You are here

Winter Storm and Trade Progress Drive Grain Futures Higher

DES MOINES, Iowa -- A mild fall proved too short as snow and a hard freeze crushed late-planted crops in the Northern Plains and Upper Midwest Friday, fueling a strong rally in CME corn futures along with soybean and wheat prices.

Traders estimated the early taste of winter will cut the nation’s soybean harvest by 30 to 40 million bushels and trim the expected corn crop by 100 million bushels to 200 million bushels, said Don Roose of U.S. Commodities in West Des Moines, Iowa.

Some areas had escaped a freeze by about two weeks past the average date, Roose said, but some latel-planted crops were a month behind.

“It was still not enough to have all of the crops escape some damage,” Roose said.

Dec. corn closed 17½¢ higher at $3.97¾. March corn futures settled 16¼¢ higher at $4.07¾.
 
Nov. soybean futures are  12½¢ higher at $9.36. Jan. soybean futures are 13¢ higher at $9.50½.

Dec. wheat futures are 15¢ higher at $5.08

December soymeal futures are $3.00 per short ton higher at $310.80. December soy oil futures are 0.19¢ higher at 29.97¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.18 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 488 points higher on optimism over U.S.-China trade talks.

Harsh weather wasn’t the only factor driving prices higher Friday.

Roose said prices also rose due to optimism over U.S.-China trade talks and the possibility that Great Britain won’t crash out of the European Union through a hard Brexit.

With talks between the Trump administration and China winding up Friday, “the trade is optimistic there will be a mini-deal,” Roose said.

Progress in Brexit talks also “gives more of a positive spin to some kind of organized breakaway and more normalized trade with the E.U. and the rest of the world,” he said.

Others agreed that trade talks were helping futures prices.

Friday saw “lots of fund buying,” said Jack Scoville of PRICE Futures Group in Chicago. “We are up on the news that the U.S. and China have a partial trade deal that will hold tariffs and allow ag sales to China. Details will be out this afternoon, I guess. Plus, it is colder farther east in the forecasts and some crops will get hit, so maybe we’ll see some additional yield loss.”

Matt Tranel of Commodity Risk Management Group in Platteville, Wisconsin, agreed the trade and weather fueled the rally.

“Snow fell in the Dakotas, which has farmers running around trying to get at their soybeans with many fields at risk to a freeze,” Tranel said. “Rain is falling in other areas, which has prevented or delayed access to damp fields. Soybeans saw a boost when China purchased ahead of trade talks. President Trump made comments that trade talks were proceeding in a positive direction. The WASDE report friendly to soybeans dropped yield by a bushel an acre to 46.9. Ending stocks were lower than many thought and while we still have a pile of soybeans, it isn’t the buffer that we had previously, so volatility and excitement is up on any news.”

“The corn report was bearish but ultimately a bargain buy at around $3.80 per bushel, which is support,” he added. “We have found that cash markets are have been stronger as of lately with basis strengthening, so that has supported the move higher.”

-----------------------------

DES MOINES, Iowa -- With snow and a hard freeze moving east through Plains States, at midsession Friday, CME corn futures have recovered most of Thursday’s losses after a bearish USDA report, while soybean and wheat prices move higher.

Dec. corn futures are 15¢ higher at $3.95 ¼. March corn futures are 13 1/4¢ higher at $4.04 3/4.
 
Nov. soybean futures are  10¢ higher at $9.33 1/2. Jan. soybean futures are 10 1/4¢ higher at $9.47 3/4.

Dec. wheat futures are 17¢ higher at $5.10

December soymeal futures are $2.80 per short ton higher at $310.60. December soy oil futures are 0.09¢ higher at 29.87¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.75 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 344 points higher on optimism over U.S.-China trade talks.

------------------------------------------

DES MOINES, Iowa -- In early trading Friday after a bearish USDA report, CME grains futures are modestly higher.

Dec. corn futures are 6¾¢ higher at $3.87 March corn futures are 6¢ higher at $3.97½.
 
Nov. soybean futures are 5¾¢ higher at $9.29¼. Jan. soybean futures are 5¾¢ higher at $9.43¼.

Dec. wheat futures are 5¢ higher at $4.98

December soymeal futures are $2.60 per short ton higher at $310.40. December soy oil futures are 0.10¢ higher at 29.88¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.31 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 307 points higher on optimism over U.S.-China trade talks.

Optimism in trade talks may be spilling over into grain futures. Al Kluis of Kluis Commodity Advisors notes that futures rallied overnight.

“All eyes are on Washington as the U.S. and China engage in more trade negotiations. Will we see at least a partial agreement? Trade talks will wrap up later this afternoon,” Kluis says.     

------------------

DES MOINES, Iowa -- On Thursday, the CME Group’s farm markets finished lower, pulled down by a bearish USDA Report.

At the close, the Dec. corn futures finished 14¢ lower at $3.80¼. March corn futures finished 14¢ lower at $3.91¾.
 
Nov. soybean futures settled ¼¢ lower at $9.23½. Jan. soybean futures closed ½¢ lower at $9.37½.

Dec. wheat futures closed 7¼¢ lower at $4.93½.

December soymeal futures finished $1.90 per short ton lower at $307.80. December soy oil futures closed 0.07¢ higher at 29.78¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.78 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 150 points higher.

On Thursday, private exporters reported to the U.S. Department of Agriculture export sales of 398,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.

The marketing year for soybeans began Sept. 1.

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

  • Corn = 284,500 metric tons vs. the trade’s expectations of between 500,000 and 800,000 mmt.
  • Soybeans = 2.09 mmt.; trade’s expectations not reported
  • Wheat = 521,900 mt. vs. the trade’s expectations of between 200,000 and 600,000 mt.
  • Soybean meal = 364,700 mt.; the trade’s expectations not reported

Al Kluis, Kluis Advisors, says that investors are anxious to see today’s USDA Report.
 
“This morning, all eyes will be on the USDA Crop Production report. With all the crop uncertainty, will we see the USDA lower the crop size in this report? The trade is expecting some crop declines in both corn and soybean crops,” Kluis told customers in a daily note.

Kluis added, “The USDA will likely lower the corn crop size. However, we will also see the USDA offset some of the lower production with lower demand, by decreasing exports and ethanol demand.”

--------------------

Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets lean on the soybean complex for strength.

At the close, the Dec. corn futures finished unchanged at $3.94¼. March corn futures finished 1¢ lower at $4.05¾.
 
Nov. soybean futures settled 3¼¢ higher at $9.23½. Jan. soybean futures closed 2¾¢ higher at $9.38.

Dec. wheat futures finished unchaneged at $5.00¾.

December soymeal futures closed $2.80 per short ton higher at $309.50. December soy oil futures closed 0.11¢ lower at 29.71¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.06 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 240 points higher.

Al Kluis, Kluis Advisors, says that this week’s markets are underpinned by bullish news.
 
“Yesterday’s markets reached multiweek highs as a result of short-covering ahead of the USDA report on Thursday, plus concern over the inbound winter storm. The snowfall forecasts are highly variable, but the freezing temperatures are for sure. The growing season will end for much of the northern Corn Belt in the coming days. Meanwhile, the headline this morning on the trade discussions suggests China is open to the idea of a partial trade deal. It would make sense for any partial deal to include pork and soybeans,” Kluis told customers in a daily note.

Kluis added, “Anticipation of a bullish USDA report on Thursday has pushed corn and soybean prices to the highest levels in two months. Are we walking into a “buy the rumor, sell the fact” type of trade setup for Thursday?”

----------------

Tuesday's Grain Market Review

On Tuesday, the CME Group’s farm markets close strong, with wheat up double-digits.

At the close, the Dec. corn futures finished 8 3/4¢ higher at $3.95. March corn futures finished 7 1/2¢ higher at $4.06 3/4.
 
Nov. soybean futures closed 5 1/4¢ higher at $9.20 1/2. Jan. soybean futures settled 5 3/4¢ higher at $9.35 1/4.

Dec. wheat futures ended 11¢ higher at $5.00.

December soymeal futures closed $4.80 per short ton higher at $306.90. December soy oil futures settled 0.24 cents lower at 29.82¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.09 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 103 points lower.

Jack Scoville, PRICE Futures Group, says that the higher markets are anticipating some bullish news, late this week.

“It is mostly weather-related, I think. Not much to do with demand or anything. We are going to see a part of the crop pretty beat up late this week from the freeze; the USDA progress reports showed the damage could be pretty important.  I think that is almost all of the rally here today.  Lots of short covering going on, not seeing much new buying. I am taking some partial profits on longs today, if I got profits. Some do, some don’t,” Scoville says.

Al Kluis, Kluis Advisors, says investors will be watching to see how bad the Northern Plains’ snowstorm will be Friday.
 
“Traders are likely waiting to see how much snow actually falls in the northern Corn Belt before making any adjustments to their positions. The forecasting models are still showing wide ranges for amounts of snowfall. One thing is common across the models: the temperature dipping below freezing,” Kluis told customers in a daily note.

Kluis added, “The USDA report on Thursday this week has the potential to move the market more than what is typical for an October monthly report. Many traders are curious to see how the USDA will adjust exports after a dismal first few months.”

-----------------

Monday’s Grain Market Review

On Monday, the CME Group’s farm markets trade mixed.

At the close, December corn futures finished 2¼¢ higher at $3.87; March corn futures are 2¢ higher at $3.99.
 
November soybean futures are 1¢ lower at $9.15½; January soybean futures finished ¾¢ lower at $9.29¼.

December wheat futures closed 1¼¢ lower at $4.89¼.

December soy meal futures finished $1.60 per short ton lower at $302.10. December soy oil futures closed 0.20¢ higher at 30.06¢ per pound.

In the outside markets, the NYMEX crude oil market is 6¢ per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 48 points lower.

On Monday, private exporters reported to the USDA the following activity:
 
• Export sales of 198,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.
 
• Export sales of 240,000 metric tons of soybeans for delivery to unknown destinations during the 2019/2020 marketing year.
 
The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says investors have one eye on both South America’s planting weather and this Thursday’s USDA Supply/Demand Report.
 
“The weather forecasts in South America suggest more rain each week, but so far the actual amount of rain has been less than expected,” Kluis told customers in a daily note.

Kluis added, “The monthly USDA report on Thursday will take total corn production and projected ethanol usage lower. The bottom line will not change much in projected ending stocks.”

Read more about

Tip of the Day

Farmer-Built Tough Trough

one tough trough My new troughs are made of 36-inch drain pipe cut in half. The one in the barn is installed with 6-inch wood screws, flat washers, and... read more

Talk in Marketing