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Investor Worry Creates Corn, Soybean Market Rally Thursday

Corn leads the way, with July futures reaching a 3-year high.

DES MOINES, Iowa -- On Thursday, the CME Group’s markets continue to rise on inclement weather and rationing issues.

At the close, the July corn futures finished 12¢ higher at $4.42. Dec. corn futures ended 7¼¢ higher at $4.55¾.
 
July soybean futures finished 10¢ higher at $8.88. November soybean futures closed 9¾¢ higher at $9.15¼.

July wheat futures finished 9¼¢ higher at $5.35½.

July soymeal futures closed $2.20 per short ton higher at $321.70. July soy oil futures settled 0.46¢ higher at 28.02¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.29 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 60 points higher.

On Thursday, private exporters reported to the USDA export sales of 175,000 metric tons of corn for delivery to Mexico during the 2019/2020 marketing year.

The marketing year for corn began September 1.

Jack Scoville, PRICE Futures Group, agrees that the markets are underpinned by a weather market.

“USDA cut the U.S. corn area and will cut it more.  We think so and so does Informa, the private analyst firm.  The USDA’s U.S. average corn yield is fine, but basically right now we are looking at significantly reduced carry out for the coming year and the need to ration a little bit,” Scoville says.  

On Thursday, Informa, the private analyst firm, updated its 2019 acreage estimates, Here are the new estimates:

  • Corn= 84.8 million acres, down 5.0 million vs. USDA's June estimate
  • Soybean=  85.0 million, up 370,000 acres vs. USDA June.

Scoville adds, “The market is starting to note the wet beans and note the disease potential as well as the potential for reduced area.  Funds buyers everywhere today.  This is fun again!  We can go above $5.00 in Dec corn futures, for sure, I think.”

Al Kluis, Kluis Advisors, says investors are building more risk premium into the markets.

“The seven-day precipitation amounts range from 1½ inches up to 4 inches across most of Illinois, Indiana, and Ohio. As of Sunday, these states only had 49%, 42%, and 32% of the soybean crop planted, respectively. At what point do the planters get parked for the season,” Kluis told customers in a daily note.

Kluis added, “The corn balance sheet is on the verge of becoming worrisome. We don’t need to see massive reductions in acreage and/or yield, and we could still see the stocks-to-use ratio in the 5% to 7% range. The further we see the ratio fall under 10%, the more bullish traders will become.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets push higher, with soybeans leading the way.

At the close, July corn futures settled 2¼¢ higher at $4.30; December corn futures ended 1½¢ higher at $4.48.
 
July soybean futures closed 18¾¢ higher at $8.78; November soybean futures finished 18½¢ higher at $9.05¼.

July wheat futures closed 8¼¢ higher at $5.26¼.

July soy meal futures closed $5.10 per short ton higher at $319.50. July soy oil futures finished 0.34¢ higher at 27.56¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.88 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 64 points lower.

Darin Fessler, Lakefront Futures and Options, says the USDA’s chief economist announcing that changes to the soybean acreage and yield to be made next month has underpinned soybean prices.

“With those changes coming, it’s moving the beans higher. The soybeans that are being planted in June will force the USDA to drop its current U.S. average yield of 49.5 bushels per acre,” Fessler says. “And acreage will have to be lowered, too.”

Fessler adds, “The two things investors will be watching are the weather forecasts and the technical factor of a bull flag test of last week’s highs.”

Al Kluis, Kluis Advisors, says Tuesday’s USDA Supply/Demand Report could have a long tail.

“The big news from Tuesday’s USDA Crop Report was the 3-million-acre decline in corn acres combined with a 10-bushel-per-acre reduction in yield. Corn futures had over a 20¢ range for the day. Now traders need to decide how many more acres will be cut from the corn total and where the yield goes from here. What do we see for a prevent plant total this year? Weekly crop ratings will be watched closely going forward. Soybean prices were mostly quiet after the report. The corn numbers stole the show,” Kluis told customers in a daily note.

Kluis added, “Can corn futures surpass the brick wall of resistance at $4.54 on the December contract? A close over this level should trigger further buying from momentum traders.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s futures markets reacted positively to the USDA June supply/demand numbers.

See the full report here.

At the close, July corn futures finished 12¢ higher at $4.27¾; December corn futures closed 12½¢ higher at $4.47.
 
July soybean futures settled ¾¢ higher at $8.59¼; November soybean futures settled 1¼¢ higher at $8.87.

July wheat futures settled 10½¢ higher at $5.18.

July soy meal futures closed $1 per short ton higher at $314.40. July soy oil futures ended 0.16¢ lower at 27.22¢ per pound.

In the outside markets, the NYMEX crude oil market is 4¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 27 points lower.

Al Kluis, Kluis Advisors, says investors will be watching for today’s USDA Crop Progress Report and tomorrow’s June Supply/Demand Report.

“The USDA Crop Progress Report indicated that the corn ratings were at just 59% good to excellent. That is low number, and now it is important to watch the trend in ratings as we get into June and July,” Kluis told customers in a daily note.

Kluis added, “Regarding today’s USDA June Supply/Demand Report, I am watching to see not only the USDA-projected corn crop but also what the USDA does with ethanol and exports for the rest of this year and the next marketing year. A smaller crop does not always create a smaller carryout.”

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Monday’s Grain Market Review

On Monday, the CME Group’s farm futures close higher.

At the close, July corn futures finished steady at $4.15; December corn futures ended ¾¢ higher at $4.34.
 
July soybean futures settled 2¼¢ higher at $8.58; November soybean futures ended 2¾¢ higher at $8.85.

July wheat futures closed 3¢ higher at $5.07¾.

July soy meal futures closed $1.10 per short ton higher at $313.40. July soy oil futures ended even at 27.38¢ per pound.

In the outside markets, the NYMEX crude oil market is 85¢ lower, the U.S. dollar is higher, and the Dow Jones Industrials are 118 points higher.

Al Kluis, Kluis Advisors, says investors will be watching for today’s USDA Weekly Crop Progress Report and tomorrow’s June Supply/Demand Report.

“The USDA Weekly Crop Progress Report today will show nationwide corn planting at about 85% complete. I also look for the initial report on corn conditions to show that about 60% of the corn will be rated good to excellent, since the USDA only rates the corn that is emerged,” Kluis told customers in a daily note.

Kluis added, “We could be set up for a bearish USDA Crop Production Report on Tuesday. I doubt if the USDA will cut the corn crop in the June 11 report as much as the private estimates are expecting. If the USDA uses the same methodology as in 1995 and 2012, then the USDA may report a corn crop that is around 14 billion bushels.”

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