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Soybeans, Corn Close Lower on China Tensions

Worries about demand keep soybean and corn prices lower.

Soybean futures closed lower Friday amid worries about trade between the U.S. and China, the world’s biggest importer of the oilseeds. 

Investors were worried that, due to rising tensions, President Donald Trump would end or alter the so-called Phase 1 trade deal the countries – the world’s two largest economies – signed in January. 

Analysts had expected the president to talk about the trade agreement at a news conference, but the press event started later than expected and happened after the markets closed. Trump didn’t mention the trade deal in his remarks, but said the U.S. will take actions against China after the Asian country passed what it called a national security law that critics say limits political freedoms in Hong Kong. 

Protections offered to Hong Kong will be stripped as it is no longer autonomous, he said, and the U.S. will terminate ties and funding to the World Health Organization, which he said China is manipulating. Analysts said immediately after the speech that it’s likely China will retaliate in one form or another. 

Separately, the U.S. Department of Agriculture said in a report today that export sales of corn plunged 52% week-to-week while soybean sales dropped 47%. The weak export sales report also weighed on prices. 

Wheat futures rose after the USDA said sales rose 19% on a weekly basis. 

July soybean futures lost 6¼¢ to $8.40¾ a bushel Friday. Soymeal dropped $1.10 to $283.20 a short ton and soy oil futures added 0.01¢ to 27.40¢ a pound. 

Corn futures fell 2¢ to $3.25½ a bushel.

Wheat futures for July delivery gained 7¢ to $5.21½ a bushel, while Kansas City futures added 6¼¢ to $4.66 a bushel. 


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Thursday’s Grain Market Review


INDIANOLA, Iowa -- On Thursday, the CME Group’s farm markets are trading mostly higher.

At the close, the July corn futures finished 7¢ higher at $3.27½. Dec. corn futures ended 5¾¢ higher at $3.40½.
 
July soybean futures closed 1½¢ lower at $8.47. November soybean futures closed ½¢ higher at $8.56.

July wheat futures ended 10¢ higher at $5.14. 

July soymeal futures closed $2.30 per short ton higher at $284.30. July soy oil futures are 0.21¢ lower at 27.39¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.21 per barrel higher at $34.02 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 180 points higher.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that the corn market finally got out of its 5¢ trading range.  

“Couple things at play here, today, pushing corn. It seems like beans and wheat are playing follow the leader today. With the funds carrying a fairly hefty short position – call it 250,000 contracts short – you may be seeing a bit of short covering here. Weather forecast is calling for hotter and dryer in parts of western Corn Belt.”  

The Energy Information Administration’s ethanol report this morning continued to show a drawdown in stocks, with demand outpacing current outputs, she says.  

“We’ve thrown a lot of bad news at the corn market the last few months and for the meantime it seems there isn’t more to throw at it. This time of year, we typically build a little risk premium into the grain markets and maybe, just maybe, we can get some more juice out of this move,” O’Connell says.  

From a technical view, a close above $3.30 per bushel could invite a move to $3.40, where the next resistance is parked, O’Connell says.

Al Kluis, Kluis Advisors, says investors are watching the soybean market’s ability to move above technical signals.    

“July soybeans are within striking distance of the 50-day average. A convincing move through this line is important because the last time prices traded over this line was in mid-January,” Kluis told customers in a daily note. 

Kluis added, “Traders are trying to avoid the headlines involving further trade tensions between the U.S. and China. However, the headline of rumored purchases by China (from Brazil, for shipment this fall or winter) is hard to ignore. Those sales are likely being sourced from Brazil to avoid any possible tariffs or sanctions that could result from further tensions this summer.”

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Wednesday’s Grain Market Review

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

At the close, July corn futures finished 1½¢ higher at $3.20½; December corn futures ended ½¢ higher at $3.34½.
 
July soybean futures closed 1½¢ higher at $8.48¾; November soybean futures closed ½¢ higher at $8.55¾.

July wheat futures finished 2¼¢ lower at $5.04¾. 

July soy meal futures closed $1.90 per short ton lower at $282.00. July soy oil futures settled 0.33¢ higher at 27.60¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.33 per barrel lower at $33.02 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 312 points higher.

On Wednesday, private exporters reported to the USDA changes in destination of 138,000 metric tons of soybean cake and meal from unknown destinations to the Philippines during the 2019/2020 marketing year.

The marketing year for soybean cake and meal began October 1.

The USDA Crop Progress Report on Monday showed corn planting at 88% complete. This compares to 80% last week and just 55% last year. Soybean planting is 65% complete compared with 53% last week. Spring wheat planting is reported at 81%, which is 9 percentage points behind the five-year average.

Al Kluis, Kluis Advisors, says investors will need to digest a drop in corn acres.    

“The wet weather over the last two weeks in North and South Dakota will result in 2- to 3-million-acre reduction in planted corn acres in those two states. I now expect total corn acres will drop to about 94 million acres of corn, which is 3 million acres below the USDA projection from January,” Kluis told customers in a daily note. 

Kluis added, “We will be watching the weather in North Dakota this week. North Dakota plants about 50% of the U.S. hard red spring wheat crop. However, yesterday’s USDA Crop Progress Report showed only 70% of their HRS  wheat has been planted. This signals that total HRS wheat planted acres may be 1 million acres (8%) below the USDA January Prospective Plantings Report."

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Tuesday’s Grain Market Review

On Tuesday, CME Group’s farm markets were lead by the soybean complex on demand.

At the close, July corn futures finished 1¢ higher at $3.19; December corn futures closed 1¼¢ higher at $3.34.
 
July soybean futures finished 13½¢ higher at $8.47; November soybean futures closed 10¾¢ higher at $8.55.

July wheat futures closed 2¢ lower at $5.06¼. 

July soy meal futures ended 20¢ per short ton higher at $283.90. July soy oil futures finished 0.63¢ higher at 27.27¢ per pound.

In the outside markets, the NYMEX crude oil market is 91¢ per barrel higher at $34.16 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 652 points higher.

On Tuesday, private exporters reported to the USDA the following activity.

  • Export sales of 264,000 metric tons of soybeans for delivery to China. Of the total, 66,000 metric tons is for delivery during the 2019/2020 marketing year and 198,000 metric tons is for delivery during the 2020/2021 marketing year.
  • Export sales of 216,000 metric tons of soybean meal for delivery to unknown destinations during the 2019/2020 marketing year.

The marketing year for soybeans began September 1; soybean meal began October 1.

Al Kluis, Kluis Advisors, sayst investors will be watching the U.S. gasoline consumption data and the USDA’s estimate of planting progress for price direction.   

“The grain markets closed mostly lower on Friday in a choppy day of trade. The weather over the long holiday weekend was close to the forecasts on Friday,” Kluis told customers in a daily note. “The USDA Crop Progress Report today will tell us how much corn was planted in North and South Dakota over the last week. Total U.S. corn planted acreage may fall below 95 million acres as many northern Corn Belt and Delta farmers throw in the towel and take the prevent-plant alternative in 2020.”

Kluis added, “There is a lot of pent-up demand to travel. That, plus the normal seasonal increase in driving, will help increase gasoline and ethanol demand this year. Over the next few weeks, gasoline demand may rebound up to 85% to 90% of the consumption in 2019.”

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