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Afternoon Market Recap for September 21, 2017

Grain markets grind for tiny Thursday gains.

Thursday started out in the red, but technical driven trading throughout the day pushed grain prices slightly higher by the close. Corn and soybeans were almost flat, and winter wheat prices moved just enough to capture one-month highs. 

The first day of fall is tomorrow, and the season starts warmer than normal for many. Pockets of 90°F weather extend as far north as Nebraska, South Dakota and Northern Illinois. The eastern Corn Belt will see closer-to-normal daytime highs of low to mid 80s. Anyone in the Midwest looking for rain tomorrow outside of Minnesota, Wisconsin and Michigan will probably be out of luck.

The Federal Reserve said it will not raise interest rates now but could add one more hike by the end of 2017. Wall St. bristled at the notion – the Dow, S&P and Nasdaq were all down slightly during mid-afternoon trading. In the latest spat between the U.S. and North Korea, President Donald Trump ordered additional sanctions be placed on the country to curb its appetite to advance its missile and nuclear programs. Crude oil prices fell slightly but held over the $50 per barrel mark. Gold dropped another nearly 1.5% and has been falling consistently since around Labor Day.

 

Corn prices inched forward December 2017 and March 2018 futures both picked up a half-cent to close at $3.5025 and $3.63, respectively.

In the latest USDA Export Sales report, corn export sales posted old crop sales totaling 20.7 million bushels, which was below last week’s total (41.2 million bushels), trade estimates (33.5 million bushels) and USDA’s forecast (29.5 million bushels). Top sales went to Mexico (10.4 million bushels), Japan (4.4 million bushels), Colombia (2.9 million bushels), Costa Rica (1.2 million bushels) and Peru (948,774 bushels). Top export shipments headed to Mexico, Peru, Japan, Colombia and Costa Rica. 

A Chinese corn analyst says China might need to import up to 787 million bushels of corn to meet its upcoming ethanol demands. China is implementing E10 (10% ethanol, 90% gasoline) nationwide by 2020, which may cause significant supply gaps. USDA projections are much lower, however, at around 150 million bushels for 2019/20. 

Preliminary volume estimates were slightly lower than Wednesday, at 150,605.

 

Soybean prices continue to be caught between bullish export demand news and bearish high world stocks. Prices inched ahead on Thursday; with November 2017 futures going up 0.75 cents to close at $9.7075, and March 2018 futures added another half-penny to close at $9.81.

Private exporters reported yet another large sale to USDA on Thursday – the eighth in the past nine business days. Today’s sale was for 4.8 million bushels of soybeans to be delivered to China in the 2017/18 marketing year, which began September 1. 

USDA reports any daily sales activity over 100,000 metric tons (about 3.67 million bushels). Such a sale was reported for soybeans every day last week. That tallied up to 85.9 million bushels in old crop sales for the week ending September 14. That was above the trade estimate of 49.6 million bushels and well beyond USDA’s forecast of 24.8 million bushels.

Major soybean sales were reported for China, unknown destinations, Mexico, Taiwan and Pakistan. Export shipments totaled 34.7 million bushels and went primarily went to China, Pakistan, Bangladesh, Mexico and Costa Rica. 

Preliminary volume estimates were significantly higher than Wednesday, with 173,942 contracts.

 

Wheat prices entered another day of technical buying, with December Chicago SRW wheat hitting highs not seen since mid-August. Even so, funds have a large net short position, which leaves some upside exposed to short covering. Excessive drought in Australia and excessive moisture in Argentina must also be factored in. December Chicago SRW finished up 2.75 cents to close at $4.5220, December Kansas City HRW added 1.5 cents to close at $4.4950, and December MGEX Spring Wheat added another 2.75 cents to close at $6.2550.

Wheat sales were down another 3% from a week ago and 24% lower than the four-week average. Old crop sales totaled 11.3 million bushels, which was both lower than the trade estimates (14.7 million bushels) and USDA’s forecast (13.7 million bushels).

Export shipments for wheat also lagged – 3% lower than a week ago and 9% lower than the four-week average. Top destinations included the Philippines (4.4 million bushels), Mexico (2.5 million bushels), Nigeria (2.1 million bushels), Kenya (1.5 million bushels) and Guatemala (1.2 million bushels).

Preliminary volume estimates were up slightly from Wednesday’s totals, with 85,928 contracts.

More from Farm Futures:

Corn Outlook
Soybean Outlook
Wheat Outlook

 

 

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