Ag markets fade next week's USDA report Friday

It looks to be a broad-based sell-off Friday.

On Friday, the CME Group’s farm markets weaken into the weekend.

At the close, the Sept. corn futures finished 3½¢ lower at $3.07¾. Dec. corn futures ended 3¼¢ lower at $3.20½.
 
Sept. soybean futures closed 9¢ lower at $8.65¾. November soybean futures settled 10½¢ lower at $8.67¼.

Sep. wheat futures finished 5¾¢ lower at $4.95¼. 

Sep. soymeal futures settled $1.20 per short ton lower at $282.00. Sept. soy oil futures closed 0.37¢ lower at 30.85¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.62 per barrel lower at $41.33. The U.S. dollar is higher, and the Dow Jones Industrials are 79 points lower.

On Friday, private exporters reported to the USDA export sales of 456,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

Al Kluis, Kluis Advisors, says that investors will be positioning themselves ahead of next week’s USDA August Supply/Demand report.  

“Grain traders are deciding if current corn and soybean prices are acceptable ahead of the USDA report next week. Soybeans have seen a few export sales announcements this week, while corn sales have been quiet,” Kluis told customers in a daily note.  

He added, “With the U.S. dollar at multiyear lows, we would expect to see U.S. exports pick up. However, it seems grain sales have slowed this week. The USDA report next week – combined with Phase One trade deal uncertainty – has pushed some traders to sit and wait.”

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Thursday’s Grain Market Review

DES MOINES, Iowa -- At the close of CME Group trading Thursday, wheat closed sharply lower while corn futures settled fractionally higher and soybeans were lower.

September corn futures finished ¼¢ higher at $3.11¼. Dec. corn futures are ½¢ higher at $3.23¾.
 

Sep. soybean futures finished 1½¢ lower at $8.74¾. November soybean futures are ¾¢ lower at $8.78.

Sep. wheat futures settled 9½¢ lower at $5.01¼. 

Sep. soymeal futures ended are $1.50 per short ton lower at $283.20. Sep. soy oil futures are 0.12¢ higher at 31.22¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.21 per barrel lower at $41.98. The U.S. dollar is lower, and the Dow Jones Industrials are 122 points higher.

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DES MOINES, Iowa -- At midsession Thursday, grain futures have shifted into neutral or negative territory.

In late-morning trading, the September corn futures are 1¢ higher at $3.12. Dec. corn futures are ¾¢ higher at $3.24.
 
Sep. soybean futures are 1¢ lower at $8.75¼. November soybean futures are ¼¢ lower at $8.78½.

Sep. wheat futures are 7¼¢ lower at $5.03½. 

Sep. soymeal futures are $1.40 per short ton lower at $280.90. Sep. soy oil futures are 0.16¢ higher at 31.86¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.16 per barrel lower at $42.59. The U.S. dollar is higher, and the Dow Jones Industrials are 24 points lower.

Anyone looking for bullish signs in today’s trading might want to go fishing instead.

“It’s a lower day today in response to good weather and mostly strong export sales,” says Jack Scoville of PRICE Futures Group. “The problem is that we got demand for now, but it is not expected to last for more than a couple of months, and then we will still have lots and lots of stuff to sell. It is supply side selling for now. In corn, the trade is also waiting for the big dump-out by producers who probably need to clean out some old-crop supplies before moving the new crop in. It’s a pretty price-ugly picture around here for sellers.”

Britt O’Connell of Commodity Risk Management Group has a similar view:

“Welcome to the August doldrums,” she says. “It is seasonally very normal for the corn market to search for a seasonal low. Exports have continued to be very strong, but with various analysts’ yield estimates starting to roll, it seems very logical that yields will be ratcheted higher.”       

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DES MOINES, Iowa – In early trading Thursday, soybean futures are higher following more positive export news while corn prices rise slightly.

In early trading, the September corn futures are ¾¢ higher at $3.11¾. Dec. corn futures are ½¢ higher at $3.23¾.
 
Sep. soybean futures are 3¼¢ higher at $8.79½. November soybean futures are 4¢ higher at $8.82¾.

Sep. wheat futures are 2¼¢ higher at $5.13. 

Sep. soymeal futures are $0.30 per short ton lower at $284.40. Sep. soy oil futures are 0.36¢ higher at 31.46¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.40 per barrel higher at $42.59. The U.S. dollar is higher, and the Dow Jones Industrials are 36 points lower.

“It appears the trade is prepared for a bearish USDA report next week,” says Al Kluis of Kluis Commodity Advisors. “Watch for the first negative headline that does not send prices lower. It may provide an opportunity for the bulls to step in and push higher.”

Separately, the USDA’s weekly Export Sales Report Thursday showed new crop corn and soybean sales that were at or above the upper end of trade expectations.

  • Corn: 101,600 metric tons (mt) for 2019/2020 and 2,600,000 mt for 2020/2021. Trade expectations for corn were 100,000 to 600,000 mt old crop and 2,000,000 to 2,600,000 mt new crop.
  • Soybeans: 345,200 mt for 2019/2020; 1,405,000 mt for 2020/2021. For soybeans, trade guesses ranged from  200,000 to 550,000 mt old crop and 600,000 to 1,200,000 mt new crop. 
  •  Wheat: 605,500 mt
  • Soybean meal: 532,200 mt (old and new crop)

Also on Thursday, a USDA daily report showed additional soybean sales to China.

Private exporters reported to the U.S. Department of Agriculture export sales of 126,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.  

The marketing year for soybeans began Sept. 1.

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On Wednesday, the CME Group’s farm markets finished mostly higher.

At the close, the Sept. corn futures finished 2¼¢ higher at $3.11. Dec. corn futures ended 3¢ higher at $3.23¾.
 
Sept. soybean futures closed 3¾¢ lower at $8.76. November soybean futures settled 3¢ lower at $8.78¼.

Sep. wheat futures finished 2½¢ higher at $5.10. 

Sep. soymeal futures closed $1.10 per short ton lower at $284.70. Sept. soy oil futures finished 0.05¢ higher at 31.10¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.59 per barrel higher at $42.29. The U.S. dollar is lower, and the Dow Jones Industrials are 308 points higher.

Jason Roose, U.S. Commodities, says that the grains are mixed today with a small short covering bounce in corn.

“Also, pre-estimates for next week’s crop report gives the market uncertainty. Nonthreatening weather has taken premiums out, and China still continues to have a strong appetite for U.S soybeans, as the U.S. dollar trends lower,” Roose says.

On Wednesday, private exporters reported to the USDA export sales of 192,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

In the outside markets, the NYMEX crude oil market is $1.63 per barrel higher at $43.33. The U.S. dollar is lower, and the Dow Jones Industrials are 274 points higher.

Al Kluis, Kluis Advisors, says that investors will be watching crop ratings for price direction.  

“Crop ratings are among the highest ever seen for this time of year. Soybean prices also came under pressure as the forecast for August is showing chances of rain in key areas while the heat is manageable. Soybean crop ratings are also very impressive for this time of year,” Kluis told customers in a daily note.  

He added, “The bears have control of the corn and wheat markets. Soybeans closing under the 40-day average for the first time since June 1 could be the beginning of a longer-term bearish shift in momentum.” 

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets sink, with the soybean complex taking the biggest haircut.

At the close, the Sept. corn futures finished 9½¢ lower at $3.08. Dec. corn futures finished 8½¢ lower at $3.20¾.
 
Sept. soybean futures closed 13¼¢ lower at $8.79¾. November soybean futures ended 14¾¢ lower at $8.81¼.

Sep. wheat futures closed 12¾¢ lower at $5.08¼. 

Sep. soymeal futures settled $3.50 per short ton lower at $285.80. Sept. soy oil futures closed 0.17¢ lower at 31.05¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.59 per barrel higher at $41.60. The U.S. dollar is lower, and the Dow Jones Industrials are 45 points higher.

Jack Scoville, PRICE Futures Group, says that the markets fell due to stronger crop ratings and big crop estimates for Brazil. 

“We had no export demand in the daily announcements, so that was negative as well. But everyone is talking about super yield potential and maybe some record crops. Not sure if records are out there, but it is in fact a very nice looking crop for just about all major production areas. And, we need to find a home for it, which will be hard as there are nice crops about everywhere in the world. Going to be a bearish year from the looks of it,” Scoville says.

Al Kluis, Kluis Advisors, says that investors will be watching for Iowa’s crop ratings to improve.   

“The USDA Crop Progress report showed a corn rating unchanged from last week and soybean ratings up 1%. Conditions are well above the five-year average and soybean ratings are at the highest level ever for this time of year,” Kluis told customers in a daily note. Current crop ratings are suggesting a better-than-trendline yield. “I expect the corn crop to be very close to a new record yield. If the forecast rain hits in August, then we will have a new record soybean yield for the 2020 crop.” 

He added, “How much rain will hit in Iowa, and when? Crop conditions continue to decline with corn ratings down 3% in the report last week and down another 4% in the report yesterday. Soybean ratings are down 6% over the last two weeks. Also watch the topsoil moisture ratings. Last week, 32% of Iowa was reported as short- to very-short moisture. The report yesterday showed topsoil moisture 47% short-to-very-short.” 

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Monday’s Grain Markets Review

On Monday, the CME Group’s farm markets lean on the soybean market for strength.

At the close, the Sept. corn futures finished 1½¢ higher at $3.17¼. Dec. corn futures closed 1½¢ higher at $3.28½.
 

Sept. soybean futures settled 2¾¢ higher at $8.93. November soybean futures ended 3¾¢ higher at $8.96¼.

Sep. wheat futures closed 10½¢ lower at $5.21¼. 

Sep. soymeal futures closed $1.90 per short ton lower at $289.30. Sept. soy oil futures closed 0.75¢ higher at 31.22¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.72 per barrel higher at $40.99. The U.S. dollar is higher, and the Dow Jones Industrials are 266 points higher.

On Monday, private exporters reported to the USDA export sales of 260,000 metric tons of soybeans for delivery to unknown destinations. Of the total, 8,000 metric tons is for delivery during the 2019/2020 marketing year and 252,000 metric tons is for delivery during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that without much by way of news, the markets continue to take their lead from the weather, which is favorable for strong yields.  

“Expectations right now are for the USDA to raise both corn and soybean yields. The trade seems to be expecting a push in yield toward 51 to 52 bushels. Assuming no other changes, ending stocks would push to 525 million. Traders have corn yields being raised toward 183 to 185 bushels per acre. Should we see a 3% increase in yields, ending stocks would be pushed back over the 3-billion-bushel mark,” O’Connell says.  

She added, “With large yields and ample supplies projected it has been very hard to get the market excited about higher prices despite China’s active buying pattern. China’s domestic corn prices have surged to record levels. Continued buying should not come as a shock and is much needed,” O’Connell says.  

Al Kluis, Kluis Advisors, says that higher crop prospects pressure prices.   

“The USDA Crop Progress report today will show corn conditions steady to 1% better and soybeans up 1% to 2%. This (plus a very favorable weather forecast) suggests we have the potential for record corn and soybean yields in 2020,” Kluis told customers in a daily note. 

He added, “Watch the gold futures market and the U.S. dollar. The higher gold market and lower U.S. dollar are both very favorable over the long term for the entire commodity complex.” 

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