By G.C. Mays
The USDA released its export sales report for the period October 27-November 2 2017. Wheat and corn sales surged while rising prices are seemingly pushing soybean sales to the downside.
Wheat export sales were strong, more than doubling to 781,700 metric tons during the week, despite orders for 61,700 metric tons cancelled. The bulk of the cancellations were from unknown destinations. Small cancellations were from Mexico and South Korea. According to the USDA, the Korean Government has begun to allow the use of rice for consumption in animal feed. Despite this, the 2017/18 forecast of Korean wheat imports remains at 4.6 million metric tons.
The strong wheat sales during the week have lowered the year-over-year decline in year to date accumulated net sales to 12 percent from 13 percent the earlier week.
December wheat futures moved in lock step with cash prices during the week. Futures ended the week down a penny to close at $4.26 per bushel. Cash prices at the Gulf, Chicago, and Toledo export terminals also moved higher, closing the export sales period at $4.8050, $4.16, and $4.21 per bushel, respectively.
For investors that prefer the Teucrium wheat ETF (WEAT), it lost $0.01 per share over the same period. As discussed last week with corn, the divergence between the Teucrium Wheat Fund and the current December futures contract is because the December wheat futures contract is no longer part of the ETF's portfolio. The Teucrium wheat ETF now holds the March, May, and December 2018 futures contracts.
Corn exports sales were even more robust than wheat, surging to 2.36 million metric tons during the week ending November 2. In addition, US exporters sold more than 600,500 metric tons for delivery during the 2018/19 marketing year. Mexico and South Korea accounted for nearly seventy percent of the total.
Interestingly, South Korea is going to lower its corn consumption forecast to 9.8 million metric tons according to the USDA. This is due to displacement of corn by rice as a feed substitute as well as the lower demand due to its poultry sector being affected by Highly Pathogenic Avian Influenza. Year-over-year marketing year to date sales are now only down 7.6 percent.
Corn futures climbed marginally during the week, adding $0.0175 cents to $3.5050 per bushel. However, cash prices at the gulf moved higher at a faster rate, rising $0.0925 cents to $3.84 per bushel. Prices at the Chicago and Toledo terminals also strengthened during the week, rising $0.0425 and $0.0575 cents, respectively. This is reflective of the strong demand during the week, in my opinion.
The Teucrium Corn ETF (CORN) closed at $17.40 per share, a penny below the earlier week but up $0.06 during the measurement period. This was due to a decline of $0.07 cents on October 27, the day following end of the earlier week. The March, May, and December 2018 Futures contracts were all down two cents on October 27.
In contrast to wheat and corn, soybean sales sagged for the second straight week. Net sales of 1.16 million metric tons were down 41% from the earlier week. Naturally, China was the largest buyer of soybeans, purchasing 1.16 million metrics tons while also selling the U.S. importers 201,300 metric tons during the week.
Perhaps uncompetitive prices played a role in the sharp drop in sales as well as imports in excess of 200,000 metric tons from China during two of the last three weeks.
Soybean futures climbed $0.1375 cents to $9.89 per bushel as the current contract moved from November 2017 to January 2018. Cash prices at key export terminals also moved higher. Cash prices at the Toledo terminal rose the most, closing up $0.1925 cents for the week ended November 2. Prices in Chicago closed at $9.54 per bushel, $0.1425 cents higher. At the Gulf, prices were up a more modest $0.0875 cents, closing at $10.0450.
The Teucrium Soybean ETF (SOYB) was up $0.20 during the period. The underlying futures contracts are now January, March, and May 2018 and they were up $0.1325, $0.1275, and $0.1250 cents, respectively, during the week ending November 2.
The USDA will release its monthly WASDE or World Agriculture Supply Demand Estimates Report. Over the next week, the Mays Report will publish its monthly analysis of wheat, corn, and soybeans separately.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.