Soybeans Close 13¢ Higher Friday on Brazil Concerns
Soybeans closed higher in low-volume trading Friday on speculation that U.S. exporters are making unreported sales to overseas buyers and on reports of dry weather in Brazil.
Workers in the U.S. Department of Agriculture’s office who generate the export sales reports have all been furloughed due to the partial government shutdown that started last week, according to a voice message, creating a bit of a data vacuum and leaving producers, traders, and other market-watchers guessing about whether overseas customers are buying.
Still, traders seem optimistic that China and other customers are making purchases that aren’t being reported, as evidenced by the price increase this morning.
The Asian nation in the past couple of weeks has purchased more than 2.7 million metric tons of U.S. soybeans as part of an agreement to buy more agricultural products. Presidents Trump and Xi Jinping met at the start of December and hammered out a temporary deal in which the U.S. put on hold planned tariff increases in exchange for Beijing promising to buy more agricultural goods.
Data released on Dec. 20, before the partial government shutdown began, showed accumulated exports since the start of the marketing year on Sept. 1 were down 40% from the same period a year earlier. Soybean sales were down 30% year-over-year, the USDA said.
Precipitation in Brazil’s main soybean growing areas likely will be below normal at the start of 2019 after a dry December, Reuters reported. Rains in Mato Grosso do Sul, Mato Grosso, Goias, and Sao Paulo, the states that account for about two-thirds of soybean output in the South American country, will be less than normal through at least Jan. 10.
“In other news, since there is a lack of it, people are starting to talk about dryness in Brazil,” says Jeff Kaprelian, the director of brokerage services at The Hueber Report and CGB Diversified Services. “The only thing I’m thinking right now is about how many soybeans the Chinese are buying under the radar since we don’t have any daily reporting going on. If I were in their shoes, I’d be buying like crazy. So maybe others are thinking that as well.”
Soybean futures gained 13¢ to $8.95½ a bushel on the Chicago Board of Trade. Soymeal added $4 to $312.30 a short ton, and soy oil added 0.19¢ to 27.82¢ a pound.
Corn gained ½¢ to $3.75 a bushel in Chicago.
Wheat gained ¾¢ to $5.11¼ a bushel while Kansas City futures rose ¾¢ to $4.95¾ a bushel.
Thursday’s Grain Market Review
DES MOINES, Iowa -- On Thursday, the CME Group’s farm futures close mixed.
At the close, the March corn futures finished 1½¢ higher at $3.74. May futures closed 1¢ higher at $3.82.
January soybean futures finised ¼¢ lower at $8.69. March soybean futures finished ½¢ lower at $8.82½.
March wheat futures finished ½¢ higher at $5.10½.
March soymeal futures closed 0.40¢ per short ton higher at $308.30. March soy oil futures closed 0.02¢ lower at 27.63¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.81 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 549 points lower.
Al Kluis, Commodity Advisors (kluiscommodities.com), says end-of-year positioning is hitting the markets.
“The end-of-year selling continues. Light volume may also be part of the reason we moved to the downside. This has to be disheartening for the bulls for U.S. grains to struggle while the outside markets rebound. Expect choppy trade to close out the year,” Kluis stated in a daily note to customers.
Kluis added, “With U.S. grain prices coming under some more pressure, will China start to buy more grain from the U.S.? With the partial government shutdown, we will not get any notification of any export sales. Until we get the government back open, watch the basis levels at the Gulf and Pacific Northwest for any signs of export sales.”
Wednesday’s Grain Market Review
Soybean futures plunged Wednesday on concerns about demand amid few signs of increasing demand from China.
The Asian nation, once the largest buyer of U.S. soybeans, bought more than 1.7 million metric tons from U.S. supplies in the past two weeks.
Investors were positive on the sales, but said they weren’t as strong as expected. Since a purchase of just over 1.1 million tons was announced last week, no new buys have been reported.
Funding to the U.S. Department of Agriculture, however, was slashed amid a partial government shutdown, which may be one reason no new sales have been announced. Still, private exporters and industry sources haven’t said anything that would indicate China is buying.
March soybean futures dropped 13 1/4¢ to $8.83 3/4 a bushel on Wednesday. Soymeal fell $3.80 to $308 a short ton, and soy oil lost 0.36¢ to 27.67¢ a pound.
Corn for March delivery declined 4 1/2¢ to $3.73 1/4 a bushel on the Chicago Board of Trade.
Wheat lost 6 1/4¢ to $5.10 1/4 a bushel in Chicago and Kansas City futures dropped 6 1/2¢ to $4.96 a bushel.
In the outside markets, the NYMEX crude oil jumped alomost 10% while Brent futures rose 8.7%. The Dow Jones Industrial Average rose 4.3%.
Monday’s Grain Market Review
On Monday, the CME Group’s farm futures traded in a narrow range, closing near their opening.
At the close, the March corn futures finished ¾¢ lower at $3.77¾. May futures finished ½¢ lower at $3.85¾.
January soybean futures closed ¾¢ lower at $8.84. March soybean futures closed ¾¢ lower at $8.97.
March wheat futures settled 2½¢ higher at $5.23½.
March soymeal futures closed 1.70¢ per short ton higher at $311.80. March soy oil futures settled 0.14¢ lower at 28.03¢ per pound.
In the outside markets, the NYMEX crude oil market is $3.06 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 653 points lower.
A trader in Chicago, choosing anonymity, says that the market may have already offered farmers a soybean selling opportunity.
“I am afraid that farmers have missed their best opportunity to sell new crop in beans and corn already, when the recent highs were hit when the administration was hyping the return of Chinese soybean buying,” the anonymous trader says.
He added, “The Chinese buying is only government agency buying for reserve. The 25% duties on commercial trade are still intact and we are running out of time to affect a large export trade for this marketing year. The rub comes when the U.S. farmer will be forced to move out of soybean acres and into corn and wheat, stifling rallies in those markets.”
The Chicago trader says that investors will start to assess this in the runup to the annual February USDA Outlook Conference and the USDA’s March Prospective Planting Report.
“China apparently has lowered duties on alternative meals like rapeseed meal, and Argentine meal is cheaper than U.S. already,” the Chicago trader says.
He adds, “Meanwhile, government shutdown is keeping tax subsidy for biodiesel on the shelf and early harvest has already started in Mato Grosso, Brazil.”
There could be 10 million tons harvested in Brazil by late January, with main crop harvest starting as early as mid- February, he says.
“The commercial trade is typically executing exports for shipment six weeks ahead. In most years, 70% of the commercial bean exports are sold by the end of December. This is our problem with prices,” the Chicago trader says.
“Weather can still over ride the bias, but today’s weather looks for improvement in SA, and Chinese continue to take actions to avoid U.S.,” he said.