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Soybeans Close 17¢ Lower Friday

Soybean orders canceled

DES MOINES, Iowa -- On Friday, China canceled some previously purchased U.S. soybeans, dropping the market by double-digits.

At the close, the March corn futures settled 3¼¢ lower at $3.58, and new-crop December 2017 futures finished 3¢ lower at $3.85½ per bushel.

March soybean futures settled 17½¢ lower at $9.94¾; November 2017 soybean futures closed 13¾¢ lower at $9.82½.

March wheat futures closed 3¢ lower at $4.23¼.

March soy meal futures ended $6.90 a short ton lower at $311.30. March soy oil futures settled 0.24¢ lower at 34.98¢ per pound. 

In the outside markets, the Brent crude oil market is $0.08 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 78 points higher at 19,977 points.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the markets are lower on a small rebound in the U.S. dollar combined with some very weak export sales today. 

“Really not much else to talk about. Weather forecasts now call for rain in central and northern Brazil by the end of next week or so, but these rains forecasts never seem to show up. In the meantime, crops are being stressed.” Too much rain still in parts of Argentina, and this does not seem to be going away. Too dry in southern Brazil, he says. 

“The market is pretty complacent about huge crops down there and might be a bit too complacent, but given the weekly sales today that does not matter.  I think the sales are just a blip, sales will improve again and soon, but the world raced to book before the holidays and in response to U.S. election. So, it might take a couple of weeks,” Scoville says.

On Friday, the USDA released its delayed Weekly Export Sales Report. The report shows China canceled previously purchased U.S. soybean orders.

  • Corn = 429,200 mt. vs. the trade’s expectations of 550,000 to 1,100,000 metric tons
  • Wheat = 183,700 mt. vs. the trade’s expectations of 250,000 to 525,000 mt.
  • Soymeal = 83,300 mt. vs. the trade’s expectations of 100,000 to 350,000 mt.
  • Soybeans = 87,700 mt. vs. the trade’s expectations of 500,000 to 1,500,000 mt.

For soybeans, net sales of 87,500 MT for 2016/2017 – a marketing-year low – were down 91% from the previous week and 94% from the prior four-week average. Increases were reported for China (641,500 MT, including 626,000 MT switched from unknown destinations and decreases of 23,600 MT). The bad news for the soybean market came in this sentence: Reductions were for unknown destinations (898,300 MT).

For 2017/2018, net soybean sales of 200 MT were reported for Japan. Exports of 1,590,100 MT were down 16% from the previous week and 14% from the prior four-week average. The primary destinations were China (1,194,900 MT), Indonesia (81,200 MT), Vietnam (71,900 MT), Spain (66,000 MT), and Bangladesh (57,400 MT). 

Separately, the USDA reported a fresh wheat export sale Friday.

Private exporters reported to the U.S. Department of Agriculture export sales of 100,000 metric tons of hard red winter wheat for delivery to unknown destinations during the 2016/2017 marketing year.

The marketing year for wheat began June 1.

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Thursday’s  Grain Market Review

On Thursday, the CME Group’s corn and wheat markets close higher on a falling U.S. dollar.

At the close, the March corn futures settled 1½¢ higher at $3.61¼, and new-crop December 2017 futures finished 1¾¢ higher at $3.88¼ per bushel.

March soybean futures closed 2¾¢ lower at $10.12½; November 2017 soybean futures finished 2½¢ lower at $9.96¼.

March wheat futures ended 7¾¢ higher at $4.26¼.

March soy meal futures settled $0.90 a short ton lower at $318.20. March soy oil futures settled $0.01¢ lower at 35.20¢ per pound. 

In the outside markets, the Brent crude oil market is $0.55 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 63 points lower at 19,843 points.

Pete Meyer, PIRA Energy grain analyst, says that the South American weather story is an “easy excuse” for a rally. 

“Losses in Argentina can be somewhat made up – from what I am hearing, a really good Brazilian crop in the 102-103M MT range. The failure of President Macri to reduce Argentina’s export tariff from 30% in 2017 is probably the most supportive thing I’ve heard in beans,” Meyer says. 

Brazilian farmers started to harvest some beans as early as two weeks ago. “So, those will be available to the export market in a matter of weeks. Dollar is off from the highs, but still holding its own, which will  make South American origin beans attractive. I expect a slowdown in bean exports fairly soon,” Meyer says.
 
“Nice rallies in wheat and corn that producers should be taking advantage of in my opinion,” Meyer says. Prompt corn futures had traded just seven days above the $3.60 level since July 19. Six of those occurrences were in December, while the other time was in late-November. The highest futures price paid during those instances was $3.6475 on December 13. Corn is entering an area of high congestion above $3.60.”

So too with wheat above $4.20. The prompt SRW contract has spent but a handful of trading days above the $4.20 level since August 22 and failed at or near that $4.20 level no fewer than five times in the same period, Meyer says.

Jason Roose, U.S. Commodities, says that with the January crop report just right around the corner, no surprise to see index fund rebalancing, buying corn, wheat and selling soybeans.

“Flooding in Argentina is a concern on their overall acres. So, weather is still giving us volatility; slow farmer selling on corn is also giving the grains support along with lower crop ratings for winter wheat.”

 

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s soybean futures prices closed double digits higher, on damaging crop weather in Argentina.

At the close, the March corn futures finished 4¢ higher at $3.59¾, and new-crop December 2017 futures finished 3¼¢ higher at $3.86¾ per bushel.

March soybean futures finished 20¼¢ higher at $10.15¼, and November 2017 soybean futures closed 15½¢ higher at $9.98¾.

March wheat futures finished 12¢ higher at $4.18½.

March soy meal futures finished $7.00 a short ton higher at $319.10. March soy oil futures closed 0.40¢ higher at 35.21¢ per pound. 

In the outside markets, the Brent crude oil market is 84¢ per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 57 points higher at 19,939 points.

Jack Scoville, Price Futures Group vice president, says that the U.S. dollar is sharply lower, and it’s looking like a top is possible. 

“That is lifting all commodities to some extent today. Then there is the South American weather, with floods in Santa Fe and Buenos Aires provinces in Argentina and the dry weather in northern Brazil. There are pictures of the flooding starting to circulate. That could mean much less from both countries, both corn and soybeans. Good price action today, and it looks like a good close is coming,” Scoville says.

 

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Tuesday’s Grain Market Review

The corn market ended higher, while wheat and soybeans dropped.

At the close, the March corn futures finished 3¾¢ higher at $3.55¾, and new-crop December 2017 futures closed 3½¢ higher at $3.83½ per bushel.

March soybean futures finished 9¢ lower at $9.95, while November 2017 soybean futures ended 6¢ lower at $9.83¼.

March wheat futures closed 1½¢ lower at $4.06½.

March soy meal futures settled $4.50 a short ton lower at $312.10. March soy oil futures ended 0.15¢ higher at 34.81¢ per pound. 

In the outside markets, the Brent crude oil market is $1.34 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 31 points higher at 19,803 points.

Dustin Johnson, EHedger LLC, says that the recent rainfall in the South American forecast is set to alleviate some of the dryness concerns.

“Overall, the impact of the current dry conditions is confined to an area that would still suggest +100 million MT crop is possible out of Brazil. The focus is shifting to the Index Fund rebalancing, which is supposed to shift toward corn. Also the corn-bean ratio is ultra high leading into the January reports, so some steam could come out of them as traders position for that release,” Johnson says.

Bob Linneman, Kluis Commodities broker, says it’s worth watching the South American crop weather and outside money flow to get a handle on grain market direction.

“Areas of South America remain dry, while other areas are experiencing flooding. We may not see any major allocation of money based on the current weather as everyone awaits the upcoming USDA report,” says Linneman in a daily note to customers.

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