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China buys huge amounts of U.S. corn, Friday’s market not impressed

The USDA releases its July Supply/Demand Report at 11:00 a.m. CT today.

On Friday, the CME Group’s farm markets watch the wheat prices go higher.

In early trading, the Sept. corn futures are ¾¢ lower at $3.48. Dec. corn futures are 1¾¢ higher at $3.55¼.
 
Aug. soybean futures are 1½¢ higher at $8.98. November soybean futures are 1¢ higher at $9.02½.

Sep. wheat futures are 3¾¢ higher at $5.28½. 

Aug. soymeal futures are $0.50 per short ton lower at $296.80. Aug. soy oil futures are 0.16¢ higher at 28.45¢ per pound. In the outside markets, the NYMEX crude oil market is $0.03 per barrel lower at $39.59. The U.S. dollar is lower, and the Dow Jones Industrials are 1 point higher.

On Friday, private exporters reported to the USDA the following activity:

  • Export sales of 1,365,000 metric tons of corn for delivery to China. Of the total, 765,000 metric tons is for delivery during the 2019/2020 marketing year and 600,000 metric tons is for delivery during the 2020/2021 marketing year.
  • Export sales of 190,000 metric tons of hard red spring wheat for delivery to China during the 2020/2021 marketing year.
  • Export sales of 130,000 metric tons of hard red winter wheat for delivery to China during the 2020/2021 marketing year.

The marketing year for wheat began June. 1 and corn began Sept. 1.

Al Kluis, Kluis Advisors, says that investors will digest today’s USDA report quickly. 

“We will get the USDA report at 11:00 this morning. Following the reaction of the report, traders will quickly move back to weather. The seven- to 10-day forecast is what everyone is watching,” Kluis told customers in a daily note. 

He added, “If we see a friendly USDA report today coupled with further indication of hot and dry weather over the next week, then prices could test overhead resistance. The funds may continue to cover shorts in corn and add to the long side in soybeans.”

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Thursday’s Grain Market Review

DES MOINES, Iowa -- At the close of CME Group trading Thursday, gains in wheat, corn, and soybean futures settled higher.

September corn futures finished 2½¢ higher at $3.48¾. Dec. corn futures ended 2¾¢ higher at $3.57.
 
Aug. soybean futures finished 4¢ higher at $8.96½. November soybean futures are 4¼¢ higher at $9.01½.

Sep. wheat futures settled 8½¢ higher at $5.25. 

Aug. soymeal futures ended $3.50 per short ton higher at $297.30. Aug. soy oil futures are 0.26¢ lower at 28.29¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.22 per barrel lower at $39.68. The U.S. dollar is lower, and the Dow Jones Industrials are 324 points lower.

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DES MOINES, Iowa -- At midsession Thursday, gains in wheat futures are strengthening while corn and soybean futures remain sharply higher.

During midmorning trading, the September corn futures are 6¼¢ higher at $3.52½. Dec. corn futures are 5¼¢ higher at $3.59½.
 
Aug. soybean futures are 9¢ higher at $9.01½. November soybean futures are 8¾¢ higher at $9.06.

Sep. wheat futures are 10¾¢ higher at $5.27¼. 

Aug. soymeal futures are $4.00 per short ton higher at $297.80. Aug. soy oil futures are 0.09¢ lower at 28.46¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.40 per barrel lower at $39.50. The U.S. dollar is lower, and the Dow Jones Industrials are 491 points lower.

Matt Tranel of the Commodity Risk Management Group explains some factors driving today’s trades.

“The market is moving higher on managed fund money position squaring,” Tranel says. “Similar activity took place ahead of the planted acreage report. With the funds still short 210,000 contracts, they may elect to offset some more in case of a surprise.”

“Soybeans are up as acres weren’t overwhelming in the acreage report,” he adds. “Ending stocks won’t nearly be as burdensome as a year ago, and thoughts are that a lot of the South American crop has already been sold to China.”

His colleague at Commodity Risk Management Group, Britt O’Connell, says, “Both corn and soybeans are stronger on the open as both the American and European weather models suggest a hot and dry forecast.”

“In export news, old-crop corn sales for the week ending July 2 posted at 599k tonnes, which was at the top end of the range of expectations,” she adds. “We have officially achieved sales expectations by the USDA and further sales would end in a reduction of carryout. New-crop sales were a bit light of expectations coming in at 382 tonnes. Soybean sales for old crop were also able to come in over trade expectations at 952k tonnes. New-crop sales came in at 409; expectations carried a wide range from 150 to 500k tonnes.” 

Jack Scoville of PRICE Futures Group agrees with Tranel about fund activity.

“We are up today on spec and fund buying,” Scoville says. “We are not taking out recent highs just yet, which might be a sign that we are near a top, but the day has a while to go yet. It is a weather market, and the weather will be mostly hot and dry after some rains today and tomorrow.” 

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DES MOINES, Iowa -- On Thursday, grain futures are higher.

In early trading, the September corn futures are 7¼¢ higher at $3.53½. Dec. corn futures are 6½¢ higher at $3.60¾.
 
Aug. soybean futures are 9¾¢ higher at $9.02¼. November soybean futures are 10¼¢ higher at $9.07½.

Sep. wheat futures are 1½¢ higher at $5.18. 

Aug. soymeal futures are $4.00 per short ton higher at $297.80. Aug. soy oil futures are 0.18¢ higher at 28.73¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.44 per barrel lower at $40.46. The U.S. dollar is lower, and the Dow Jones Industrials are 38 points lower.

“Grain traders are trying to quietly make it to the Friday USDA report without any major chart damage being inflicted beforehand,” says Bob Linneman of Kluis Commodity Advisors. “November soybeans did break below the low from last Thursday briefly on Wednesday. However, there was no follow-through selling. This tells us the bulls and bears are content to wait for the report. December corn slid to another lower low this week before rebounding and ending the day above the 100-day average. Further strength today could indicate funds are covering more shorts ahead of the report.”

“Grain traders are closely watching the weather forecast for mid-month,” Linneman adds. “The primary models suggest temperatures in the low 90s up to the low 100°F. range during the key pollination window.”

Separately, the USDA’s weekly Export Sales Report Thursday shows strong increases from the previous week. Old-crop corn and soybean sales were near or above the upper end of trade expectations.

  • Corn: 599,200 metric tons (mt) for 2019/2020 and 409,300 mt for 2020/2021. Trade expectations for corn were 300,000 to 600,000 mt old crop and 150,000 to 500,000 mt new crop.
  • Soybeans: 952,200 mt for 2019/2020; 382,100 mt for 2020/2021. For soybeans, trade guesses ranged from 300,000 to 800,000 mt old crop, and 400,000 to 1,000,000 mt new crop. 
  •  Wheat: 326,100 mt
  • Soybean meal: 197,900 mt (old and new crop)

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On Wednesday, the CME Group’s farm markets lack bullish news.

At the close, the Sept. corn futures finished 2¾¢ higher at $3.46¼. Dec. corn futures settled 1¾¢ higher at $3.54¼.
 
Aug. soybean futures finished 4¢ lower at $8.92¾. November soybean futures closed 5½¢ lower at $8.97.

Sep. wheat futures settled 21¼¢ higher at $5.16½. 

Aug. soymeal futures settled $1.70 per short ton lower at $293.80. Aug. soy oil futures closed 0.32¢ lower at 28.55¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.27 per barrel higher at $40.89. The U.S. dollar is lower, and the Dow Jones Industrials are 23 points higher.

Al Kluis, Kluis Advisors, says that the market bears are gaining traction. 

“Corn bulls have been unable to score new highs this week. The soybean bulls managed to etch a new high on Monday but have since posted back-to-back lower lows and lower highs on the daily chart. The soybean bull spreads are showing signs that the rally may be over for the soybeans. Continue to watch the bull spreads for any change in trend that could lead to a strong move for the soybean complex,” Kluis told customers in a daily note. 

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets close unchanged to lower.

At the close, the Sept. corn futures finished 3¢ lower at $3.43½. Dec. corn futures ended unchanged at $3.52¾.
 
Aug. soybean futures closed 1¾¢ lower at $8.96¾. November soybean futures ended unchanged at $9.02½.

Sep. wheat futures settled unchanged at $5.02. 

Aug. soymeal futures closed $2.30 per short ton lower at $295.50. Aug. soy oil futures closed unchanged at 28.87¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.22 per barrel lower at $40.40. The U.S. dollar is higher, and the Dow Jones Industrials are 396 points lower.

Al Kluis, Kluis Advisors, says that investors are squarely focused on crop-weather. 

“The grain markets closed higher on Monday as hot dry weather begins to take a toll on about 20% of the main corn and soybean crop area. The big question now is how hot, for how long,” Kluis told customers in a daily note. 

He added, “This is the third week of lower ratings. When corn and soybean conditions trend lower from June into August final yields, the USDA yield projections move lower. With the hot, dry conditions in most of the Corn Belt this week, I expect crop ratings to move lower in next Monday’s report.”  

Kluis continued: “The grain and stock markets are lower in the overnight markets on increased trade tension with China. The USDA Crop Progress report on Monday afternoon showed corn ratings down by 2% and soybean ratings were unchanged from last week.”

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Monday’s Grain Trade Review

On Monday, the CME Group's farm markets surge higher, with increased demand news and hotter crop-weather outlooks.

At the close, the Sept. corn futures settled 3¢ higher at $3.46½. Dec. corn futures ended 2½¢ higher at $3.56.
 
Aug. soybean futures finished 7½¢ higher at $8.98¾. November soybean futures closed 9¼¢ higher at $9.06¼.

Sep. wheat futures finished 1¼¢ higher at $4.93¼. 

Aug. soymeal futures closed $1.60 per short ton higher at $297.80. Aug. soy oil futures ended $0.45 higher at 28.54¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.04 per barrel lower at $40.99. The U.S. dollar is lower, and the Dow Jones Industrials are 394 points higher.

The outside markets are finding strength from China’s economic data, Friday, showing a V-shape recovery. Also, news that longtime investor Warren Buffet is showing interest in any companies. And, investors believe that the Federal stimulus set to arrive in four to six weeks will support household spending.

On Monday, private exporters reported to the USDA the following activity:

  • Export sales of 264,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.
  • Export sales of 204,000 metric tons of corn for delivery to China during the 2020/2021 marketing year.
  • Export sales of 182,880 metric tons of corn for delivery to Mexico. Of the total, 121,920 metric tons is for delivery during the 2020/2021 marketing year and 60,960 metric tons is for delivery during the 2021/2022 marketing year.

The marketing year for corn and soybeans began Sept. 1.

Al Kluis, Kluis Advisors, says that investors are squarely focused on crop weather. 

“The weather forecasts today have more rain and cooler temperatures for early this week for the northern Corn Belt, but when it gets hot, it stays hot longer,” Kluis told customers in a daily note. 

Kluis added, “The USDA Crop Progress Report today will show corn and soybean conditions moving slightly lower. One key to watch is what the subsoil moisture condition report shows for the main Corn Belt states.”

“Watch the CFTC Commitments of Traders report that is released at 2:30 pm today. The key to watch is the fund short position in corn. I think the report will show funds (as of last Tuesday) short 220,000 contracts. My current estimate is that funds (as of the close on Thursday) are still short over 200,000 contracts of corn,” Kluis stated.

CFTC Report

On Monday, the CFTC released its delayed Commitments of Traders Report from Friday.

In the report, it’s indicated that the managed money investors sold off some of their large short positions in the corn market, while they added top their net long positions in the soybean market.

Specifically for corn, managed money net positions, ending June 30th, totaled 202,000 contracts vs. 277,000 on June 23rd.

For soybeans, the managed money net long positions climbed to 67,800 contracts, vs. 44,300 on June 23rd.

For wheat, managed money net short positions dwindled from 48,200 on June 23rd to 38,800 on June 30th.

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