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May starts with corn, soybean markets closing lower

China buys a bunch more U.S. soybeans Friday.

INDIANOLA, Iowa -- As the month of May arrives, the CME Group’s farm markets have trouble getting any traction.

At the close, the July corn futures closed 2¼¢ lower at $3.17¾. Dec. corn futures closed ½¢ lower at $3.36¾.
 
July soybean futures settled 5¼¢ lower at $8.49½. November soybean futures ended 2¾¢ lower at $8.55.

July wheat futures closed 7¾¢ lower at $5.16½. 

July soymeal futures closed $2.60 per short ton lower at $292.50. July soy oil futures settled $0.10¢ lower at 26.50¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.05 per barrel higher at $19.89 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 588 points lower.

On Friday, private exporters reported to the USDA export sales of 264,000 metric tons of soybeans for delivery to China. Of the total, 132,000 metric tons is for delivery during the 2019/2020 marketing year, and 132,000 metric tons is for delivery during the 2020/2021 marketing year.

The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says the rumor is China is looking to buy more soybeans and some corn.    

“U.S. grain prices had a nice bounce Thursday off the news that China stepped in to buy some soybean cargoes from the U.S. Expect the market to be a bit suspicious of this news since we’ve seen this happen in the past. As we close out the week, expect grain prices to be a touch lower with continued pressure on the market. It does feel as though we have a low in place for now,” Kluis told customers in a daily note. 

Kluis added, “Planting progress was fast and furious this week. Will the U.S. reach 50% planted on corn in the Monday afternoon Crop Progress Report? Typically, we like to have 50% of the crop planted by May 10. We expect to be well past that pace this year.”

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Thursday’s Grain Market Review

At the close of CME Group trading Thursday, corn, wheat and soybean futures settled sharply higher.

May corn futures finished 7¢ higher at $3.11½; July corn futures ended 5½¢ higher at $3.20.
 
May soybean futures finished 18½¢ higher at $8.50¼; July soybean futures are 17¾¢ higher at $8.55¼.

July wheat futures settled 7¾¢ higher at $5.24¼. 

July soy meal futures ended $6.50 per short ton higher at $295.10. July soy oil futures settled 0.43¢ higher at 26.60¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.65¢ per barrel higher at $16.71 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 332 points lower.

Mike North, head of Commodity Risk Management Group in Platteville, Wisconsin, sums up the factors behind today's gains:

“First, exports were solid,” North says. “Net sales of corn were 1,356,700 MT for the 2019/2020 marketing year.  That's an 87% increase from the previous week and 19% from the prior four-week average. Similarly, net soybean sales were 1,078,300 MT for the same period – a sizable increase from last week and the four-week average." [Totals SF reported earlier today were for both marketing years – 2019/2020 and 2020/2021.]

“Stronger crude and diesel markets have also given a boost to soybeans,” he says. “Add a recovery in the Brazilian real, and you have just cause for a soybean rally.  Corn caught additional support from the fact that China increased low-tariff corn import quotas by 1.5 million tons. That brings the estimated total for this year to 6.3 million tons. The U.S. will be a major contributor to this number. While broader economic conditions and quickly advancing field progress continue to weigh on corn and soybeans, today's stories provide temporary support.”

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DES MOINES, Iowa -- At midsession Thursday, grain futures are in positive territory with soybeans leading.

During late morning trading May corn futures are 5¢ higher at $3.09½; July corn futures are 4¼¢ lower at $3.18¾. 

May soybean futures are 17¾¢ higher at $8.49½; July soybean futures are 15½¢ higher at $8.53.

July wheat futures are down 3¼¢ at $5.13¼. 

July soy meal futures are $6 per short ton lower at $294.60. July soy oil futures are 0.30¢ higher at 26.47¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.96 per barrel higher at $18.02 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 379 points lower on higher-than-expected jobless claims.

According to Jack Scoville of the PRICE Futures Group, soybeans are up today because  “Funds are buying to cover as the short-term trends turned up on the charts and farmers are not selling. Plus, I think maybe some China buying rumors.”

Britt O’Connell of the Commodity Risk Management Group says, “We are seeing nice strength today across the corn and soybean complex. Beans are seeing support from a key reversal in the meal market yesterday, a weaker U.S. dollar, and stronger Brazilian real. We are competing directly with our neighbors to the south for global exports. Exports were released this morning with both crops having a nice showing. Both markets are borrowing a little strength from a higher crude oil market. The soybean crush is estimating that March will post a record month – this strings three record months together.”  

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DES MOINES, Iowa -- On Thursday, the grain futures are mixed, with corn lower and soybeans higher.

In early trading, May corn futures are down ¼¢ at $3.04¼; July corn futures are 1¼¢ lower at $3.13¼.
 
May soybean futures are 5¼¢ higher at $8.37; July soybean futures are 4¼¢ higher at $8.41¾.

July wheat futures are lower – down 8¼¢ at $5.08¼. 

July soy meal futures are 20¢ per short ton lower at $288.40. July soy oil futures are 0.29¢ higher at 26.46¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.06 per barrel higher at $17.02 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 341 points lower.

Even before the opening of trading today, Al Kluis of Kluis Commodity Advisors saw a possible uptick.

“Grain prices seem to have maybe found some support on Wednesday,” Kluis says.  “Weekly energy numbers were a bit friendly, as gasoline demand picks up for the second week in a row. Corn scratched out a new low by ¾ of a cent before turning higher. With corn and soybean planting off to a great start in 2020, and the weather looking great, the market feels like we have enough negative news built in for now. However, rallies will be limited.”

Separately, the USDA’s weekly Export Sales Report Thursday shows strong corn, soybean, and wheat demand figures, ahead of trade expectations for corn and soybeans.

  • Corn: 1,695,700 metric tons (mt) vs. the trade’s expectations of between 500,000 mt and 1.45 mmt
  • Soybeans: 1,183,300 mt vs. the trade’s expectations of 700,000 mt and 1.4 mmt
  • Wheat: 622,500 mt vs. the trade’s expectations of between 100,000 and 650,000 mt
  • Soybean meal: 223,700 mt vs. the trade’s expectations of 100,000 to 275,000 mt 

The numbers aren’t quite as bullish as they might seem, according to Don Roose of U.S. Commodities in West Des Moines, Iowa.

“I think what we’re really doing is that we were running behind on our pace and we’re kind of catching up,” Roose says. “Low prices are supposed to bring demand, so it would be really disappointing if they didn’t.”

U.S. corn prices are about on par with those of Argentina, but prices there will become more competitive as that country’s harvest widens their corn basis, Roose says.

Brazil’s soybean prices is still about a dime lower than U.S. beans, along with another 20¢-per-bushel advantage due to higher quality.

“These are our best export times right now. As we move into June, we’ll be less competitive,” he says.

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Wednesday’s Grain Market Review

DES MOINES, Iowa --At the close of CME Group trading Wednesday, corn and soybean futures settled higher while wheat pared losses from earlier in the session.

May corn futures finished 1¾¢ higher at $3.04½; July corn futures ended 2½¢ higher at $3.14½.
 
May soybean futures finished 5¾¢ higher at $8.31¾; July soybean futures are 5½¢ higher at $8.37½.

July wheat futures settled 9½¢ lower at $5.16½. 

July soy meal futures ended 20¢ per short ton higher at $288.60. July soy oil futures settled 0.40¢ higher at 26.17¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.04 per barrel higher at $15.38 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 562 points higher.

Even though corn closed higher, it’s still near an important support level.

“Corn has taken a little bit of a pause as we test support in the market,” says Matt Tranel of Commodity Risk Management Group in Platteville, Wisconsin. 

“The May low from April 24 was $3.01 a bushel, and as of this writing, May was trading $3.0125 per bushel,” he said late in the session. “$3 per bushel is also a psychological number as the last time we’ve seen it prior to this year was September 2016 and last time we’ve traded beneath $3 per bushel was 2009. So we’re in some interesting territory here as we speak.”

“While soybeans aren’t at the previous lows, we’re near the bottom end of the recent range and certain buyers are finding value here near the lows and have paused the move lower – for however long that may last, we shall see,” he says.

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DES MOINES, Iowa -- At midsession Wednesday, nearby corn futures have given up gains at the open while soybeans continue higher.

During late morning trading May corn futures are 1¼¢ lower at $3.01½; July corn futures are 1¼¢ lower at $3.10¾.

May soybean futures are 3¢ higher at $8.29; July soybean futures are 2¾¢ higher at $8.34¾.

July wheat futures continue trading lower—now down 14¾¢ at $5.11¼. 

July soy meal futures are 80¢ per short ton lower at $287.60. July soy oil futures are 0.34¢ higher at 26.11¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.52 per barrel higher at $15.86 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 531 points higher.

According to Jack Scoville of the PRICE Futures Group, these are the main factors driving grains futures today:

--“Soybeans are up on a recovery in the Real,” he says. “The market has been sideways anyway and the upside appears limited but the higher Real could cut Brazil selling pressure a bit.”

--Corn is fading on ethanol, but was a little higher early on news that Trump was signing the Defense Production Act to get the meats processors back up and running.  Feed demand will improve,” Scoville says.

--“Wheat is down on forecast rains for Europe and Russia,” he says.  “They can still get very good crops and are willing to pressure the market to make sales.  The U.S. is high priced in the world market anyway.”

Sal Gilbertie of  Teucrium Trading, LLC, says that  “markets are taking a breather from the relentless selling of the past few weeks – you have to ‘feed the bear’ or the downtrend will stall, and there appears to be little bad news that is not already built into the markets. The approach of May deliveries is also providing some uncertainty, which means there will be evening up of some short positions ahead of expiration and ahead of the next WASDE on May 12.”

Soybeans may have gotten a boost, too, from a Foreign Agricultural Service announcement today that private exporters reported to the USDA export sales of 108,860 metric tons of soybeans for delivery to Mexico. Of the total, 65,316 metric tons is for delivery during the 2019/2020 marketing year and 43,544 metric tons is for delivery during the 2020/2021 marketing year.

The marketing year for soybeans began September 1.

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DES MOINES, Iowa -- On Wednesday, the grain futures are mostly trading slightly higher.

In early trading, May corn futures are 3¢ higher at $3.05¾; July corn futures are 3¢ higher at $3.15.
 
May soybean futures are 3¢ higher at $8.29; July soybean futures are 3¢ higher at $8.35.

July wheat futures have been trading lower – down 5¾¢ at $5.20¼. 

July soy meal futures are $1.30 per short ton lower at $287.10. July soy oil futures are 0.43¢ higher at 26.20¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.27 per barrel higher at $15.61 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 390 points higher, with the stock market focusing on positive preliminary results reported for the possible COVID-19 treatment, remdesivir.

Later today, “the Federal Reserve Board will announce any changes to interest rates or monetary policy based on current economic projections. Their comments will be closely watched by traders,” says Al Kluis of Kluis Commodity Advisors.

“The entire grain industry continues to wait for China to step in and start buying U.S. grain as part of the Phase One trade deal,” Kluis adds. “The bears will continue to hold the upper hand until these sales become a reality.”

Also, “the energy sector will need to prove a bottom is in before agricultural commodities will be able to move higher,” he says.

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Tuesday’s Grain Market Review

The CME Group’s weakness continues in the ag complex.

At the close, May corn futures finished 2¾¢ lower at $3.02¾; July corn futures ended 1¼¢ lower at $3.12.
 
May soybean futures finished 3¢ lower at $8.26; July soybean futures are 4½¢ lower at $8.32.

July wheat futures settled 1¼¢ higher at $5.26. 

July soy meal futures ended $3.10 per short ton lower at $288.40. July soy oil futures settled 0.30¢ higher at 25.77¢ per pound.

In the outside markets, the NYMEX crude oil market is 10¢ per barrel lower at $12.68 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 67 points higher.

Tom White, TWA Trading, says the corn market is falling due to little bullish news.

“I’m looking for July futures to continue down to $3.09. To the upside, I am now using $3.17 as resistance until objective hit,” White says.

Al Kluis, Kluis Advisors, says market-moving information could move the futures contract to a full carry.    

“Watch the May-to-July corn spread, which closed at 8¢ on Monday. If the corn market goes out to a full carry, then that spread may go out to 11¢ or more when we get into the May corn deliveries. On Wednesday, the Energy Information Agency report will show an increase in U.S. gasoline use compared with last week, and that stocks of ethanol and crude oil continue to increase,” Kluis told customers in a daily note. 

Kluis added, “The USDA Crop Progress Report on Monday showed corn planting at 27% complete, a full 7% ahead of the five-year average. Spring wheat planting is 14% complete. On Monday, corn closed down 10¢, soybean futures closed 3¢ higher, and wheat futures closed 4¢ to 6¢ lower.”

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Monday’s Grain Market Review

On Monday, the CME Group’s corn market shaves off 10¢, as investors look for bullish news.

At the close, May corn futures finished 10¼¢ lower at $3.05½; July corn futures ended 9¾¢ lower at $3.13¾.
 
May soybean futures ended 3¼¢ lower at $8.29; July soybean futures closed 3¢ lower at $8.36½.

July wheat futures settled 5¾¢ lower at $5.24¼. 

July soy meal futures closed $1.10 per short ton lower at $291.50. July soy oil futures finished 0.03¢ lower at 25.47¢ per pound.

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In the outside markets, the NYMEX crude oil market is $3.87 per barrel lower at $13.07 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 402 points higher.

Tom White, TWA Trading, says the corn market is going to test new lows.

“I see the market is in that range of $3.30 to $3.17. Today, I see the same outlook as last week. The market needs to break out, otherwise it will test both ends. If the market peaks, it’s headed above $3.30 and will go to $3.41. If it gets below $3.17, it will test down to $3.09,” White says.

Al Kluis, Kluis Advisors, says investors will be eyeing the ideal planting weather.    

“U.S. planting progress advanced rapidly this week in the central and western Corn Belt. I estimate that planting will be right at the five-year average next week (20%). Farmers in the western Corn Belt are getting ahead of normal, and a few farmers will finish planting late this week. The eastern Corn Belt and Delta are running behind normal. Spring wheat producers are making good progress and should be close to the 29% five-year average in the Monday report,” Kluis told customers in a daily note. 

Kluis added, “The CFTC Commitments of Traders Report on Friday showed the funds added to their short position in corn. They went to the short side in soybeans and reduced the long position in wheat. The report showed funds short 161,000 contracts of corn, and short 3,000 contracts of soybeans. For wheat, when you combine all three exchanges, funds are long 17,000 contracts of wheat. Funds are long winter wheat and have a near-record short position in Minneapolis spring wheat.”

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