Japan will allow gas blends using U.S. ethanol
Wheat struggled in the Thanksgiving shortened week as weekly export inspections came in at 9.5 million bushels (259,264 metric tons). This was the third lowest weekly total for the year. Trade was expecting 250,000 to 450,000 metric tons.
Russian wheat exports are up 26 percent from last year for the period July 1 through Nov. 15. This number was released Nov. 20 and put further pressure on wheat contracts. The Russian Ruble was also lower after slight gains the previous week. Black Sea Region prices are down for the third straight week at $191 per metric ton Free On Board.
Winter wheat ratings declined 2 points in the good to excellent category lending minor support in Nov. 21 trade. The western tier states of Montana, South Dakota, Nebraska, Kansas and Texas show the poorest ratings. Winter wheat emergence is right at the 5 year average of 88 percent.
It was reported that the Ural mountain region of Russia tested nearly 1,000 times the normal level for radiation. There is speculation that a nuclear incident occurred in September and it is unclear what the impacts will be, but this led to short covering in Nov. 21 trade.
Informa came out with its estimate of 2018 U.S. all wheat acres to decline to 45.625 million acres. Winter wheat acres are expected to decline 773,000 to 31.923 million. Spring wheat acres are expected to increase 336,000 to 11.335 million.
For the week ending Nov. 22, December contracts for Minneapolis wheat were down 8.25 cents at $6.2675, down 4.5 cents at $4.2275 for Chicago wheat, and down 1.0 cents at $4.21 for Kansas City wheat.
Japan announced that it will allow gasoline blenders to use ethanol sourced from the U.S. Japan currently allows blending with Brazilian sugar ethanol, but U.S. ethanol is currently 35 percent cheaper than Brazilian sugar ethanol. China had announced last month that it will increase E-10 into gasoline. On top of these positive Asian biofuels announcements, China stated that they will exempt the value-added tax on imports of dry distillers grains. From a demand perspective, these are all positive developments and should help confirm that a harvest low is in.
Brazil summer corn plantings are near 81 percent complete versus 92.4 percent at this time last year. Hectares are expected to decline to 3.85 million from 5.3 million last year. The U.S. corn harvest is 90 percent complete according to the Nov. 20 crop progress report with the northern and eastern Corn Belt lagging the most.
Ethanol production for the week ending Nov. 17 averaged 1.074 million barrels per day. This is up 1.9 percent versus last week and up 5.92 percent versus last year. Total ethanol production for the week was 7.518 million barrels. Stocks as of Nov. 17 were 21.897 million barrels. This is up 1.86 percent versus last week and up 15.54 percent versus last year. Corn used in last week's production is estimated at 111.77 million bushels bringing cumulative corn usage for ethanol to 1.29 billion bushels.
Exports remain 44 percent behind last year's pace and still well below the U.S. Department of Ag's projected 16 percent demand decrease.
Corn harvest is 90 percent complete versus the 5 year average of 95 percent according to the weekly crop progress report. For the week ending Nov. 22, December was up 2.25 cents at $3.4525 and March was up 2.0 cents at $3.57.
It was a slow start to the week for the row crop markets as traders were reluctant to add positions and others were taking profits going into the holiday season. Early week pressure in the soy complex was contributed to lower soy oil futures as palm oil futures traded down to a three month low. A thin trade put some volatility back into the soybean complex on Nov. 22 to push January soybeans back near the $10 area. The trade is keeping a weather premium in the soybean complex as the threat of an La Nina is creeping in traders' minds. For the week ending Nov. 22, January soybeans were up 6.75 cents and March soybeans were up 6 cents.
India announced that it is raising its import tariffs for palm oil and crude soybean oil. As the world's largest vegetable oil importer, India will increase import taxes on crude palm oil from 15 percent to 30 percent, refined palm oil from 25 percent to 40 percent, and crude soybean oil from 17.5 percent to 30 percent. Estimates for U.S. consumption of soybean oil usage to make biodiesel are expected to rise 13 percent to a new record this year. If this demand holds, it would put reserves ahead of the next U.S. soybean crop at a 4 year low.
Northern and central Brazil have been getting timely rains which are helping their crop get off to a decent start. Argentina weather is dry and is expected to stay that way in the near term. Soybeans also continue to find support as the funds continue to keep a net long position. January soybeans are hanging above the 50 and 100 day moving average of $9.84 and $9.385 respectively.
The USDA announced a sale of 4.8 million bushels (130,000 metric tons) of U.S. soybeans to China for 2017-18. This was the first reported sale on the USDA wire in quite a while. Exports continue to lag behind last years pace. If a continuation of cheaper port bids is the trend though, it should spark increased U.S. export demand sooner than later. Brazil Free On Board bids are 30 cents higher than U.S. port bids.
The U.S. soybean harvest is almost wrapped up with a few small pockets left in the eastern Corn Belt. Soybean harvest came in at 96 percent complete on Nov. 20, versus the 5 year average of 97 percent and 98 percent last year.
For the week ending Nov. 22, January Canola futures in Winnipeg were down $4.3 Canadian to $515.1 metric tons Canadian. The Canadian dollar was up to .7864. This brings the U.S. price to $18.38 per hundredweight U.S.
• Velva, N.D., $17.78 per hundredweight, December $17.89
• Enderlin, N.D., $18.42 per hundredweight, December $18.42
• Hallock, Minn., $17.63 per hundredweight, December $18.12
• Fargo, N.D., $18.45 per hundredweight, December $18.40
Cash feed barley bids in Minneapolis were at $2.40, while malting barley received no quote. Berthold, N.D., bid is $2.25 and CHS Southwest New Salem, N.D., bids were at $2.50.
Cash bids for milling quality durum are $6.25 in Berthold and at $6.25 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17.65, December $17.55. For the week ending Nov. 22, Soybean oil was down 39 cents to $34.05 on the December contract.