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Corn & Soybean Condition and Chinese Imports/Soybeans

August 11, 2015
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Corn and Soybean Pro Farmer Crop Condition Index (“CCI”) post modest gains…

When U.S. Department of Agriculture’s (“USDA”) weekly crop condition ratings are plugged into the weighted CCI’s (0 to 500 point scale, with 500 being perfect), the corn crop ticked another 0.59 points higher to 376.17. The soybean crop rose 1.3 points to 355.90 over the past week. Both of these ratings are down from year-ago levels when the corn crop had a 386.08 CCI rating and the soybean crop stood at 373.84.

August 12th is a key day for the corn and soybean markets. The USDA will release its first survey-based corn and soybean crop estimates on Wednesday, August 12th at 11:00 a.m. Central Time. Reuters has conducted a pre-report survey study in which analysts expect the USDA to peg the U.S. corn crop around 13.327 billion bu. (“bb.”), based on a harvested acreage estimate of 81.017 million acres and an average yield of 164.5 bu. per acre (“b/a”). In the May 2015 Supply & Demand Report, the USDA indicated 90% of yield variability is determined by July weather across the Corn Belt, with more weighting toward temps than precipitation. For the first time since 2009, the Corn Belt as a whole experienced temperatures averaging below normal and precipitation averaging above normal for July.

Analysts expect the USDA to estimate soybean harvested acreage around 83.271 million acres with an average yield around 44.7 b/a for a 3.724 bb. crop. Roach Ag Marketing projects U.S. soybean plantings will be 83.1 million acres vs. 85.139 million acres in the June USDA survey. Roach Ag also expects U.S. corn planted acreage to be 88.2 million acres vs. 88.897 million acres in the June USDA survey. For soybeans, August is the key weather period as the crop is setting and filling pods. A lot can change between now and the end of the month — good or bad.

China National Grain and Oils Information Center “(“CNGOIC”) expects record-large Chinese soybean imports for 2014/2015 and 2015/2016…

China is now expected to import a record 76 million metric tons (“mmt.”) of soybeans for the 2014/2015 marketing year that ends in September, according to the CNGOIC. This represents an 8% increase over last year’s levels. It is being attributed to rising soymeal demand and higher soybean use by the feed sector. Official customs data this past weekend showed that China imported a record 9.5 mmt. of soybeans in July, up 17.4% from the month prior.

CNGOIC expects China’s soybean imports to total 13 mmt. from August to September versus 11.06 mmt. during the same period last year. Looking ahead to 2015/2016, CNGOIC expects import growth to slow to 77 mmt. — roughly in line with USDA peg of 77.5 mmt. It should also be noted that Beijing is cracking down on the illegal use of imported soybeans by the food industry, which used between 2 mmt. to 3 mmt. of imported soybeans last year.

Implications for the Dry Bulk Shipping Market…

Every few extra million tons of soybeans transited into China supports a challenging dry bulk market, particularly Panamaxes and Supramaxes.

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