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3 Big Things Today, May 11

Wheat Futures Decline Overnight; Export Sales of Soybeans Drop as China Again Absent

1. Wheat Falls Overnight as Domestic Output Forecasts Top Expectations

Wheat futures were lower in overnight trading after the U.S. Department of Agriculture’s estimate for domestic production topped expectations.

Output was pegged at 1.821 billion bushels in the 2018-2019 marketing year that starts on June 1, up 5% year-over-year and topping forecasts compiled by Reuters for 1.777 billion bushels.

“Winter wheat yields are below average in the drought affected states of Kansas, Oklahoma, and Texas,” the USDA said in yesterday’s World Agricultural Supply and Demand Estimates (WASDE) report. “Combined spring wheat and durum production for 2018-19 is projected to increase 34% from the previous year’s low, which is due to both increased area and yield.”

Soybean futures were lower after China, the biggest importer of the oilseeds, said it would curb imports for the first time in 15 years. Imports are expected to fall 0.3% this year to a shade under 96 million metric tons, according to the Ministry of Agriculture and Rural Affairs.

Wheat for July delivery fell 3 cents to $5.03 ½ a bushel overnight on the Chicago Board of Trade. Kansas City futures lost 3 ¼ cents to $5.23 ¾ a bushel.

Soybean futures for July delivery lost 4 ¾ cents to $10.16 ½ a bushel overnight. Soymeal fell 2 ¾ cents to $383.50 a short ton while soy oil rose 0.01 cent to 31.14 cents a pound.

Corn fell 1 cent to $4.01 a bushel overnight.

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2. China Again Absent as Soybean Sales Decline Week-to-Week                                                          

China was again absent from the export sales report as the Asian country, the biggest importer of the oilseeds, bought no soybeans from the U.S. last week.

Soybean sales for delivery in the 2017-2018 marketing year that ends on Aug. 31 dropped 15% from the previous week and 57% from the previous four-week average to 354,300 metric tons, according to the U.S. Department of Agriculture, on the low end of expectations for 300,000 to 600,000 tons.

Egypt was the biggest buyer at 90,000 tons, the Netherlands was in for 85,100 tons and Taiwan bought 69,900 tons. Pakistan purchased 65,900 tons and Japan was in for 41,300 tons. An unknown buyer canceled a contract for 90,000 tons, the USDA said.

For 2018-2019, exporters sold 278,300 tons to overseas buyers. An unknown buyer took 183,000 tons, Argentina bought 83,000 tons and Malaysia purchased 20,000 tons. Analysts had expected sales from 100,000 to 300,000 tons.

Corn sales last week fell 32% from the prior week and 22% from the average to 695,600 metric tons, the government said.

Vietnam bought 266,500 metric tons of old-crop corn, followed by Japan, which took 186,200 tons and Colombia, which purchased 124,400 tons. Israel bought 114,600 tons and the Netherlands was in for 89,600 tons. An unknown buyer took 489,700 tons.

Analysts had pegged 2017-2018 sales from 700,000 to 1 million tons.

For 2018-2019, Mexico was the only buyer reported, taking 90,000 metric tons. Analyst had expected new-crop sales from 50,000 to 300,000 tons.

Old-crop wheat sales for delivery before the end of the marketing year on May 31 totaled 35,200 tons, the USDA said. That’s down 85% from the prior week and 76% from the average.

Malaysia was the biggest buyer at 31,000 tons, followed by Italy at 19,500 tons, Indonesia took 11,000 tons, the Philippines bought 9,600 tons and Colombia was in for 8,800 tons. An unknown buyer canceled a purchase of 56,700 tons.

Sales for delivery in the 2018-2019 marketing year totaled 48,200 tons, the government said. The Philippines bought 25,000 tons, unknown buyers bought 22,000 tons, Trinidad was in for 21,000 tons and Nigeria purchased 20,000 tons. Mexico canceled a contract for 34,900 tons and Peru canceled a cargo of 5,000 tons. Analyst had pegged new-crop sales from 200,000 to 350,000 tons.

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3. Extremely Dry Conditions Prevail in Southern Plains as `Dry Lightning’ Possible

A red flag warning indicating extremely dry conditions has spread in the southern Plains.

The National Weather Service said in a report early Friday morning that winds will be sustained from 20 to 30 miles an hour with gusts up to 40 miles an hour in parts of the Oklahoma and Texas panhandles.

Temperatures will range from 95 to 104 degrees Fahrenheit and relative humidity is forecast from 6% to 10%.  

Isolated thunderstorms are possible in the eastern part of the panhandles but that brings with it a chance of “dry lightning,” which could easily spark wildfires, the NWS said.

Further north in Iowa and Minnesota, meanwhile, thunderstorms are likely with lightning and locally heavy rain being the main threats, the agency said. An inch or 2 is possible through tonight, which may further flood rivers that are already over their banks.

Elevated rivers are expected early next week as the water flows south along the Mississippi River.

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