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Friday’s Ag Trade Is Over, Bring on USDA’s Corn Acreage

Soybean prices added to Thursday’s rally.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets settle mostly higher.

At the close, the Sep. corn futures settled ¾¢ lower at $4.10¾. Dec. corn futures settled ½¢ higher at $4.17¼.
 
Sep. soybean futures settled 8¾¢ higher at $8.79. November soybean futures closed 8¾¢ higher at $8.91¾.

Sep. wheat futures settled 1½¢ higher at $5.01½.

December soymeal futures closed $1.70 per short ton lower at $303.70. December soy oil futures ended $0.57 higher at 29.95¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.07 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 40 points lower.

Al Kluis, Kluis Advisors, says that investors will take today to prepare for the much anticipated USDA Report Monday.

“Although we had another week of disappointing export sales, U.S. grain prices posted some solid gains. The weather forecast is on the drier side the next few weeks, but at least the temps will be tolerable. The dry weather is not exactly what the soybeans need. Expect choppy two-sided trade today as traders positions themselves ahead of the USDA crop production report (to be released 11:00 CST Monday August 12),” Kluis told customers in a daily note.

On Friday, an unscientific poll on Agriculture.com found that over half of the respondents see the USDA pegging the U.S. 2019 corn acreage somewhere above 80.0 million.

The poll asked voters, What will be the USDA’s U.S. corn acreage estimate on August 12? Of the 650 respondents, 26% replied between 85 and 90.9 million, 26% sees 80 to 84.9 million, 21% sees less than 80 million, 7% voted 91.0 million, while the other 20% just voted to see other people’s answers.

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets like the buyers that have checked in.

At the close, the Sep. corn futures finished 4½¢ higher at $4.11. Dec. corn futures closed 4¼¢ higher at $4.18¼.
 
Sep. soybean futures settled 16½¢ higher at $8.70½. November soybean futures closed 16¼¢ higher at $8.83.

Sep. wheat futures finished 10½¢ higher at $4.98½.

December soymeal futures settled $2.00 per short ton higher at $302.00. December soy oil futures closed $1.01 higher at 29.12¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.62 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 300 points higher.

Jack Scoville, PRICE Futures Group, says that soybean prices are rallying off of weather.

“We are turning into a weather market. Demand ideas are a little better now that we sold some beans to unknown yesterday and meal to Philippines today, but the overall pace is still too slow. But after the super bad news that China will not buy anything here for a while, the market pivots to supply and here east of the Mississippi the situation is dry and crops are showing stress. No real rains in the forecast and sliding production potential are providing support and the weak demand is providing the selling,” Scoville says.

On Thursday, private exporters reported to the USDA export sales of 135,000 metric tons of soybean meal for delivery to the Philippines during the 2019/2020 marketing year.

The marketing year for soybean meal began October 1.

Al Kluis, Kluis Advisors, says U.S. grain prices remain fairly quiet leading up to the USDA Crop Production Report to be released Monday, August 12.

“Crop conditions continue to hold steady, and the weather for much of the U.S. is not threatening at this point. It feels as though we have good support under the market. We are getting pretty cheap with this year’s crop still very much unknown. However, until we get some solid production numbers, we will trend sideways,” Kluis told customers in a daily note.

On Thursday, the USDA’s Weekly Export Sales Report shows lackluster corn, soybean figures.

Corn: 239,600 metric tons (mt) vs. the trade’s expectations of between 300,000 and 700,000 mt

Soybeans: 20,000 mt vs. the trade’s expectations of between 150,000 and 600,000 mt

Wheat: 487,700 mt vs. the trade’s expectations of between 250,000 and 500,000 mt

Soybean meal: 110,800 mt vs. the trade’s expectations of between 75,000 and 275,000 mt

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Wednesday’s Grain Market Review

At the close Wednesday, September corn futures finished 2½¢ higher at $4.06½; December corn contracts were 1½¢ higher at $4.14.

September soybean futures ended 1¢ higher at $8.54; November soybean futures were up 1¢ at $8.66¾.

September wheat futures were 4¼¢ higher at $4.88¼.
 
December soy meal futures were $2.60 a short ton lower at $300. December soy oil futures ended 0.44¢ higher at 28.37¢ per pound.
 
In the outside markets, the NYMEX crude oil market is $2.57 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 152 points lower.

Jack Scoville of The PRICE Futures Group described today’s trading as almost uneventful. “My farmer customers are buying bull call spreads in beans and corn,” he said.  “Overall volumes being traded are not all that strong as people are kind of waiting for some news with the weather or demand. We know most, if not all, the bad demand news, but we need to trade the potential crop disaster here and we are not doing a real good job of that yet.”

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At midsession Wednesday, grain futures are trading in a narrow range as markets anticipate key USDA reports on August 12.  

September corn futures are 1¾¢ higher at $4.05¾; December corn contracts are 1¢  higher at $4.13½.

September soybean futures are 1¢ higher at $8.54; November soybean futures are up 1¢ at $8.54.

September wheat futures are ¼¢ higher at $4.84¼.
 
December soy meal futures are $1.90 a short ton lower at $300.70. December soy oil futures are 0.37¢ higher at 28.30¢ per pound.
 
In the outside markets, the NYMEX crude oil market is $2.44 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 208 points lower.

“Corn and soybeans are trading in very small ranges thus far today – corn 6¢ and soybeans 7¢, respectively,” said Matt Tranel of Commodity Risk Management Group in Platteville, Wisconsin. “The rally that began with the calendar changing to August has at least temporarily stalled as a much-needed rain swept across parts of the Midwest on Sunday evening into Monday morning. While some areas remain dry, the forecast for the coming 11- to 15-day forecast is less than threatening so heat stress on the crop isn’t much of a concern. Most traders are also waiting until the August 12 WASDE report and an update on acres before establishing newer positions in the market.”

Don Roose of U.S. Commodities in West Des Moines, Iowa, said the focus of the markets is “the weather first, the report, weather again, and in between – what you think the demand is.”

Traders are trying to even up their positions in the market before the August 12 reports, which is why you’re seeing small movement in positive and negative territory today, he says.

Recently “it’s been slashing to the downside because of the Chinese uncertainties in the trade war,” Roose said.

But that’s already factored into the commodities market. “It’s pushed us down to the oversold level,” he said,

Uncertainty about weather and crop development pressures prices upward while the headline-grabbing trade war and loss of markets drives them down.

Essentially, grain commodity futures remain in a supply-driven bull market countered by a demand-driven bear market, he said.     

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In early trading Wednesday, grain futures are mixed.

Corn contracts are up slightly, with September corn futures ½¢ higher at $4.04½; December corn contracts are ½¢ higher at $4.13.

September soybean futures are ½¢ higher at $8.53½; November soybean futures are up 1¢ at $8.66¾.

September wheat futures are down 2¢ at $4.82.
 
December soy meal futures are $1 a short ton lower at $301.60. December soy oil futures are 0.05¢ higher at 27.98¢ per pound.
 
In the outside markets, the NYMEX crude oil market is $1.92 lower, the U.S. dollar is slightly lower, and the Dow Jones Industrials are 533 points lower.

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets end lower.

At the close, September corn futures finished 1¼¢ lower at $4.04; December corn futures closed 2¼¢ lower at $4.12¼.
 
September soybean futures closed 3¢ lower at $8.53; November soybean futures settled 3¢ lower at $8.65¾.

September wheat futures ended 10½¢ lower at $4.84.

December soy meal futures closed 30¢ per short ton higher at $302.60. December soy oil futures settled 0.33¢ lower at 27.93¢ per pound.

In the outside markets, the NYMEX crude oil market is 82¢ lower, the U.S. dollar is higher, and the Dow Jones Industrials are 288 points higher.

Al Kluis, Kluis Advisors, says investors will stay focused on crop weather.

“I am watching the short to very short moisture index that shows the dry area in the central Corn Belt continues to grow. This will have a major yield impact on about 25% of the Corn Belt,” Kluis told customers in a daily note.

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets have digested the fallout of trade tariff talks between the U.S. and China and trade mixed.

At the close, September corn futures finished 5¾¢ higher at $4.05¼; December corn futures closed 5¼¢ higher at $4.14¾.
 
September soybean futures finished ¼¢ higher at $8.56½; November soybean futures are ¼¢ higher at $8.68¾.

September wheat futures are 3¼¢ higher at $4.94¾.

September soy meal futures closed $2.90 per short ton higher at $3021.30. December soy oil futures finished 0.45¢ lower at 28.26¢ per pound.

In the outside markets, the NYMEX crude oil market is 97¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 831 points lower.

“Today started off with the China story of devaluing its currency to levels not seen since the 2008 financial crisis. With that news, the market had nowhere to go but down, as this throws another wrench in the trade war that will be tough to overcome. This was a response to the U.S. placing 10% tariffs on Chinese goods that will go into effect September 1,” says Matt Tranel, cash adviser for Commodity Risk Management Group.  

Tranel added, “While soybeans are lower yet, corn has made a bounce. There really hasn't been much for news that has hit the market since the currency story – not yet anyway. What you will at times find, however, is that at the end of a month a trend can change. We saw corn close 7¢ off the lows on Thursday August 1 and up 7¢ on Friday. Today, you're seeing some follow through despite negative headlines with China. The bigger picture with corn and China is that we don't actually sell/export much to them. This is more of a soybean story. With that being said, if soybeans do fall, it does make a bigger run for corn more difficult.”

Al Kluis, Kluis Advisors, says the broad-based sell-off is sending the ag markets lower.

“The additional tariffs on Chinese imports add uncertainty and are keeping pressure on the stock and commodity markets,” Kluis told customers in a daily note.

Kluis added, “Watch for the weather pattern in the central Corn Belt. The weather forecast changed on Sunday to bring more rain into that dry area. That rain could help the soybean crop.”

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