean crush margins in South America are coming under pressure, as farmers hold onto beans after smaller-than-expected harvests, Bunge said. Crush margins, the amount of money to be made by processing oilseeds into meal and oil, are a key driver of demand. But Bunge said that this shortfall in South America will boost soybean crush margins in North America and Europe, Bunge said, as it announced better than expected sales.
Summary:
The USDA’s Weekly export sales showed that Soybean demand fell below trade expectations which was contrary to rumors that were circulating across newswires yesterday. Beans were in positive territory for a decent portion of the day but it topped about an hour into the regular trading session then proceeded to move down the balance of the day. September and November Beans ended the day down 5.25 and 6.50 cents respectively.
The Weekly USDA report showed Corn coming in at 915.3k metric tons which was right in line with trade expectations of 800k to 1.5M metric tons. Soybean was a big miss coming in at 676.8k metric tons versus the trade expectations of 800k to 1.4M metric tons. Wheat rounded out the day at 506.1k metric tons coming in right in the middle of trade expectations of 400 to 600k metric tons.
Today’s move lower is consistent with our projections that the grain market should move sideways or lower through the end of month.
