Free Commentary

By: Dan Hueber –

We have finally arrived…the first official production and supply/demand report for calendar year 2017 and theoretically should be a big one (figuratively) at that.  I say that not because I am anticipating any major surprises although that is always a possibility but rather because from this point forward through the balance of the marketing year, the production tally is etched in stone.  Changes in demand of course will continue to reinterpreted as we move ahead.  Once again, here is a synopsis of the trade estimates; Total corn production of 15.196 to 15.2 billion with yield estimates between 175.1 and 175.4 and ending stocks right around 2.4 billion.  Bean production is expected to be around 4.374 to 4.380 billion with yield somewhere between 52.5 and 52.8 leaving ending stock in the range of 468 million bushels.  Finally, wheat ending stocks are expected to be around 1.148 billion.

We have export sales back on the schedule and while they did improve from the marketing year lows that were recorded the previous week, there is little here to really cheer about.  For the week ending January 5th we sold a total of 603,300 MT or 23.75 million bushels of corn.  This was 41% higher than the previous week but 42% below the 4-week average.  Top sales were made to unknown destinations with 207k MT, followed by Japan purchasing 126.5k and Taiwan with 80.6k.  Beans sales were nearly four times larger than the previous week coming through at 348,900 MT or 12.82 million bushels.  Regardless, that number was still 71% below the 4-week average and even though it is only realistic that we should get used to it, it is a letdown to not see sales above the 1 MMT mark as we have grown so accustomed to.  The top sales were made to the Netherlands with 208.2k MT, followed by China with 200.3k and Mexico for 67.8k.  There were cancelations of 471.5k from unknown destinations.  Wheat sales were a bit over double last week coming in at 391,000 MT or 14.37 million bushels, which was actually just 1% below the 4-week average.  Top purchasers were unknown destinations with 292.9k Mt, followed by Mexico with 66.1k and then Nigeria with 10.9k.  In the daily reporting system this morning, we also find sales of 110,000 MT of corn to Japan and 253,488 MT of corn to unknown destinations.

I believe it is worthwhile at this time to give you a little glimpse of the ag world in a nutshell to keep the bigger picture in perspective.  Here is a graph of the DB Agricultural EFT, which includes a weighted mix of 11 different ag commodities.  Overall, we remain in a base-building sideways pattern but have actually begun to show just a little more positive bias since we have rolled into the New Year.


We have little more than a mixed bag of trade in grain and soy markets this morning as we tread water waiting for the release of the report.  Corn and wheat are a bit defensive and looking rather weary while beans are a smidge higher and for whatever reason, appear poised to advance.