Morning Comments – May 17

Headlines

  • Grains trading higher on optimism toward US/China trade talks.

  • Wheat higher on crop damage concerns.

  • Ethanol production stronger again this week.

  • Private exporters reported to the USDA export sales of 132,000 metric tons of soybeans for delivery to unknown destinations during the 2017/2018 marketing year.

U.S. to hold trade talks with China on Thursday and Friday

  • Treasury secretary Mnuchin is hosting trade talks with Chinese Vice Premier Liu today and tomorrow.

  • Many speculate that Liu is coming to the U.S. to make a deal. However, rhetoric on Tuesday from U.S. trade representative to China indicated that the two countries are still “far apart.”

Wheat Trading Higher

  • Chicago and Kansas winter wheat are both trading higher this morning after reports of crop damage from high wind and hail from storms in Kansas and Colorado.

  • Australia weather continues to be very dry during fall planting.

  • Recent satellite imagery shows record lows for vegetation density across all of Australia’s major wheat growing region.

Ethanol Production

  • Ethanol production increased to 1.058 million bpd from 1.040 mbpd last week.

  • Weekly production was 3% above LY during the same week.

  • LY production levels declined from late May through June which will provide further opportunity for TY ethanol production to make significant gains over LY.

  • Ethanol stocks declined this week to 903 million gallons from 922 million.

  • Ethanol stocks usually reach a peak in April and decline until August during the summer driving months.

  • The decline in ethanol stocks from the seasonal peak to mid-May was 11% this year, which is significantly larger than 2017 when ethanol stocks were reduced by only 4%.

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Weekly Exports

  • Export sales were mostly within expectations this week with soymeal beating expectations.

  • Wheat sales were up 79% from last weeks terrible performance.

  • Corn sales were up 42% from last week and were on the high side of analyst expectations.

  • Soybean sales were down 20% from last week and narrowly missed expectations to the low side.

 

Actual

Estimated

Last Week

Wheat-OC

63

0-200

35

Wheat-NC

131

100-300

48

Corn-OC

985

700-1,000

695

Corn-NC

129

50-200

90

Soybeans-OC

281

300-600

354

Soybeans-NC

224

100-400

278

Soymeal-OC

376

100-300

90

Soymeal-NC

45

0

-6

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