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Afternoon Market Recap for Dec. 6, 2018

Trade tensions put lid on grain prices.

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Corn, soybeans and wheat all end Thursday’s session with moderate losses

Impatient grain markets await U.S. soybean sales to resume to China – or absent that, at least more details regarding the latest U.S.-China trade negotiations. The apparent lack of progress so far had soybeans tilted moderately lower today, with corn and wheat futures also spending the session in the red.

Data from the latest U.S. Drought Monitor shows just 32.55% of the country is affected by drought this week, with drought’s footprint diminishing for 15 of the past 16 weeks and falling to the lowest level since last September. NOAA’s monthly precipitation outlook for December predicts above-average rain and snow for much of the U.S. this month.

Trade tensions also cast a bearish pall on Wall St. today, with the Dow down another 447 points in afternoon trading to 24,580. Losses were more severe earlier today, with midmorning losses exceeding 700 points. Energy futures also took a tumble, with crude oil down more than 3% this afternoon, trading just above $51 per barrel. Gasoline and diesel were down around 2%. The U.S. Dollar also softened moderately.

Corn prices tilted moderate lower amid ongoing U.S.-China trade tensions and lack of specifics following last weekend’s announced “trade truce.” December futures dipped 0.6% lower, losing 2.25 cents to $3.72, with March futures down 1.5 cents to $3.8275.

Corn basis bids were largely unchanged across Midwestern locations Thursday but did rise 4 cents higher at an Indiana ethanol plant and slip 3 cents lower at an Illinois river terminal today.

Ahead of the next round of USDA export data, out Friday morning, analysts expect the agency to report corn sales ranging between 31.5 million and 43.3 million bushels for the week ending November 29.

Private exporters reported to USDA the sale of 7.8 million bushels of corn for delivery to Mexico. About 54% of the total is for delivery during the 2018/19 marketing year, which began September 1, with the remainder for delivery in 2019/20.

Weekly ethanol production for the week ending November 30 reached a daily average of 1.069 million barrels, up from 1.048 million barrels per day the week prior and reaching the highest level since late August.

Algeria purchased 1.6 million bushels of corn, likely sourced from Argentina, in a tender that closed Wednesday. The grain is for shipment in late December.

Preliminary volume estimates were for 207,906 contracts, falling nearly 10% below Wednesday’s final count of 230,275.

 

Soybean prices ended a four-day rally as traders await more details regarding U.S.-China trade negotiations. January futures dropped 4 cents to $9.0950, with March futures down 3.5 cents to $9.22.

Soybean basis bids were mostly steady across Midwestern locations Thursday but did fall 3 cents lower at an Ohio elevator today.

Ahead of Friday morning’s USDA export report, analysts expect the agency to show soybean sales ranging between 22.0 million and 33.1 million bushels for the week ending November 29. Analysts also estimate USDA will report between 175,000 and 400,000 metric tons of soymeal sales, plus another 8,000 to 26,000 MT of soyoil sales last week.

Argentina could export a record amount of soybeans to China in 2019, according to the country’s Rosario grains exchange. Sales to China, which account for up to 95% of Argentina’s total soybean exports, could top 514 million bushels next year.

Statistics Canada says the country’s 2018 canola production totaled 896.8 million bushels, which dropped 4.6% year-over-year.

Algeria purchased 40,000 metric tons of soymeal, sourced from Argentina or the U.S., in a tender that closed Wednesday, which is for shipment in January.

Farm Futures senior grain market analyst Bryce Knorr laments that the only constant in soybean futures seems to be “uncertainty and confusion” in his latest Soybean Outlook. Click here for more analysis on where prices might be headed next, and how China’s participation (or lack thereof) continues to factor heavily into the mix.

Preliminary volume estimates were for 203,782 contracts, moving moderately ahead of Wednesday’s final count of 144,656.

 

Wheat prices continue to face downward pressure from low U.S. exports and large global supplies, taking another round of small to moderate losses Thursday. March Chicago SRW futures dipped 2.5 cents to $5.1550, March Kansas City HRW futures dropped 2.5 cents to $4.9550, and March MGEX spring wheat futures fell 6.25 cents to $5.69.

Ahead of Friday morning’s USDA export report, analysts expect the agency to show wheat sales ranging between 11.0 million and 22.0 million bushels for the week ending November 29.

The United Nations estimates world wheat production for 2018/19 will reach 26.643 billion bushels, falling 102.9 million bushels below its prior estimates.

Statistics Canada says the country’s 2018 wheat production is up 6% year-over-year, with 1.167 billion bushels. That includes 211 million bushels of durum wheat, which is up 15.8% from 2017. Canada’s barley production is also up 6.2% this year.

Egypt purchased 12.9 million bushels of wheat in an international tender Thursday. About 83% of the total was sourced from Russia, with the remainder originating from Ukraine. The grain will ship in late January.

Japan purchased 5.3 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closed Thursday. U.S. supplied approximately 44% of the total purchases.

Taiwan purchased 4.0 million bushels of U.S. milling wheat in a tender that closed Wednesday. The grain is for shipment beginning in January.

Thailand purchased 2.5 million bushels of feed wheat, sourced from Argentina or Ukraine, in a tender that closed Thursday; the grain is for shipment in January.

Jordan issued another international tender to buy 4.4 million bushels of hard milling wheat, with a deadline for bids of December 12.

Preliminary volume estimates were for 56,245 CBOT contracts, down 15% from Wednesday’s final count of 66,306.

 

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