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Afternoon Market Recap for January 18, 2018

Soybeans step higher on South American weather.

Dryness in Argentina continues to lend price support for now

Although Argentina has now planted 96.7% of its total soybean acres for 2017/18, continued dryness in areas of the country has caused overall planted acres to drop to 44.5 million acres (from 44.7 million acres), with markets wondering about the yield potential of what’s already in the ground. It was enough to give soybean prices a small boost (around 0.4%) Thursday. Wheat and corn headed in two opposite directions due to technical maneuvering, meantime.

For every single week since November 4, 2017, drought has expanded in the U.S. – from 32.81% of the country battling it then to 60.93% as of January 16, according to the latest U.S. Drought Monitor. That represents drought’s widest footprint since September 2013. Click here for additional coverage from Farm Futures about which areas are most at risk.

On Wall Street, the Dow retreated somewhat from yesterday’s surge, dropping 98 points in early afternoon trading to hit 26,000 points. The U.S. economy saw mixed news Thursday, with U.S. home sales chilled by the recent cold snap, but jobless claims reaching 45-year lows. Energy prices were mixed, with most prices down slightly but gasoline prices boosting more than 1% due to a refinery outage in Louisiana. The U.S. Dollar was flat in early afternoon trading. 

According to the proprietary Farm Futures nationwide survey of more than 900 farmers, estimated 2018 corn acres could reach 90.1 million acres, fractionally lower (-0.1%) versus USDA’s prior estimates. The survey also indicated U.S. farmers could plant 90.1 million acres of soybeans, 46.8 million acres of wheat, 5.8 million acres of sorghum and 13.2 million acres of cotton. Click here for a more detailed analysis of the survey’s results. 

Commodity funds were net buyers of wheat and soybean futures on Thursday, and they were net sellers of corn.

 

Corn prices were pinched a round of technical selling Thursday, with March and May prices both down 1.5 cents to close at $3.5150 and $3.5950, respectively.

Corn spot basis bids were mostly steady Thursday, with two Midwestern locations down 1 cent and another up 5 cents. Inclement weather and unfavorable prices have kept farmer sales slow.

Ahead of Friday morning’s next round of USDA export data, which covers export sales for the week ending January 11, trade experts expect corn volume to land between 19.7 million and 31.5 million bushels.

The International Grains Council upped its 2017/18 corn production forecasts by 551.2 million bushels on improved production expectations in the UE, China and Nigeria. The IGC also significantly raised its global corn stock estimates for 2017/18 from a prior forecast of 8.1099 billion bushels to 12.6766 billion bushels to reflect adjustments to historical Chinese corn stocks. 

The EPA reports the U.S. generated 1.28 billion ethanol blending credits in December, unchanged from November.

Preliminary volume estimates were for 182,155 contracts, less than half of Wednesday’s final count of 370,592.

 

Soybean prices caught a lift from Argentina weather worries and found extra support though soymeal’s 1% gains. March and May futures each gained 4.25 cents to close at $9.73 and $9.8425, respectively.

Soybean spot basis bids were steady at most Midwestern locations, except for processors – many of whom upped prices 5 to 8 cents Thursday.

Ahead of Friday morning’s next round of USDA export data, which covers export sales for the week ending January 11, trade experts expect soybean volume to land between 29.4 million and 51.4 million bushels.

The IGC slightly increased its world soybean production estimates for 2017/18 soybeans from 12.7868 billion bushels to 12.8236 billion bushels. That stays slightly below the prior year’s world production estimates of 12.8603 billion bushels. 

EU soybean imports for the 2017/18 marketing year, which began July 1, are down 7% year-over-year. The latest data suggests import totals have reached 270.1 million bushels so far. Soymeal (6%) and palm oil (3%) were up year-over-year during the same period. 

The EPA reports the U.S. generated 364 million biodiesel blending credits in December, up more than 15% from November.

Preliminary volume estimates were for 96,791 contracts, down moderately from Wednesday’s final tally of 149,005.

 

Wheat prices landed a second consecutive day of gains on short-covering and projections that world production could decline slightly next year. March Chicago SRW prices added 3.75 cents to close at $4.2525, and March Kansas City HRW prices gained 1.75 cents to close at $4.2875. Spring wheat did not follow the trend, however, with March MGEX futures closing 1.25 cents lower at $6.10.

Ahead of Friday morning’s next round of USDA export data, which covers export sales for the week ending January 11, trade experts expect wheat volume to land between 7.3 million and 18.4 million bushels.

The International Grains Council projects a 2% reduction in world wheat production for 2018/19, which could create the first year-over-year reduction in lower stocks in six years. The group estimates total world production of 27.2638 billion bushels, compared to a 2017/18 production of 27.8150 billion bushels. The group’s 2017/18 production estimates were raised by 293.9 million bushels due to improved outlooks from Russia, Canada, Australia and Argentina, meantime. 

A French consultancy has lowered its projections of EU soft wheat exports for 2017/18 to 793.7 million bushels, which would be 91.9 million bushels lower than 2016/17. 

Algeria has purchased between 2.8 million and 3.7 million bushels of durum wheat, likely sourced from Canada, in a tender that closed Wednesday. The grain is for shipment between February 16 and March 15. 

Preliminary volume estimates were for 63,379 CBOT contracts, down moderately from Wednesday’s final count of 80,657.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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