What We're Watching This Week - May 15, 2017

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Soybean Sales Slow In Brazil:

Brazil is preparing to deliver a massive soybean crop to the global markets. Yet, Brazilian growers have sold only 50% of the 2016/17 soybean crop compared to 67% a year ago and the 5-year average of 65%. Some are apparently betting that red-hot Chinese demand could lift local prices if the US experiences adverse weather this summer. Despite US soybean exports entering a seasonally-low period, exports have been recently trending above year-ago levels. We suggest that agribusiness groups and traders keep an eye on weekly export prices along with weekly US export sales data.

Soybean Export Prices vs. US Export Sales


Sweetener Prices Narrow Amidst Mexican Trade Dispute:

Mexico and the United States are currently in a trade spate over the amount of refined sugar that the former can export north. At the same time, the price premium that US sugar holds over high fructose corn syrup (HFCS) has narrowed sharply. US sugar refiners obviously want to minimize price pressure, but lower prices may actually promise greater demand. Food and beverage companies could switch sweeteners if sugar prices fall enough and corn processors hold prices firm. With the USDA publishing its monthly outlook on Tuesday, we recommend that procurement managers closely monitor this potential market shift.

Soybean Corn Syrup, Sugar Prices vs.US Corn Use for Corn Syrup


US Winter Wheat Conditions Remain Fluid:

USDA is forecasting a 9% decline in US wheat supply during the 2017/18 season, which is somewhat supportive for US wheat futures. Still, large global wheat stocks present an uphill battle for any price rally. Also, the USDA only lowered its rating of winter wheat by 1% to 53% good-to-excellent last week, despite much ado about a snowstorm that hit much of the Hard Red Winter wheat belt in late April. Whether this was merely a delay will become more clear when the USDA releases its weekly Crop Progress report today. ​We will be focused on the good-to-excellent rating of US winter wheat in the report.

US Winter Wheat Conditions
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