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Ag Markets Close on Daily Highs

Outside investors increase their net short positions, in the soybean market.

Des Moines, Iowa --- On Friday, the CME Group’s farm markets finish near daily highs, following the announcement of a nearly signed U.S.-China trade deal.

READ MORE: China to Buy Additional $32 Billion in U.S. Farm Goods Over Two Years, Sign Deal in January

At the close, the March corn futures closed 3¼¢ higher at $3.81. May corn futures ended 3¾¢ higher at $3.88.
 
Jan. soybean futures are 9¼¢ higher at $9.07½. March soybean futures closed 9¢ higher at $9.21½.

March wheat futures finished 2¼¢ higher at $5.32½.

January soymeal futures closed $2.70 per short ton higher at $296.90. January soy oil futures settled 0.37¢ higher at 32.60¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.83 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 3 points lower.

Al Kluis, Kluis Advisors, says the market is digesting the trade news.
 
“Strong weekly exports for all three grains – plus the Mexican purchases of a large amount of corn – finally helped push grain prices higher. We also got confirmation that Phase One of the U.S./China trade deal has been approved by both sides and signed by President Trump,” Kluis stated in a daily note to customers.

Kluis added, “We had a very strong week of export sales and a China trade deal agreed on in principle. Now will we finally see the corn and soybeans exports pick up even more momentum.”

On Friday, the Committments of Traders report showed that the outside investors are growing their net short position in the soybean market.

Corn

The producers are net short corn, after this week, by 231,583 contracts. They added 9,369 long contracts and added 309 short contracts.

Managed money investors are net short corn by 1118,449 contracts. They cut their long positions by 11,379 contracts while adding to their short position by 21,488.

Soybeans

Producers/Commercials are net short the market by 66,573 contracts. they added 28,166 long positions while adding 7,473 short positions.

Managed money is now net short soybeans by 114,250 contracts. The outside investors added to their shorts by 9,950 contracts and cut their long positions by 2,582. This is the most short the soybean market managed money investors have been all year.

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets jump up, following President Trump’s tweet that a trade deal with China is very close to being finalized.

READ MORE: Trump Says U.S. and China Very Close to Trade Deal

At the close, March corn futures finished 6¼¢ higher at $3.77; May corn futures ended 6¼¢ higher at $3.84¼.
 
January soybean futures settled 4¾¢ higher at $8.98¾; March soybean futures closed 4¾¢ higher at $9.12¼.

March wheat futures finished 11¢ higher at $5.30½.

January soy meal futures closed 80¢ per short ton lower at $294.20. January soy oil futures finished 0.79¢ higher at 32.23¢ per pound.

In the outside markets, the NYMEX crude oil market is 60¢ per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 250 points higher.

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

  • Export sales of 1,600,200 metric tons of corn for delivery to Mexico. Of the total, 1,074,420 metric tons is for delivery during the 2019/2020 marketing year and 525,780 metric tons is for delivery during the 2020/2021 marketing year.
  • Export sales of 110,744 metric tons of corn for delivery to unknown destinations during the 2019/2020 marketing year.

The marketing year for corn began September 1.

Greg Lumsden, Cargill, says the grain market finally participated in positive, broad-based risk appetite, working higher across the board.  

“There are three main factors that are giving corn, beans, and wheat a lift. First, newswires reported that Trump met overnight with his trade negotiation team. Second, Trump tweeted this morning that ‘They want it (a deal), and so do we!’ which was a surprisingly positive view of the U.S. position,” Lumsden says.  

Lastly, Dow Jones reported that the U.S. team has offered to delay the December 15 tariffs and reduce tariffs by 50% on $360B worth of Chinese imports, Lumsden says.  

He added, “Adding a tailwind, the first EU wheat production estimates for new crop were significantly below last year. And, we saw exports at the high end of expectations for corn, wheat, and beans, along with a USDA daily flash sale of 1.6M mt of corn sold to Mexico.”

Though this type of sale happens every year at this time when Mexican rail customers buy a year’s worth of corn, the market has been starving for positive news and this helped sentiment, Lumsden says.  

“The market spiked but has now paused as traders are leery of buying into trade headlines given the performance of the last 18 months. Plus, South American forecasts have turned a little wetter than earlier in the week. If we do in fact see tariffs removed, or enough tariffs removed to make import margins on corn, wheat, DDGs, sorghum, and ethanol positive, the price structure (trading range) will move higher for all three products. We are at a key point in the trade story, but the market will require concrete details before extending higher,” Lumsden says.

Al Kluis, Kluis Advisors, says the outside markets could help bolster exports.
 
“With the U.S. dollar drifting back down to the lower end of the range and U.S. corn futures under pressure, we could see an uptick in export sales.”

Kluis added, “The funds were in full force on Wednesday. Soybeans led the way lower. We just could not break through tough resistance around the $9 futures level again in January futures. Corn did manage to drift lower and fill the gap on the continuation chart. The markets seem content to trade in a sideways pattern, waiting until we get the January 10, 2020 crop report.”

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

  • Corn: 874,000 metric tons (mt) vs. the trade’s expectations of between 400,000 and 800,000 mt
  • Soybeans: 1.05 mmt vs. trade’s expectations of 500,000 and 1.1 mmt
  • Wheat: 503,000 mt vs. the trade’s expectations of between 200,000 and 450,000 mt
  • Soybean meal:  239,000 mt vs. the trade’s expectations of 125,000 and 300,000 mt

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets fade, despite strong soybean demand news.

At the close, March corn futures settled 5¾¢ lower at $3.71¼; May corn futures ended 4¾¢ lower at $3.78.
 
January soybean futures closed 7¾¢ lower at $8.93½; March soybean futures closed 7½¢ lower at $9.08.

March wheat futures settled 4½¢ lower at $5.19¾.

January soy meal futures closed $3.70 per short ton lower at $295.00. January soy oil futures closed 0.24¢ lower at 31.44¢ per pound.

In the outside markets, the NYMEX crude oil market is 32¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 7 points higher.

On Wednesday, private exporters reported to the USDA the following activity:
 
• Export sales of 585,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.
 
• Export sales of 140,000 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 the soybean market has the best potential to move higher. “We will be watching to see if the soybean bulls can build any momentum above the 20-day average. This week is the first time we have closed above this line of resistance since October 24.”

Kluis added, “The USDA report on Tuesday was pretty much as expected. We did not see any changes to U.S. production levels for corn and soybeans. We did see a slightly friendly cut to U.S. wheat stocks. The WASDE data was slightly bearish as corn, soybeans, and wheat all saw an increase in world stocks. South American production was left unchanged compared with the November data. This December report once again provided very little fresh news to excite traders.”

READ MORE: USDA Supply/Demand, WASDE Report.

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Tuesday’s Grain Market Review

Because of the USDA making little changes in its December Supply/Demand Report, Tuesday's grain market ends in a narrow trading range.

At the close, March corn futures ended 1¼¢ higher at $3.77; May corn futures finished 1¢ higher at $3.82.
 
January soybean futures closed 4¢ higher at $9.01¾; March soybean futures finished 3¾¢ higher at $9.15¾.

March wheat futures closed 1¢ higher at $5.23½.

January soy meal futures finished 20¢ per short ton higher at $298.70. January soy oil futures closed 0.09¢ higher at 31.68¢ per pound.

In the outside markets, the NYMEX crude oil market is 19¢ per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 3 points higher.

Al Kluis, Kluis Advisors, says today’s USDA Supply/Demand Report is not expected to be a game changer.
 
“The monthly December USDA report rarely has any news that shocks the market. We are more likely to see some adjustments to WASDE data, while the U.S. production information will remain unchanged until the January Final Production Report,” Kluis told customers in daily note.”

Kluis added, “After the USDA report this morning at 11 a.m. CST, all attention will shift back to the trade talks and what will happen with the new and existing tariffs. With the right headline, can the soybean bulls push prices back over the $9 mark.”

Kluis added, “The USDA released its final Crop Progress Report for the year on Monday afternoon. The bottom line is that an estimate 6 million acres of corn is still standing in fields. North Dakota was pegged at 43% harvested while South Dakota came in at 83%, Michigan at 74%, and Wisconsin at 74%. Traders will have a difficult time assessing quarterly stocks reports, since these bushels will most likely fall into the on-farm storage category.”

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Monday’s Grain Market Review

At the close of Monday’s trading, soybeans settled higher with corn down slightly.                      

March corn futures closed 1¢ lower at $3.75¾; May corn settled 1¼¢ lower at $3.81¼.

January soybean futures ended 7¾¢ higher at $8.97¼; March soybean futures were 8¢ higher at $9.11¾.

March wheat futures closed 1¾¢ lower at $5.22¾.

January soy meal futures closed 80¢ per short ton lower at $298.50. January soy oil futures settled 0.37¢ higher at 31.59¢ per pound.

In the outside markets, the NYMEX crude oil market is 7¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 84 points lower.

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At midday Monday, soybeans have added slightly to a strong open while corn and wheat are little changed ahead of Tuesday’s World Agricultural Supply and Demand Estimate Report.

March corn futures are down by ½¢ at $3.76¼; May corn is ¼¢ lower at $3.82¼.
 
January soybean futures are 9¢ higher at $8.98½; March soybean futures are 9¼¢ higher at $9.13.

March wheat futures are 2¢ lower at $5.22¼.

January soy meal futures are unchanged at $299.30 per short ton. January soy oil futures are 0.51¢ higher at 31.73¢ per pound.

In the outside markets, the NYMEX crude oil market is 12¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 87 points lower.

“It’s very quiet trade in the corn market today,” says Matt Tranel, risk-management adviser for Commodity Risk Management Group in Platteville, Wisconsin. “That has been the trend in corn for the last two to three weeks as the market is hibernating until fresh news appears. We’ve traded a 10¢ range over that time period. Tomorrow we will release the December version of the World Agricultural Supply & Demand Estimates (WASDE). Not a whole lot of change is projected as the average analyst guess is coming in at 1.919 billion bushels (for corn ending stocks).”

“On the soybean front we’re seeing a little more excitement as there’s talk in the market that China may grant further tariff waivers on U.S. soybeans and pork,” he adds. “It just so happens that on December 15 the U.S. planned to apply additional tariffs against Chinese goods. The market is pricing in some premium but ultimately where this market ends up will depend on politics, and we’ve heard/seen that song and dance many times. WASDE on soybeans tomorrow is estimating ending stocks at 476 million bushels according to private analysts.” 

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In early trading Monday, March corn futures are down by ½¢ at $3.76¼; May corn is also down ½¢ at $3.82.
 
January soybean futures are 7¼¢ higher at $8.96¾; March soybean futures are 7¾¢ higher at $9.11½.

March wheat futures are 1¾¢ lower at $5.22¾.

January soy meal futures are $1.90 per short ton higher at $301.20. January soy oil futures are 0.38¢ higher at 31.60¢ per pound.

In the outside markets, the NYMEX crude oil market is 47¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 25 points lower.

Here are some of the things Al Kluis of Kluis Commodity Advisors is watching this week:

“The pressure is now on the U.S. to slow, eliminate, or delay the scheduled tariff increases set to go into effect next week on almost all the Chinese imports that are not subject to tariffs already,” Kluis says.

According to David Tolleris, Kluis Commodity Advisors’ weather guy, “It looks like another round of snow is on the way. We are forecasting 2 to 6 inches of snow across much of the northern Corn Belt early this week, and temps get down to below zero for two days the middle of this week. Then get ready for a return to more seasonal temps with several snow/rain events through the third week of December.  

“Some rain moved across central Brazil, while northeastern Brazil, extreme southern Brazil, and Argentina remain dry. It looks like the late-week rain for the dry areas or Argentina are gone from the Sunday forecast. With the snow event in the northern Corn Belt and dry conditions in Argentina, the grain markets will start out higher this week,” Tolleris says.

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