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Corn Closes Slightly Higher Friday

Investors look for bullish news to trade.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets keep looking for more reasons to go higher.

At the close, the July corn futures finished ¼¢ higher at $3.70¾. Dec. corn futures closed ¾¢ higher at $3.87¾.
 
July soybean futures closed 1¢ lower at $8.42¼. November soybean futures finished ¾¢ lower at $8.64¼.

July wheat futures finished 6¢ lower at $4.38.

July soymeal futures closed $1.30 per short ton higher at $298.20. July soy oil futures ended 0.15¢ lower at 27.35¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.18 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 208 points higher.

On Friday, private exporters reported to the USDA export sales of 293,922 metric tons of soybeans for delivery to Mexico during the 2019/2020 marketing year.
 
The marketing year for soybeans began September 1.

Jason Roose, U.S. Commodities, says that investors are digesting the idea of more wet weather.

“Grains are trading mixed today, with all eyes on the next weather forecast. The current six- to 10-day forecast is for cool temperatures and above-normal precipitation. Weekly exports were poor for the week, but current U.S., China trade talks would be bright spot for exports. Funds are record short in most grains,” Roose says.

Al Kluis, Kluis Advisors, says the market is officially being driven by the weather.

“The market seems to be pricing in a little weather premium. Much of the U.S. has been rather wet and looks to be that way for a few more days before it starts to warm up and dry out. There is not a lot new in the marketplace for news to trade on, other than wet weather delaying planting. Expect choppy trade action today as we head into the weekend,” Kluis told customers in a daily note.

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets find wheat leading the way.

At the close, July corn futures settled 2¢ higher at $3.70¼; December corn futures finished ¾¢ higher at $3.87.
 
July soybean futures ended 8½¢ lower at $8.43¼; November soybean futures finished 8¢ lower at $8.65.

July wheat futures closed 8¢ higher at $4.44.

July soy meal futures finished $3.40 per short ton lower at $296.20. July soy oil futures finished 0.15¢ cent lower at 27.50¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.97 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 146 points lower.

Britt O’Connell, cash advise for Commodity Risk Management Group, says the corn market is getting rewarded, finishing higher for four consecutive sessions.

“Corn has seen a bit of a reprieve this week, as funds begin to take profit on some of the record shorts that they had on. Sentiment may be shifting in that crowd, as well. Long-range weather forecasts do not favor planting progress in most of the Corn Belt,” O’Connell says.  

He added, “Soybeans have been the casualty to that acreage discussion. The prevailing thought now is that the further we get into May, the more acres you could see shift into soybeans.”

Al Kluis, Kluis Advisors, says the market is officially being driven by the weather.

“The weather looks to be very wet for the first five to eight days of May for a good portion of the Corn Belt, so that has traders a bit nervous. However, any talks of late corn planting is putting pressure on the soybean market. If we get less corn acres planted, then those could get switched to soybeans. All in all, we are in a weather market. Expect some volatility the next few weeks,” Kluis told customers in a daily note.

On Thursday, the USDA’s Weekly Export Sales Report were weak soybean, corn figures. Here are the numbers:

  • Corn: 796,000 metric tons vs. the trade’s expectations of between 600,000 and 1,000,000 mt
  • Soybeans: 336,900 mt vs. the trade’s expectations of between 400,000 and 900,000 mt
  • Wheat: 419,500 mt vs. the trade’s expectations of between 250,000 and 800,000 mt
  • Soybean meal: 95,700 mt vs. the trade’s expectations of between 100,000 and 350,000 mt

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Wednesday’s Grain Market Review

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

At the close, July corn futures finished 6¢ higher at $3.68½; September corn futures closed 5¾¢ higher at $3.76¼.
 
July soybean futures settled at 2¼¢ lower at $8.51¾; August soybean futures finished 2¢ lower at $8.58.

July wheat futures ended 7¼¢ higher at $4.36.

July soy meal futures ended 20¢ per short ton higher at $300.30. July soy oil futures settled 0.23¢ lower at 27.65¢ per pound.

In the outside markets, the NYMEX crude oil market is 25¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 20 points higher.

Separately, the Federal Reserve announced Wednesday that it will keep the U.S. benchmark interest rate between 2.25% and 2.5%. The Fed cited a lack of inflation in the U.S. economy, with vulnerabilities moderate, as reasons that it will keep rates unchanged.

Al Kluis, Kluis Advisors, says the market is holding on to a theme involving outside investors.

“Corn spreads have stabilized since the lows hit last week. Keep an eye on the December 2019 vs. July 2020 spread. I think a string of higher highs and higher lows on the spread would trigger some fund managers to reevaluate their record short position,” Kluis told customers in a daily note.

Kluis added, “With a wet six- to 10-day forecast, it is hard to imagine spring wheat will get planted in ideal conditions. Spring wheat areas in North Dakota are still covered in snow.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets finish mostly lower.

At the close, July corn futures finished ¾¢ higher at $3.62½; September corn futures settled ½¢ higher at $3.70½.
 
July soybean futures settled 6¾¢ lower at $8.54; August soybean futures ended 6¾¢ lower at $8.60.

July wheat futures closed 6½¢ lower at $4.28¼.

July soy meal futures finished 80¢ per short ton lower at $300.10. July soy oil futures finished 0.31¢ lower at 27.88¢ per pound.

In the outside markets, the NYMEX crude oil market is 33¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 18 points higher.

Peter J. Meyer, S&P Global Platt’s head of grain and oilseed analytics, says it’s an obviously very difficult market environment.  

“On one hand, you have the record fund shorts in corn and soybeans with poor planting conditions, which seems to be the focus of those trying to will the markets higher. On the other hand, you have farmers who are long a good chunk of last year’s corn crop, have very few hedges on for new-crop corn or beans, and are unwilling to sell,” Meyer says.  

Meyer adds, “Too much focus is being placed on the fund short, as something that needs to be reversed at some point and thus causing a rally. The funds are entrenched, based on weakening demand, and have rolled their shorts since late last year, gaining the same carry that is supposedly helping the farmer. A majority of those fund corn shorts have a 30¢-plus cushion as a result and have been buying cheap call option contracts against their position as insurance.”

In the end, any rally at this point will need to be production-based, as demand for both U.S. corn and beans remains suspect, Meyer says.

“The markets remain worn out by all the trade war resolution rhetoric. Should a production rally occur, it should be sold,” Meyer says.

Al Kluis, Kluis Advisors, says investors are keeping a close eye on planting weather.

“Keep an eye on the extended weather forecasts. The next 10 days look very wet. Then it may dry out a bit, but 15-day forecasts are more subject to change. With planting behind the average pace and wet weather in the next 10 days, the focus will be on the extended maps,” Kluis told customers in a daily note.

Kluis added, “Once the wheat market started to head south, that pulled corn and soybeans off their highs. Winter wheat conditions are off to one of the best starts in 20 years. The huge wheat supply in the U.S. and world puts wheat futures under pressure.”

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Monday’s Grain Review

On Monday, the CME Group’s corn futures prices backed off early gains, closing slightly higher on inclement planting weather support.

At the close, May corn futures finished ¾¢ higher at $3.52; July corn futures finished ½¢ higher at $3.61¾.
 
May soybean futures closed 6¼¢ lower at $8.47½; July soybean futures ended 6¼¢ lower at $8.60¾.

July wheat futures finished 7¼¢ lower at $4.35¼.

July soy meal futures settled $2.80 per short ton lower at $300.90. July soy oil futures finished 0.35¢ higher at 28.19¢ per pound.

In the outside markets, the NYMEX crude oil market is 19¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 49 points higher.

Jason Roose, U.S. Commodities, says the market is getting niblets of bullish factors.

“Grains are mixed today, with all eyes on the weather forecast. Corn is trading in positive territory, with wet weather considered friendly. Any further delay in planting could lower potential yield or see farmers switch to planting soybeans. Potential Argentina export tax on grain and wet weather in Canada are also giving the grains support,” Roose says.

Al Kluis, Kluis Advisors, says the weather and fund position are driving the market.

“With funds short over 320,000 contracts of corn and with the wetter forecasts, the odds are good that corn prices will move higher,” Klus told customers in a daily note.

He added, “This afternoon, watch the USDA Crop Progress Report. I expect nationwide corn planting to be at about 14%. That compares to 25% in the six-year average. With the wet forecast now through mid-May, I doubt if the U.S. planting progress on May 13 will show corn planting above 50%.”

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