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Soybeans Add To This Week’s 32¢ Rally Friday

The bulls are taking the positive trade sentiment and running with it.

DES MOINES, Iowa, --  On Friday, the CME Group’s investors bought up the soybean market.

At the close, the Dec. corn futures finished 1 1/2¢ higher at $3.68 1/4. March corn futures finished 1 3/4¢ higher at $3.81 1/2.
 
Nov. soybean futures closed 3 1/4¢ higher at $8.98 3/4. Jan. soybean futures settled 3 1/4¢ higher at $9.12 1/4.

Dec. wheat futures closed 1/4¢ lower at $4.83 1/2.

December soymeal futures finished $0.20 per short ton higher at $301.50. December soy oil futures settled $0.27 higher at 29.43¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.12 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 50 points higher.

On Friday, private exporters reported to the USDA export sales of 204,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.

 
The marketing year for soybeans began September 1.
 

Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that while the initial reaction to the WASDE for corn would be bearish, and for a short time it was, it appears as if the market moving higher confirms the lack of belief in USDA's data

“Given the follow throughu strength today in corn, I am inclined to believe that we have set our low in the corn market for the season.  This would be inline with the last number of years.  As a matter of fact, 9 out of the last 10 years we have seen the low of corn established within a 3 week window from the end of Aug to first half of September,” O’Connell says.

Traditionally, the crop condition scores decline as we move towards harvest, this is the natural maturing process, she says.  

“This year, however, we did not see that play out as such.  Until the last few weeks, crop condition ratings vacillated slightly, even gaining in some weeks.  With harvest nearing and the most common comment being that the crop is variable, the trade seems to be building back in some risk premium,” O’Connell says.  

While an early frost does still remain a threat, the trade will begin to focus on early yield results from the field, she says.  

“From a technical perspective, we also have a gap left to fill on the corn chart from $3.92 to $3.88.  That seems like a realistic aim for this market,” O’Connell says.
In regards to beans, we continue to find not only good news by way of exports, but great news on the domestic crush front as well, she says.  

“With demand for soybean meal strong and margins healthy, U.S. soybean crushers set a new record for the month of August's crush.  Beans bulls will have to continue wrestling with the burdensome ending stocks.  While we are seeing those numbers decline with strong usage, 2019/2020 is pegged to be second only to the mountain of beans from the 2018 season,” she says.  

O’Connell added, “It seems that traders are so over the trade war and the rhetoric around it.  I believe that until we can see and smell the dry ink on a deal the markets reactions will remain somewhat muted.”

Al Kluis, Kluis Advisors, says investors are squarely focused on trade news with the U.S. and China.
 
“The USDA crop report was negative for corn and a little positive for soybeans. The numbers were traded for about 15 minutes, and then the optimism took over. Traders anticipated the U.S./China trade talks could be heading in a positive direction. Time will tell,” Kluis told customers in a daily note.

Kluis added, “Keep a close eye on the headlines out of Washington relating to the U.S./China trade war. With The U.S. holding off on some tariff increases for two weeks, could this be a sign of more tariff rollback to come.”

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets move higher.

At the close, December corn futures finished 7½¢ higher at $3.67¼; March corn futures finished 7½¢ higher at $3.79¾.
 
November soybean futures closed 29¢ higher at $8.95¾; January soybean futures closed 28½¢ higher at $9.09.

December wheat futures closed 6¼¢ higher at $4.83½.

December soy meal futures finished $6.60 per short ton higher at $301.30. December soy oil futures closed 0.33¢ higher at 29.16¢ per pound.

In the outside markets, the NYMEX crude oil market is 66¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 148 points higher.

On Thursday, the private exporters reported to the USDA export sales of 113,036 metric tons of corn for delivery to Mexico during the 2019/2020 marketing year.

 The marketing year for corn began September 1.

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

  • Corn: 498,100 metric tons (mt) vs. the trade’s expectations of between 400,000-850,000 mt
  • Soybeans: 1.17 million metric tons (mmt) vs. the trade’s expectations of between 300,000-1.2 mmt
  • Wheat: 602,700 mt vs. the trade’s expectations of between 250,000-600,000 mt
  • Soybean meal: 119,000 mt vs. the trade’s expectations of between 100,000-350,000 mt

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Wednesday’s Grain Market Review

On Wednesday, investors hold positions close to the vest, awaiting tomorrow’s USDA reports.

At the close, December corn futures finished 1½¢ lower at $3.60; March corn futures settled 2¼¢ lower at $3.72¼.
 
November soybean futures ended 5½¢ lower at $8.66¼; January soybean futures closed 5¼¢ lower at $8.80¼.

December wheat futures settled 4¾¢ lower at $4.77½.

December soy meal futures closed $3.40 per short ton lower at $294.70. December soy oil futures closed 0.30¢ higher at 28.83¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.36 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 136 points higher.

Al Kluis, Kluis Advisors, says at some point the funds will have to consider the late-developing crops.

“The pop on Tuesday was encouraging to see after the slide lower over the past month. However, it is likely that we saw some funds covering shorts ahead of the USDA report tomorrow. More position squaring is likely again today,” Kluis told customers in a daily note.

Kluis added, “Corn and soybeans closed above the prior two-day high on the charts. CBOT wheat closed at the highest level since August 14. KC wheat and Minneapolis spring wheat traded above last week’s high. All of these are great milestones for the bulls. However, we need to see follow-through to confirm the trend is changing. Traders will need to see what the USDA report says tomorrow before any major changes to strategy will be made.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets have the interest of the buyers.

At the close, December corn futures finished 7¼¢ higher at $3.61¼; March corn futures ended 7¢ higher at $3.74¼.
 
November soybean futures settled 14¼¢ higher at $8.72; January soybean futures closed 13¾¢ higher at $8.85½.

December wheat futures closed 7¾¢ higher at $4.81¼.

December soy meal futures finished $4.10 per short ton higher at $298.10. December soy oil futures closed 0.08¢ higher at 28.53¢ per pound.

In the outside markets, the NYMEX crude oil market is 43¢ per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 48 points lower.

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

  • Export sales of 278,200 metric tons of corn for delivery to Mexico during the 2019/2020 marketing year. 
  • Export sales of 138,000 metric tons of soybeans for delivery to Mexico during the 2019/2020 marketing year. 
  • Export sales of 195,750 metric tons of soybean cake and meal delivery to Mexico. Of the total, 155,000 metric tons is for delivery during the 2019/2020 marketing year and 40,750 metric tons is for delivery during the 2020/2021 marketing year.

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

Al Kluis, Kluis Advisors, says, at some point, the funds will have to consider the late-developing crops.

“The Monday afternoon Crop Progress Report continued to shed light on how behind this crop continues to be. There are over 9 million acres of corn that have not hit dough stage. There are over 6 million acres of soybeans that have not started setting pods. This data is as of September 8. The latest forecasts do not call for a killing frost in the near term. However, it is far-fetched to think those acres have a shot at hitting trendline yields. Some will argue those acres won’t hit half of trendline. This data has not influenced the funds since the August USDA report; will it have an impact as we get deeper into September?” Kluis questions in a daily note to customers.

Kluis added, “The grain boat is overwhelmed with bears. It is possible that a bearish USDA report on Thursday could mark a low. The bears need to see the report so negative that it validates adding more short positions. If they don’t get what they want, then we could see some funds start to cover shorts.”

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Monday’s Grain Market Review

The CME Group’s farm markets were unable to gain much traction Monday.

At the close, December corn futures finished 1¼¢ lower at $3.54¼; March corn futures settled 1½¢ lower at $3.67¼.
 
November soybean futures settled unchanged at $8.57¾; January soybean futures ended unchanged at $8.72.

December wheat futures closed 10¾¢ higher at $4.74½.

December soy meal futures finished $1.00 per short ton higher at $294.00.

December soy oil futures closed 0.20¢ lower at 28.45¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.39 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 7 points higher.

USDA Export Inspection Report on Monday shows corn, soybean sales as expected.

  • Corn: 590,013 mt for export last week. For the first five days of the new marketing year, this total is 34% lower than a year ago.
  • Soybeans: 906,000 mt inspected for export last week. For the first five days of the new marketing year, this total is down 40% year over year.
  • Wheat: 402,000 mt inspected for export last week. This is 23% higher compared with this same time last year.
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