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September 23, 2019

© 2018•Trilateral

Trilateral Grain and Market Weather Update

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© 2019 •Trilateral 2

“Corn” on page 3 “Soy Complex” on page 4“Wheat” on page 5 “Related Market News” on page 6 “Weather Update” on page 7 “Feedstuffs” on page 8

Contents

Commodity Month Last ChangeCorn Dec 3.7325 2.75

Soybeans Nov 8.9675 13.75 Soybean Meal Dec 298.60 3.60 Soybean Oil Dec 29.5200 0.13

Chicago Wheat Dec 4.8700 2.75 KC Wheat Dec 4.1300 5.75

MPLS Wheat Dec 5.3375 9.50

Commodity Month Last ChangeCrude Oil Oct 58.29 0.20

Natural Gas Oct 2.526 (0.029)Gold Dec 1527.50 12.00

S&P Futures Sep 2989.00 (0.50)Dollar Index Cash 98.71 0.192

Overnight Trade

Market Summary Highlights

Morning Trading

• Corn • Soybeans • Wheat

USDA, Government & Industry Reports

Market Headlines Corn:

Soybeans:

Wheat:

• Dow Jones: Lower• U.S. Dollar Index: Higher• Gold: Higher• Crude Oil: Lower•

HigherHigherHigher

Concern is growing for a very wet start to harvest in the central U.S.

Regain ground, focus on U.S.-China talks

All three wheat markets are higher. HRS has rallied 47 cents above the low set on Sept. 3

• Cold Storage• Crop Progress

© 2019 •Trilateral 3

CornSources: DTN and Reuters

• Corn is higher to begin the new week, but has trad-ed sideways within a 7-cent range for the past seven trading sessions. December corn appears to be set to break out of a small bull flag chart pattern with a close over $3.75 possibly pointing to a run at the open chart gap at $3.88.

• Managed funds were reported to have sold another nearly 29,000 contracts of corn last week, putting their net short at 177,000 as of last Tuesday and an estimated 185,000 contracts to begin this week. Emboldening funds is the fact no frost or freeze threats are seen for another 15-days across the heart of the Corn Belt.

• U.S. corn remains anywhere from 10 to 40 cents per bushel more expensive than FOB corn offers from South America and the Ukraine, and U.S. export commitments are rough-ly 50% below those of a year ago.

• Concern is growing for a very wet start to harvest in the central U.S. The forecast remains devoid of any frost threat for the next two weeks, and there is rain moving across Illinois and Indiana Monday morning. Many acres will be susceptible to freeze damage all the way through October.

• Cattle on Feed showed on feed numbers at 99% of a year ago but placements were at 91% versus 95% expected.

• China’s pork imports surged 76% in August versus a year ago, and total for the first 11 months is up nearly 41% as China’s pig herd has fallen by 40%. China’s beef and poultry imports are up 54% and 48% for the year.

• China’s corn imports so far this year, are also up 37% to 3.73 million meric tons (mmt. • Early corn harvest results are very variable, with many in the trade looking for a further

yield cut of 3 to 4 bushels per acre (bpa). Demand remains the major stumbling block, as the U.S. will carry in close to 2.5 billion bushels (bb) as a cushion.

© 2019 •Trilateral 4

Soy ComplexSources: DTN and Reuters

• The soy complex is higher, but the short-term downtrend remains in place with the November contract having closed lower in three of the last four sessions

• Both sides on the trade negotiation teams admit-ted that last week’s talks were productive, and that scheduled visits to U.S. farms would be re-sched-uled.

• U.S. soybeans are currently the cheapest in the world on an FOB basis -- some $25 per metric ton below Brazil and $10/mt under Argentine offers.

• Brazil and Argentina, in the early stages of plant-ing, remain very dry, and some of the Brazil rains projected late last week for this coming week, have been reduced.

• Bad news is the finding of African swine fever on more farms in the Philippines, and a new case in Russia.

• Weather remains favorable, with the warm Septem-ber thus far advancing maturity of the late matur-ing crop, and no frost appears at least to Oct. 6 at this point. However, a very wet pattern could stick around. We may see another slight drop in soybean conditions in Monday’s crop progress report.

• Funds hit the buy button in soybeans last week, purchasing a net 32,459 contracts to leave them short 68,507 contracts. Big buying also seen in soybean oil as funds bought 34,244 contracts, the fourth largest week of buying on record. Funds are now net long 16,904 contracts. The oil buying stood in stark contrast to the meal selling where man-aged funds sold 7,145 contracts to put them net short 54,751 contracts, the largest net short since September 2016.

Soybeans

Meal

Oil

© 2019 •Trilateral 5

WheatSources: DTN and Reuters • All three wheat markets are higher Monday, led by Min-

neapolis wheat, with December now having rallied 47 cents above the low set on Sept. 3.

• The delay in harvest, where as of late week some 24% of the North Dakota harvest is yet to be completed, and increased reports of quality issues are making the rounds. Sprout damage, low falling numbers, test weight and even vomitoxin concerns are on the rise, limiting the amount of quality spring wheat from the last part of harvest.

• Canada’s spring wheat harvest is also late, with Alberta said to be half of the average pace, at just less than 15%. Also helping wheat is the almost universal opinion that winter wheat planting area will be on the downhill slide. Canadian harvest progress was almost nil last week with Alberta advancing just 4% while Saskatchewan advanced just 6%.

• Minneapolis spot floor values rallied sharply to close the week with 14.0% protein garnering +140/150 over the December vs. +80 over the December a week prior.

• Bullish is the fact that some private estimates of the Aus-tralian wheat crop, impacted by drought for the third straight year, are falling, with some now thinking less than 18 mmt compared to over 21 mmt a several weeks ago.

• Despite the harvest concerns, funds continued to add to their record net short position in Minneapolis wheat as of September 17. Funds are now short a record 23,071 contracts which is 83% larger than the previous record short.

HRW

SRW

HRS

© 2019 •Trilateral 6

Related Market NewsReuters• China Aug pork imports jump 76% as disease decimates local supply. China’s pork imports

for the first eight months of the year were up 40.4% from a year earlier. Beef imports reachedwere up 32%, bringing volumes for the first eight months to a 54% jump from a year ago. Imports of chicken in August rose 51% , with total volumes so far this year at a 48% rise.

• U.S., Canadian spring wheat quality hurt by wet harvest conditions. U.S. and world wheat supplies remain ample overall, but the quality problems may lift cash prices for the best grades of wheat sought by millers. North Dakota’s spring wheat was 73% harvested by Sept. 15. Crops still standing due to weather delays - some 86 million bushels - are likely to have the poorest quality. In Canada, the wheat harvest is less advanced. The top grades of U.S. and Canadian spring wheat “just are not going to be available in the same volumes,” said Chuck Penner, analyst at Winnipeg-based LeftField Commodity Research. He added that the weather was also causing problems for durum wheat, used to make pasta. “Durum is look-ing awful too ... Half the crop might end up essentially going to the feed market.

• Cattle placements in feedlots during August were 9% below 2018. This was considered bull-ish against expectations that averaged at down 5.9%. Cattle on feed came in at 98.7% of last year and marketings down 1.5%. It was the first time the on-feed supply was below year-ago since December, 2016.

• Palm futures extend falls on views of sluggish exports

• Funds slash bearish soy bets on U.S.-China trade hopes, but corn selling persists

• Dry weather a worry as EU sugar beet harvest starts

• The euro fell on Monday after German flash purchasing managers’ index survey data for September was weaker than expected, raising more fears about the health of the economy.

© 2019 •Trilateral 7

Weather UpdateDTN Ag Weather Brief:

• CANADIAN PRAIRIES (WHEAT/CANOLA/BARLEY): Favorable conditions for maturing crops and harvesting for 2-3 more days. After that colder temper-atures and more rain, possibly mixed with snow, for the region. A hard, season ending, freeze is expected to occur through most of Alberta, west-central and north Saskatchewan by this coming weekend. Late filling crops, especially canola, would be at risk of damage or quality reductions due to this freeze. A frost and possibly light freeze elsewhere in Saskatchewan. Rain through southern and eastern areas later this week is unfavorable for maturing crops and harvesting.

• NORTHERN PLAINS: Wet con-ditions due to weekend rain, along with hail and high winds during the weekend, unfavor-able for mature crops and har-vesting. Some chance frost may develop into central North Da-kota crop areas this weekend..including some corn/soybean fields.

• MIDWEST (CORN, SOYBEANS): Well above to near normal tem-peratures will favor corn and soybean development which continues to run well behind normal in most areas. The re-gion is expected to remain frost free for another 10 days, at least. Weekend rains and another round of potentially heavy rains later this week may mean addi-tional risk of flooding within the region, especially over western and north-central areas.

ThelastfullweekofSeptembermaybringveryheavy,flashfloodingrain,tothewesternandcentralMidwest.Wesawthis feature a year ago, and it was the beginning of a harvest seasonthat,forawhile,seemedlikeitwouldneverend.

© 2019 •Trilateral 8

Commodity IndicesFeedstuffsLinks to weekly USDA feedstuffs reports:

• National Weekly Feedstuffs Prices • Corn Belt Weekly Feedstuffs

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