Friday’s ag markets rebound, ahead of USDA data

USDA’s report will need to be a bullish one to keep the markets rallying.

On Friday, the CME Group’s farm markets trade higher, as investors await the 11:00 a.m. CT release of the USDA’s October Supply/Demand Reports.

In early trading, the Dec. corn futures are 1¾¢ lower at $3.88½. March corn futures are 2¢ higher at $3.96½. 

Nov. soybean futures are 9¾¢ higher at $10.59¾. January soybean futures are 9¼¢ lower at $10.57.

Dec. wheat futures are 2¼¢ higher at $6.01. 

Dec. soymeal futures are $3.30 per short ton higher at $362.90. Dec. soy oil futures are 0.59¢ higher at 33.59¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.12 per barrel lower at $41.07. The U.S. dollar is lower, and the Dow Jones Industrials are 145 points higher.

Bob Linneman, Kluis Advisors, says that investors are eyeing today’s USDA report. 

“It makes sense that we would see some profit-taking ahead of the USDA report this morning at 11:00. CBOT and KC wheat prices continue to climb as traders evaluate the dry conditions in the U.S. and Russia. What could this do to the world wheat balance sheet,” Kluis posed to customers in a daily note.   

He added, “Including the bullish September Grain Stocks report day (seven trading days ago) corn has rallied 25¢ and soybeans have rallied over 60¢. Did the trade build in all the bullish news that we could see in the report today? It will take very friendly data today to avoid profit taking after the quick run-up in prices.”

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets turned weaker, as the afternoon trading session ended.

At the close, the Dec. corn futures finished 1¾¢ lower at $3.87½. March corn futures closed 2½¢ lower at $3.94½. 

Nov. soybean futures finished 1¢ lower at $10.50. January soybean futures finished 3½¢ lower at $10.48.

Dec. wheat futures closed 12¾¢ lower at $5.95¾. 

Dec. soymeal futures settled $2.20 per short ton lower at $359.60. Dec. soy oil futures settled 0.03¢ lower at 33.00¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.32 per barrel lower at $41.27. The U.S. dollar is higher, and the Dow Jones Industrials are 101 points higher.

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

  • Export sales of 374,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.
  • Export sales of 152,404 metric tons of soybeans for delivery to Mexico during the 2020/2021 marketing year.
  • Export sales of 132,000 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

Separately, the USDA’s Weekly Export Sales Report Thursday shows strong demand figures.

  • Corn = 1.22 million metric tons vs. the trade’s expectations of between 700,000 mmt and 1.5 mmt. 
  • Soybeans = 2.59 million metric tons. vs. trade’s expectations of 1.5 mmt to 2.5 mmt. Of that total, China bought 1.53 million metric tons.
  • Wheat = 568,000 mt. 
  • Soybean meal = 271,700 mt.

Bob Linneman, Kluis Advisors, says that the market’s trend is higher. 

“The trend this week has been to buy any dip in the overnight session and see new highs by midmorning. After that, prices settle off their highs. This is a good trend for the bulls, as long as the bull spreads continue to work higher. Wheat traders continue to push prices higher; the top stories are that winter wheat conditions are less than ideal in the U.S., and the concern about dryness in Russia,” Kluis told customers in a daily note.   

He added, “The hurricane brewing in the Gulf of Mexico is expected to disrupt barge traffic. This will impact export capability for at least a little while. If that impact is not as severe as traders expect, then prices could quickly give back some of the recent gains.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets added to this week’s gains.

At the close, the Dec. corn futures finished 3¾¢ higher at $3.88½. March corn futures closed 3¾¢ higher at $3.97, after hitting the $4.00 mark.
 
Nov. soybean futures settled 7¢ higher at $10.51½, trading as high as $10.59. January soybean futures closed 6¢ higher at $10.51½.

Dec. wheat futures settled 14¾¢ higher at $6.07¾. 

Dec. soymeal futures finished $6.30 per short ton higher at $361.80. Dec. soy oil futures are 0.06¢ lower at 33.03¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.69 per barrel lower at $39.98. The U.S. dollar is lower, and the Dow Jones Industrials are 561 points (2.02%) higher.

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

  • Export sales of 132,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.
  • Export sales of 120,000 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says that yesterday’s markets posted impressive gains. 

“Watch the bull spreads in soybeans. November 2020 is now trading at a 9¢ premium to the March 2021 soybeans and a 14¢ premium to the July 2021 contract. As long as the bull spreads keep working, soybeans will keep trending higher,” Kluis told customers in a daily note.   

He added, “Farmers are getting a lot of $10 soybeans sold right off the combine. Commercials have bought and are now holding over 50% of the 2020 U.S. soybean crop. Long-term, this is positive for the soybean market.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s soybean market traded double-digits higher wire to wire.

At the close, the Dec. corn futures finished 5¼¢ higher at $3.85. March corn futures closed 5¢ higher at $3.94¼.
 
Nov. soybean futures settled 22½¢ higher at $10.44. January soybean futures finished 20½¢ higher at $10.45½.

Dec. wheat futures closed 8½¢ higher at $5.92¼. 

Dec. soymeal futures closed $9.50 per short ton higher at $355.50. Dec. soy oil futures finished 0.53¢ higher at 33.09¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.20 per barrel higher at $40.42. The U.S. dollar is lower, and the Dow Jones Industrials are 134 points higher.

On Tuesday, private exporters reported to the USDA export sales of 154,400 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

The USDA weekly crop report on Monday afternoon showed corn ratings up 1% (at 61%) good to excellent. Soybean ratings were unchanged. Corn harvest was reported at 25% complete, and nationwide soybean harvest was reported at 38%. 

Al Kluis, Kluis Advisors, says that this is the time of the year when investors consider the harvest pace. 

“Soybean harvest will pass 55% nationwide in the USDA Crop Progress report next Monday. That will force elevators and end users to start pushing basis bids to lock in the soybeans they need to buy from farmers before the beans go to the bin,” Kluis told customers in a daily note.   

He added, “Watch the low made last Friday in November soybeans at $10.13. That is the key two-day low. The two-week low at $9.85 held last week, and is now major support.  A close below $10.13 on Tuesday or Wednesday will signal a short-term top.”

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets diverge.

At the close, the Dec. corn futures finished ¼¢ lower at $3.79¼. March corn futures closed unchanged at $3.89¼.
 
Nov. soybean futures closed ¾¢ higher at $10.21¾. January soybean futures ended ¼¢ higher at $10.25.

Dec. wheat futures ended 11¢ higher at $5.84¼. 

Dec. soymeal futures settled $5.90 per short ton lower at $346.00. Dec. soy oil futures finished 0.90¢ higher at 32.56¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.10 per barrel higher at $39.15. The U.S. dollar is lower, and the Dow Jones Industrials are 376 points higher.

On Monday, private exporters reported to the USDA export sales of 160,020 metric tons of corn for delivery to Mexico during the 2020/2021 marketing year.

The marketing year for corn began Sept. 1.

Jack Scoville, PRICE Futures Group, says that the corn and bean markets are trading in ranges and are waiting for the harvest progress reports, today, and the WASDE at the end of the week. 

“Past history suggests that USDA will come in below the average trade guess, so the market could rally again on Friday or maybe next week. But it should be a choppy affair until then or unless the yield reports from the country are very good and high,” Scoville says.

“The wheat market is up on weather, dry conditions in Russia, the U.S. Plains, and Argentina and Australia. All in all, the wheat market is held up by less production coming and fund buying,” Scoville says. 

Al Kluis, Kluis Advisors, says that the funds are expected to get longer the markets, pushing up prices. 

“Even with the lower corn and soybean market on Friday, the corn and soybean markets closed higher for the week. The lower markets last Monday and Tuesday are a correction in the overall bull market,” Kluis told customers in a daily note.   

He added, “The USDA Crop Progress report today will show corn harvest at about 25% and soybean harvest at 35%. With dry weather forecasts for the next two weeks, I expect a fast wrap-up to the corn and soybean harvest this year. I look for soybean harvest to be at 50% in two weeks, and corn harvest to be at the 50% mark in three weeks.”

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