WEEKLY OUTLOOK: UPDATING CORN, SOYABEAN, EXPORT PACE.

As the focus of corn and soybean markets turns to 2017 prospects for production, the pace of old-crop corn and soybean consumption carries implications for carryover stocks into the 2017-18 marketing year. The level of corn and soybean consumption in export markets provides an indication of demand strength moving into the next marketing year. The recent pace of exports in soybean and corn markets and the implications for stocks at the end of the marketing year is considered in this post.

Corn exports in the current marketing year exceed the pace for a year earlier through March and currently exceed the historical pace to meet USDA projection of 2.225 billion bushels. The 2016-17 marketing year corn exports through March came in at 61% of the total exports projected during the entire marketing year. This pace is substantially higher than the 43% pace during the same period last year, but poor crop performance in South America gave life to expanded exports through the summer months of 2016.

The rate of weekly export inspections continues to show strength with 28.37 million bushels exported for the week ending May 4. Cumulative Census Bureau export estimates from September 2016 through March 2017 exceeded weekly export inspections by 43 million bushels. If the margin exhibited at the end of March continued, exports through May 4 equaled 1.585 billion bushels. With 17 weeks remaining in the marketing year, 37.6 million bushels per week are necessary to meet the USDA projection. Over the last six weeks, corn export inspections averaged 55 million bushels per week with a high of 61.7 million bushels and a low of 52.4 million bushels.

As of April 27, 575 million bushels of corn had been sold for export but not shipped. Additional sales of 3.82 million bushels per week are necessary to reach 2.225 billion bushels based off of current sales figures and estimated export levels through May 4. For the last six weeks ending April 30, new sales averaged 34.6 million bushels per week. The current pace and sales of corn appear supportive of the current 2.225 billion bushels projection. In assessing the potential for increased exports of corn during the marketing year, the large Brazilian second crop of corn will play a major role since total Brazilian corn production is projected at 3.68 billion bushels, which are up 39.5% from last year’s poor crop.

Soybean exports typically slow as the South American soybean crop enters the world market. Numerous reports of Brazilian farmers holding onto soybeans due to low prices in the local currency provides support for soybean exports lagging behind the normal pace in Brazil. U.S. soybean exports in the current marketing year exceed last year’s pace through March. The 2016-17 marketing year soybean exports through March sit at 87.5% of the total exports projected during the entire marketing year. This pace is higher than the 80.5% pace during the same period last year, but progressing at a similar pace to the previous two marketing years.

The rate of weekly export inspections continues to vacillate with 12.84 million bushels exported for the week ending May 4. Cumulative Census Bureau export estimates from September 2016 through March 2017 exceeded weekly export inspections by 23 million bushels. If the margin exhibited at the end of March continued, exports through May 4 equaled 1.853 billion bushels. With 17 weeks remaining in the marketing year, 10.1 million bushels per week are necessary to meet the USDA projection. Over the last six weeks, soybean export inspections averaged 23.8 million bushels per week but varied with a low of 16.4 million bushels for the week ending April 13 and a high of 32.7 million bushels for the week ending April 6.

As of April 27, 251 million bushels of soybean had been sold for export but not shipped. This number exceeds the 172 million bushels necessary to reach 2.025 billion bushels based off of current sales figures and estimated export levels through May 5. For the last six weeks ending April 27, new sales averaged 14.7 million bushels per week. The current pace and sales of soybeans appear supportive of the current 2.025 billion bushel projection and give credence to the possibility of increased soybean exports for the 2016-17 marketing year. While some commentators see the potential for an increase in USDA projections, it may be too soon for this type of speculation.

The release of the May 10 WASDE report provides the first look at USDA projections for the 2017-18 marketing year. The strength of corn and soybean export demand bodes well for meeting USDA export projections. The ability to exceed these export projections is a possibility, but it is heavily dependent on South American exports and the continued growth in demand from importers. At this point, the ending stock projections outlined in the last WASDE supply and demand figures appear to be the levels we will see moving into the 2017-18 marketing year. BY TODD HUBBS.

SOYA BEANS DROP 5C FRIDAY: BRAZILS BIGGER CROP PRESSURES SOYABEAN MARKET.

DEE MOINES, Iowa --On Friday, the CME Group's farm markets lean lower.
In early trading, the July corn futures are 1/4¢ lower at $3.69, while December futures are 1/4¢ lower at $3.87.

July soybean futures are 5¢ lower at $9.61, November soybean futures are 4 3/4¢ lower at $9.59.
July wheat futures are 1¢ lower at $4.32.

July soy meal futures are $1.20 per short ton lower at $313.70. July soy oil futures are unchanged at 32.49¢ per pound.

In the outside markets, the Brent crude oil market is $0.06 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 22 points lower.

Thursday's Grain Market Review
Corn futures closed lower on Thursday as investors who made money on yesterday’s gains sold contracts and booked profits.

Prices rose on Wednesday after the U.S. Department of Agriculture said U.S. inventories at the end of the marketing year on May 31 would total 2.29 billion bushels, missing estimates for 2.33 billion bushels. Wheat stockpiles were pegged at 1.15 billion bushels, missing forecasts for a total of 1.16 billion bushels.

After prices rose 2% yesterday, investors who’d made money on the market are likely selling to take profits, analysts said.

Futures also dropped after the Conab, Brazil’s agricultural statistics agency, said this morning that corn output in the country should reach 92.8 million metric tons, up from 91.5 million projected a month ago. Soybean output is forecast at 113 million tons, up from 110.2 million in April.

Weather forecasts are also calling for rain to stop for a few days, giving growers a chance to accelerate planting next week. As much as six times the normal amount of rain has fallen in the past two weeks in much of Illinois and Indiana, keeping producers out of fields. Drier weather should allow the pace of planting to improve, analysts said.

Corn futures for July delivery fell 4 1/2¢ to $3.69 1/4 a bushel on the Chicago Board of Trade.
Soybeans lost 4 3/4¢ to $9.65 1/2 a bushel in Chicago. Soy meal declined $3.40 to $314.30 a short ton, and soy oil added 0.24¢ to 32.52¢ a pound.

Wheat futures bucked the trend and rose on concerns about damage to the Kansas crop from a snowstorm the last weekend of April. The heavy snow likely snapped plants that had been heading, according to participants on last week's Kansas Wheat Tour.

Wheat for July delivery rose 2 1/2¢ to $4.34 1/4 a bushel and Kansas City futures added 2¢ to $4.41 1/4 a bushel. BY SUCCESSFUL FARMING STAFF.

HUZZAHS FOR NEW USDA TRADE OFFICE, QUALMZ ABOUT STEWARDSHIP AND RURAL DEVELOPMENT.

Agriculture Secretary Sonny Perdue unveiled a USDA reorganization that would take effect in mid-June, highlighted by creation of a high-level office to promote U.S. farm exports, with President Trump’s call for a smaller and more efficient government still on the docket. Small-farm advocates said rural economic development was downgraded by Perdue’s package “in favor of boosting international trade.”

Groups speaking for grain and livestock producers applauded the new post of undersecretary for trade, mandated by the 2014 farm law. Exports generate 20 cents of each $1 in farm income and Perdue said the new undersecretary “will help me…to be an unapologetic advocate for American products. My message for farmers is simple: You grow it and we’ll sell it,” he said in an essay in the Wall Street Journal.

A USDA spokesman said the reorganization will become effective in 30 days and does not need legislative approval. The plan is “a down payment” on Trump’s executive order for agencies to propose a more efficient and smaller government, he said. “As we move forward, as we see opportunities to make further changes to the department that will improve the delivery of services to our wide array of customers, we will do so. USDA is in the process of preparing materials in response to the order.”

The package unveiled on Thursday would abolish the undersecretary for rural development and unite crop subsidy and land stewardship programs in the same operating arm. Both are significant changes. Lawmakers and the two largest farm groups were guarded in their initial assessments of those steps.
Rural development will become an office that reports directly to Perdue – an elevation in importance, according to USDA. The National Sustainable Agriculture Coalition (NSAC) questioned how much time Perdue would have for rural programs among his many duties. Groups such as the Environmental Defense Fund said “as long as conservation priorities do not take a back seat to farm production goals, both farmers and the environment can benefit” from having one undersecretary over see crop subsidies and conservation, as proposed by Perdue.

“The impacts of such a significant reorganization are hard to predict without more information from USDA and the administration,” said president Roger Johnson of the National Farmers Union, who cited the White House proposal in March for a 21 percent cut in discretionary spending by USDA.

The senior Democrat on the Senate Agriculture Committee, Debbie Stabenow, said Perdue’s package “would eliminate an important voice for rural America” – the undersecretary. The Republican chairmen of the Senate and House Agriculture Committees welcomed the undersecretary for trade and said they would review the rest of the package.

Said House Agriculture Chairman Michael Conaway, “The committee will take a very close look at each of the proposed changes and this will be one of the many important topics we cover when the secretary appears before the committee next week.” Perdue is to testify on the rural economy on Wednesday.

The new undersecretary for trade would oversee the Foreign Agricultural Service with its global network of agricultural attachés and would lead USDA trade policy. That would diminish the power of the No. 3 officer at USDA, the undersecretary for farm and foreign agricultural services, whose office would be oriented to domestic programs and re-named as the undersecretary for farm production and conservation in charge of the farm subsidies, crop insurance and conservation.

At present, the Farm Services Agency, which runs the farm program, also controls the Conservation Reserve, the largest land-idling program. A different undersecretary has jurisdiction over land, water and wildlife stewardship programs for working lands. The reorganization would end the division of authority.

Perdue said the goal of the new mission area of farm production and conservation “is to provide a one-stop shop for USDA’s primary customers: America’s farmers, ranchers and foresters.”
The NSAC said a change in the organization chart did not guarantee less paperwork at the farm level. “With no full proposal yet released that details this part of the reorganization, it is difficult to say whether or not it will result in more effective outcomes for farmers and the environment,” it said. BY CHUCK ABBOTT.

U.S CHINA AGREE TO FIRST TRADE STEPS UNDER 100-DAY PLAN.

WASHINGTON/BEIJING, May 12 (Reuters) - The United States and China have agreed to take action by mid-July to increase access for U.S. financial firms and expand trade in beef and chicken among other steps as part of Washington's drive to cut its trade deficit with Beijing.

The deals are the first results of 100 days of trade talks that began last month, when a meeting between U.S. President Donald Trump and Chinese President Xi Jinping proved far more friendly than had been expected after last year's U.S. presidential campaign, but the immediate impact was unclear.
"This will help us to bring down the deficit for sure," U.S. Commerce Secretary Wilbur Ross said at media briefing in Washington. "You watch and you'll see."

The United States ran a trade deficit of $347 billion with China last year, U.S. Treasury figures show.
By July 16, the 100th day after the leaders' meeting, China agreed to issue guidelines that would allow U.S.-owned card payment services "to begin the licensing process" in a sector where China's UnionPay system has had a near monopoly.

China will also allow U.S. imports of beef no later than July 16, and the United States will issue a proposed rule to allow Chinese cooked poultry to enter U.S. markets.
Foreign-owned firms will also be able to provide credit rating services in China.
"We believe that Sino-U.S. economic cooperation is the trend of the times... We will continue to move forward," Chinese Vice Finance Minister Zhu Guangyao told a Beijing media briefing.

Trump had pledged during his presidential campaign that he would stop trade practices by China and other countries that he deemed unfair to the United States. His tough talk toward Beijing had fueled early fears of a trade war.

But Trump's rhetoric toward China has softened in the past month, expressing admiration for Xi and saying he wanted Beijing to help deal with the North Korean nuclear threat.

Shortly after their meeting, Trump said he had told Xi that China would get a better trade deal if it worked to rein in North Korea. China is neighboring North Korea's lone major ally.

On Friday, when asked whether the trade talks with the United States were related to North Korea, Zhu said economic issues should not be politicized.

UNCERTAIN BENEFITS

But while the world's two biggest economies agreed to take a number of steps by July 16, it was not clear how much these new deals would increase trade in the near term.

Ker Gibbs, the chairman of the American Chamber of Commerce in Shanghai, said the measures were a good beginning but not a breakthrough.

"Past foot-dragging means we won't celebrate until these promises are executed," Gibbs said, calling the opening in the electronic payments market "mainly symbolic".

"This should have been done years ago when it would have made a difference. At this point, the domestic players are well entrenched so foreign companies will have a hard time entering the China market."

China is the top export market for U.S. agriculture products, with the total value of exports rising by more than 1,100 percent since 2000 to $21.412 billion in 2016, so beef sales are potentially lucrative for U.S. exporters.

China had conditionally lifted its longstanding import ban on American beef last year, but few purchases have been made. The ban was imposed in 2003 due to a case of bovine spongiform encephalopathy (BSE), or mad cow disease, in Washington state.

And U.S. credit card operators Visa Inc and MasterCard Inc have yet to be independently licensed to clear transactions in China, despite a 2012 WTO ruling mandating that Beijing open the sector and rules issued by the central bank to let foreign firms enter the market.

Visa said in an emailed statement it looked forward to submitting an application for a bank-card clearing institution license, which, "once granted", would allow it to support economic development in China.

MasterCard welcomed the announcement, saying it looked forward "to having full and prompt market access in China". The United States also signaled that it was eager to export more liquefied natural gas, saying China could negotiate any type of contract, including long-term contracts, with U.S. suppliers.

For U.S. gas drillers, China provides a potential customer base beyond countries such as Japan and South Korea, where the long-term demand outlook is bleak due to mature economies, rising energy efficiency and falling populations.

Potential cooperation between the United States and China on LNG would not have any immediate impact on supplies, as China currently does not need new gas supplies and the United States is not yet able to deliver more.

Randal Phillips, Mintz Group's Beijing-based managing partner for Asia, said that Washington was too focused on selling more to China and should instead seek to address structural imbalances created by Chinese industrial policies and barriers to investment.

"That's going to be the challenge, and hopefully the Trump administration doesn't start declaring victory," he said. (Reporting by Ayesha Rascoe in Washington; Michael Martina, Kevin Yao and Matthew Miller in Beijing; and John Ruwitch in Shanghai; Editing by Simon Cameron-Moore and Nick Macfie) BY AYESHA RASCOE AND MICHAEL MARTINA.

3 BIG THINGS TODAY, MAY 12.

1. Soybeans Down Slightly in Overnight Trading on Bigger Brazil Crop

Soybean futures were modestly lower in overnight trading after Brazil’s agricultural consultancy raised its outlook for the country’s crop and as dry weather moves into the Midwest.

Statistics agency Conab said on Thursday that the domestic crop would total a record 113 million metric tons, up from a month-earlier projection of 110.2 million. Argentina’s crop was pegged by the Buenos Aires Grain Exchange at 57.6 million tons, up 1 million from a prior estimate.

The U.S. Department of Agriculture said in a report on Wednesday that it expects Brazilian growers to harvest 111.6 million tons of soybeans.

Meanwhile in the U.S., some dry weather is on the way to the Midwest where as much as six times the normal amount of rain has fallen in the past two weeks, according to the National Weather Service. The break in the rain should allow growers to get into muddy fields to plant their corn and soybean crops, which are behind the normal pace for this time of year.

Soybean futures for July delivery fell 3 ¾ cents to $9.62 ½ a bushel overnight on the Chicago Board of Trade. Soymeal declined 20 cents to $314.70 a short ton and soy oil futures lost 0.20 cent to 32.29 cents a pound.

Corn futures were unchanged to $3.69 ¼ a bushel in overnight trading.
Wheat futures for July delivery fell ½ cent to $4.33 ¼ a bushel in Chicago. Kansas City futures declined ¾ cent to $4.40 a bushel.

2. Export Sales of Corn, Wheat Plunge in Week That Ended on May 4

Corn and wheat sales plunged week-over-week to their respective marketing-year lows, according to the U.S. Department of Agriculture.

Corn sales for delivery in the seven days that ended on May 4 totaled 277,700 metric tons, down 64% from the previous week and 66% from the prior four-week average and the lowest since the marketing year started on Sept. 1, the USDA said in a report.

Mexico was the biggest buyer, taking 109,400 metric tons, Japan was in for 89,500 tons, Venezuela took 30,000 tons, Jordan bought 26,300 tons and Ireland purchased 19,600 tons.

Wheat sales also plummeted last week as exporters actually saw net reductions in sales for the marketing year that ends on May 31. While it’s not terribly unusual this close to the end of the fiscal season to see sales decline, total sales last week came in a negative-24,200 tons.

Purchases of 66,500 tons by Indonesia, 63,000 tons by China, 51,600 tons by Egypt, 32,400 tons by Chile and 30,900 tons by Algeria were more than offset by cancellations. Unknown buyers curbed a purchase of 315,400 tons, Japan cancelled a sale of 34,700 tons and Nigeria nixed a cargo of 4,500 tons.

Sales for the 2017-2018 marketing year that starts on June 1 totaled 273,400 metric tons with China the big buyer, taking 60,000 tons. Mexico was in for 56,000 tons, an unknown buyer purchased 46,000 tons and the Philippines took 45,000 tons.

Soybean sales weren’t terrible at 381,400 tons, up 20% from the prior week but down 4% from the four-week average.

Unknown buyers took 89,400 tons, Japan bought 60,000 tons and Bangladesh purchased 58,300 tons, according to the USDA. The Netherlands was in for 57,700 tons and Indonesia bought 31,400 tons.

3. Drier Weather Expected Through at Least The Weekend in Most of Eastern Midwest

Drier weather is in store for much of the eastern Midwest where rain has been prevalent for the past few weeks, at least for a while.

No rain is in the forecast for northern Illinois or Indiana through the weekend, with the first chance of storm popping up on Monday night, though the risk of a thunderstorm is “limited,” according to the National Weather Service.

Flooding will still continue as rivers have already breached their banks in many areas including northern and north-central Illinois, the NWS said in an early report on Friday.

In the southern Plains, meanwhile, it’s going to be a “picture perfect” weekend with warm weather and sunshine forecast, the agency said. That should help some fields dry out a bit as they head into the home stretch before the harvest. BY TONY DREIBUS.