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Erin Brown / Grand Vale Creative

All eyes on G-20 Summit as trade woes continue

Wheat

The wheat markets found support early week from a Russia-Ukrainian incident over the weekend. According to reports, Russia seized three Ukrainian vessels and blockaded the Kerch Strait which has access to the port of Mariupol, Ukraine. The strait links the Sea of Azov along the Russian border to the Black Sea. The Russian port of Rostov also uses this strait for commerce. A 2003 agreement gives both countries the right to navigate the strait. The other two major ports in that area are Odessa, Ukraine, and Novorossiysk, Russia, which are directly on the Black Sea. The Russian ruble fell 1.5 percent against the U.S. dollar on this news.

The wheat markets reversed those gains in the next session as the Ukraine stated that their wheat exports were moving at a normal pace despite the seizure of the three vessels. SovEcon expects Russia to export 34.7 million metric tons of wheat for 2018-19. The U.S. Department of Agriculture is currently estimating 35 million metric tons. Reuters reported that the European Union crop monitoring firm MARS stated winter crops in the northern and western regions of Europe are off to a good start with favorable conditions.

Winter wheat conditions declined 1 percent to 55 percent good to excellent, 32 percent fair and 13 percent poor to very poor. Trade was expecting unchanged conditions. Emergence was 86 percent compared to 92 percent for the five-year average. Winter wheat planted was at 95 percent compared to 99 percent for the five-year average.

Weekly export inspections were 252,000 metric tons (9.3 million bushels) which was below expectations of 350,000 to 600,000 metric tons. Inspections are running 370 million bushels, 19 percent less than last year. Weekly exports sales totaled 13.9 million bushels. Total commitments of 547 million bushels are down 13 percent from a year ago. Weekly shipments of 9.2 million bushels put total shipments down 18 percent from the previous year. There was an announcement of a 120,000 metric tons sale of U.S. soft red wheat to Egypt which supported the Chicago market. Algeria purchased 600,000 metric tons of wheat from France and Argentina. The lack of U.S. business weighed heavy on traders this week.

Commodity Futures Trading Commission data showed the managed funds increasing their all wheat net short position by 11,000 contracts to 38,000 short. CFTC data on deliverable grain shows a much lower total versus last year in the Chicago and Minneapolis contracts but a higher total for the Kansas City hard red winter wheat complex.

For the week ending Nov. 29, December contracts for Minneapolis wheat were down 4.75 cents at $5.695, down 3.25 cents at $4.965 for Chicago wheat, and up 4.75 cents at $4.66 for Kansas City wheat.

Corn

December corn futures were up 1.25 cents for the week. Corn futures were lethargic this week as uncertainty around political and global policies are keeping the trade on edge. News for the corn complex will likely be lacking until the next World Agricultural Supply and Demand Estimates report comes out Dec. 11. Corn futures found some support midweek from a Trump administration announcement regarding biofuels. According to Reuters, the Trump administration has temporarily frozen the small refinery waiver policy pending a review of the scoring system for calculating the exemptions by the Department of Energy. The EPA granted 29 of these hardship waivers in 2017 compared to 14 in 2015 and 20 in 2016. This has placed on hold seven applications for 2017 and 15 applications for 2018.

This announcement came one day after the EPA rejected requests from the National Corn Lobby to reallocate and add the retroactive exemptions into the 2019 Renewable Fuels Standard schedule of 19.88 billion gallons.

Renewable Identification Numbers, or RINS, have declined in value to the 10 cent range after the EPA granted the unusually high number of exemptions. Congress also returned to session this week with the farm bill on the top of its agenda.

Ethanol production for the week ending Nov. 23 totaled 7.336 million barrels, up 0.58 percent from last week and down 1.69 percent versus last year. Ethanol stocks were 22.93 million barrels, up 0.61 percent versus last week and up 4.02 percent versus last year. Ethanol profit margins based on the Iowa price model continue to be in the negative 45 to 50 cents per gallon range.

Crude oil stocks rose much more than expected to 450.49 million barrels while gasoline stocks declined to 224.55 million barrels versus expectations of a slight increase. Calendar year gasoline demand is averaging 0.7 percent higher than last year, but demand since Oct. 1 is running 1.3 percent below last year.

Corn harvested as of Nov. 25 was at 94 percent complete versus 94 percent last year for this time of year and 96 percent for the five-year average. Corn weekly export inspections for 2018-19 total 470 million bushels, up 80 percent from the previous year and well above USDA's estimate for a 1 percent increase. For the week ending Nov. 22, USDA reported 49.9 million bushels of corn export sales for 2018-19. Total commitments of 1.007 billion bushels in 2018-19 are up 16 percent from a year ago.

Soybeans

Soybean futures recovered from the 18-cent sell off to start the week as optimism is increasing that the standoff between the U.S. and China over trade could be easing. Support also came from news that 6 percent of soybeans are yet to be harvested in the U.S. as of Nov. 25. Many of the soybeans that are getting harvested this week are still well above moisture levels that are generally acceptable for storage.

President Donald Trump and Chinese leader Xi Jinping have agreed to halt additional tariffs for the next three to six months in the lead up to the G-20 Summit this weekend. This was viewed as a positive by the trade, which led to double-digit gains. This announcement on Nov. 28 led the Dow Jones to a 600 point gain, the largest single day gain in eight months. An article from JP Morgan stated that the recent announcement of General Motors closing plants and a weakening farm economy may be weakening Trump's stance.

The African swine fever outbreak has led some analysts to believe that Chinese soybean imports will decline through 2018-19 regardless of how the U.S.-China talks go. If anything the outbreak has given China a good excuse to slow down imports.

There was some fresh news out of South America this week. Ag Rural is reporting the fastest Brazil soybean planting pace in history. If weather stays nice in Mato Grosso, their harvest could start before the end of December due to their early start. China and Argentine talks to allow Argentina meal into China have stalled out as Chinese demands to inspect Argentina crush plants are a hold up. Safras upped the 2019 Brazil soy crop estimate 1.1 million metric tons to 122.2 million metric tons, versus USDA at 120.5. Agroconsult put the Brazil soy crop at 123-129 million metric tons.

November soybeans support is the summer lows set July 16 of $8.2625 and then the new 10-year lows set on Sept. 18 of $8.1225. The psychological $8 mark and then $7.7625 lows set back in December 2008 are major support after that.

Resistance is the new three-month high set Oct. 15 of $9.0625 on the January contract, and then major resistance is the end of July's high of $9.3275. January soybeans were up 6.25 cents for the week ending Nov. 29.

Inspections for 2018-19 total 405 million bushels, down 43 percent from a year ago and far below USDA's new estimate for an 11 percent reduction. Total commitments of 855 million bushels in 2018-19 are down 32 percent from a year ago.

Canola

For the week ending Nov. 29, January canola futures were up $3 at $478.50 Canadian per metric ton. The Canadian dollar was down .0037 to .7531. This brings the U.S. price to $16.35 per hundredweight.

• Velva, N.D., $15.72 per hundredweight, January at $15.59.

• Enderlin, N.D., $17.07 per hundredweight, Nexera.

• Hallock, Minn., $16.38 per hundredweight, January at $16.21.

• Fargo, N.D., $16.90 per hundredweight, January at $16.25.

Barley

Cash feed barley bids in Minneapolis were at $2.60, while malting barley received no quote. Berthold, N.D., bid is $2.50 and CHS Southwest New Salem, N.D., bid is $2.55.

Durum

Cash bids for milling quality durum are $4.50 in Berthold and at $4.50 in Dickinson, N.D.

Sunflower

Cash sunflower bids in Fargo were at $16.80, with January bids at $17.05. For the week ending Nov. 29, soybean oil was up 8 cents at $27.68 on the December contract.

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