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Afternoon Market Recap for Oct. 22, 2018

Crop quality concerns give a small lift.

Corn, soybeans find small gains in Monday’s session, while wheat trends lower on weak exports

Corn and soybean crop quality are each expected to diminish a point this afternoon, giving corn and soybean prices small gains to start the week. Relatively week wheat exports contributed to declines of more than 1% for some contracts, meantime.

Seasonally warm weather popped up in parts of the Midwest today, but the warming trend appears to be short-lived, as cooler-than-normal temperatures return to much of the central U.S. for the rest of the week into the weekend. The latest five-day cumulative precipitation map from NOAA shows the southern U.S. could see moderate rainfall through October 27, with some light precipitation also possible in parts of the Plains. The Midwest – especially the eastern Corn Belt – could remain dry the rest of this week.

Stumbling financial and energy sector stocks kept Wall St. relatively bearish Monday, with the Dow down 112 points in afternoon trading to 25,331. Energy futures were mixed, however, as crude oil and diesel posted modest gains this afternoon, while gasoline declined moderately. The U.S. Dollar firmed slightly.

The European Union and the U.S. averted an all-out trade war this summer, but trade relations remain tense between the two economic powerhouses.Click here to learn more about where current negotiations stand.

 

Corn prices grabbed a technical bounce Monday, further supported by stable export data and potentially lower crop quality. Prices were up nearly 0.7% in the session, with December futures up 2.5 cents to $3.6950 and March futures up 2.25 cents to $3.8175. 

Corn basis bids were steady to firm across much of the central U.S., ticking 1 to 5 cents higher across several Midwestern locations Monday. A lone Indiana ethanol plant bucked the trend, moving 3 cents lower today.

In the latest Basis Outlook from Farm Futures senior grain market analyst Bryce Knorr, find out why basis levels are still currently “hostage to weather,” with mixed results so far this harvest season. Click here for details.

Ahead of Monday afternoon’s USDA crop progress report, analysts expect the agency to mark 51% of the 2018 U.S. corn harvest as complete, up from 39% a week earlier. Analysts also expect USDA to report 67% of the crop is in good-to-excellent condition, down a point from the prior week.

Corn export inspects eased from the prior week’s total of 39.2 million bushels down to 37.4 million bushels, which was on the low end of the average trade guess of 35.4 million to 47.2 million bushels. Last week, Mexico was again the top destination for U.S. corn export inspections, with 9.1 million bushels. 

European Union corn imports for 2018/19 reached 200.1 million bushels as of October 21, trending 12% higher year-over-year so far. 

EU’s MARS crop monitoring service raised its 2018 corn per-acre yield estimates for the region to 113.5 bushels per acre, up from September estimates of 111.4 bpa.

In the latest Feedback From The Field, farmer-reported yields dropped to an average of 175 bushels per acre, with plentiful rain and snow delays also reported this past week. Click here to view the interactive map and see how yields are stacking up in your area.

 

Soybean prices survived a choppy session to come away with small gains, thanks in part to expectations USDA will dock U.S. crop quality by a point later Monday afternoon. November futures picked up 1.75 cents to $8.5850, while January futures added 2 cents to reach $8.7250.

Soybean basis bids were steady to firm Monday, moving 3 to 5 cents higher across several Midwestern locations, although an Illinois river terminal dipped 1 cent lower today.

Ahead of Monday afternoon’s USDA crop progress report, analysts expect the agency to mark the 2018 U.S. soybean harvest as 52% complete, up from 38% a week ago. Analysts also expect USDA to report 65% of the crop is in good-to-excellent condition, down a point from the prior week. 

FAS issued a correction to a large cancellation of soybeans that was originally announced. The cancellation, for 6.6 million bushels during the 2018/19 marking year (which began September 1), was for delivery to unknown destinations – not China, as originally reported.

Soybean export inspections reached 42.2 million bushels for the week ending October 18, which was fractionally below the prior week’s tally of 42.5 million bushels and on the high end of trade estimates, which ranged between 37.1 million and 44.1 million bushels. Last week, Egypt was the top destination for U.S. soybean export inspections, with 6.0 million bushels.

EU soybean imports for 2018/19 reached 143.3 million bushels as of October 21, which is trending 8.3% higher year-over-year. EU soymeal imports of 5.1 million metric tons are trending down 17.7% year-over-year, however. Palm oil imports of 1.8 MMT are also down 14.3% year-over-year.

 

Wheat prices slumped more than 1% after USDA’s latest export data showed 2018/19 marketing year totals continue to come in significantly below 2017/18’s pace. December Chicago SRW futures dropped 6.75 cents to $5.08, December Kansas City HRW futures fell 8.75 cents to $5.0750, and December MGEX spring wheat futures dropped 3.25 cents to $5.85.

Ahead of Monday afternoon’s USDA crop progress report, analysts expect the agency to show 76% of the 2018/19 U.S. winter wheat crop now planted, up from 65% the week prior.

Wheat export inspections reached 14.1 million bushels last week, down moderately from the prior week’s total of 16.6 million bushels and nearly in the middle of trade estimates, which ranged between 11.0 million to 18.4 million bushels. The Philippines retained the top spot for U.S. wheat export inspections last week, with 2.1 million bushels.

EU soft wheat exports for 2018/19 reached 183.7 million bushels as of October 21, which is trending 24% lower year-over-year. Barley exports of 82.7 million bushels are also down 11% year-over-year.

Syria purchased 7.3 million bushels of Russian wheat in an international tender, seeking to purchase a substantial amount of grain this fall amid 30% lower production in the war-torn, drought-stressed country.

Algeria issued an international tender to purchase 1.8 million bushels of milling wheat from optional origins, which closes October 23. The grain would be for shipment in November or December. 

Jordan issued another tender to purchase 4.4 million bushels of hard milling wheat, which closes October 24; the grain would be for shipment in January or February.

China sold 1.3 million bushels of its state reserves of imported 2013 wheat at auction Monday, which was 4.2% of the total available for sale.

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