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Soybean Market Shaves Off 18¢ Friday
DES MOINES, Iowa -- On Friday, the CME Group’s soybean market closed double-digits lower, as investors watch a slowed corn planting pace that could convert acres to soybeans.
At the close, the July corn futures finished 4 1/4¢ higher at $3.83 1/4. Dec. corn futures closed 1 3/4¢ higher at $3.98 1/4.
July soybean futures closed 18¢ lower at $8.21 1/2. November soybean futures settled 17 1/4¢ lower at $8.47 1/2.
July wheat futures closed 2¢ lower at $4.65.
July soymeal futures closed $7.60 per short ton lower at $294.30. July soy oil futures ended $0.50 cent lower at 27.22¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.16 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 97 points lower.
Al Kluis, Kluis Advisors, says that producers should take advantage of what the market is offering.
“Planting progress is rolling along very nicely. However, expect that to come to a screeching halt this weekend for much of the western Corn Belt,” Kluis told customers in a daily note.
Kluis added, “Producers need to consider buying some put options on this 10% market rally that we have had in the corn market. We are entering a very volatile time of the year. If the weather forecasts change, we could be down hard.”
Thursday’s Farm Markets Review
On Thursday, the CME Group’s farm markets are catching a bullish wind, as export sales and inclement planting weather factors get traded.
At the close, the July corn futures finished 9¾¢ higher at $3.79½. Dec. corn futures ended 7¾¢ higher at $3.96¾.
July soybean futures closed 4¼¢ higher at $8.39 1/2. November soybean futures finished 5¢ higher at $8.64½.
July wheat futures finished 18¼¢ higher at $4.67.
July soymeal futures finished $2.10 per short ton higher at $301.90. July soy oil futures settled 0.48¢ higher at 27.72¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.03 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 278 points higher.
So far this week, corn prices are up 7¼% vs. a week ago, soybeans have risen 4%, while wheat is up 8½%.
Britt O’Connell, cash advisor for Commodity Risk Management Group, says that the farm markets are seeing very nice movement across the entire grain complex this week.
“You’ve got a couple of things at play here today. We had a technical key reversal pattern on Monday for corn and wheat – setting new contract lows and then closing the day higher. For a change of play, corn is leading beans higher. Since the funds were carrying such a short position, you have a bit of short covering and even fund buying on the heels of Monday’s planting progress report. With corn coming in at only 30% planted vs. the five-year average of 66% planted, the market has finally started to objectify these delays. Forecast for most of the Corn Belt is wetter than normal for next 10 days, although temps looks to be closer to normal,” O’Connell says.
Al Kluis, Kluis Advisors, says that investors eye wetter-leaning Corn Belt weather.
“The weather remains very wet. Expect some volatility in the markets for the next two weeks as the U.S. tries to get the corn crop planted,” Kluis told customers in a daily note.
Kluis added, “Funds like to buy or sell in three-day increments. I think yesterday was day three of a short-covering rally. Once the funds quit buying, the market had a tough time holding up. I think we will see choppy market action now as we watch the extended weather maps.”
On Thursday, the USDA’s Weekly Export Sales Report has favorable soybean, corn figures.
- Corn = 634,100 metric tons vs. the trade’s expectations of between 200,000 and 800,000 mmt.
- Soybeans = 674,300 mt. vs. the trade’s expectations of between 300,000 and 900,000 mt.
- Wheat = 533,900 mt. vs. the trade’s expectations of between 150,000 and 500,000 mt.
- Soybean meal = 265,400 mt. vs. the trade’s expectations of between 125,000 and 275,000 mt.
Wednesday’s Grain Market Review
On Wednesday, the CME Group’s farm markets ended lower than their daily highs.
At the close, the July corn futures finished ¾¢ higher at $3.69½. Dec. corn futures finished 1¢ higher at $3.88¾.
July soybean futures finished 4¢ higher at $8.35½. November soybean futures closed 3¼¢ higher at $8.59¾.
July wheat futures finished ¼¢ higher at $4.48¾.
July soymeal futures ended $1.80 per short ton higher at $299.80. July soy oil futures closed 0.24¢ higher at 27.24¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.34 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 165 points higher.
Al Kluis, Kluis Advisors, says investors are heading to the exit doors.
“This week is exactly what the bulls needed. Some grain charts have posted key reversals and gaps higher already this week. These are chart formations that don’t happen very often, let alone on back-to-back days. The swing in momentum has been surprising, but don’t forget that the funds were holding over 700,000 combined short positions in the grain and oilseed complex as of the most recent Commitments of Traders Reports. That is a lot of fuel to burn once the short-covering rally gets rolling,” Kluis told customers in a daily note.
Kluis added, “The big day in July corn on Tuesday marked the largest daily volume since the March Prospective Plantings Report day. This indicates to me a major move by the funds as they look for the exit door.”
Tuesday’s Grain Market Review
On Tuesday, the CME Group’s farm markets have launched a rally.
At the close, July corn futures finished 12¼¢ higher at $3.68¼; December corn futures ended 11¼¢ higher at $3.87¾.
July soybean futures ended 29¢ higher at $8.31½; November soybean futures closed 29¢ higher at $8.56½.
July wheat futures finished 11½¢ higher at $4.48½.
July soymeal futures finished $10.70 per short ton higher at $298.00. July soy oil futures closed 0.39¢ higher at 27¢ per pound.
In the outside markets, the NYMEX crude oil market is 82¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 341 points higher.
A grain trader in Chicago, choosing anonymity, says the market rally revolves around investors who have been holding the record-short positions in corn and wheat are buying those shorts back.
“We’re seeing record-short speculative open interest. It’s a massive short squeeze. Yes, the rally is all about market position. Plus, China headlines hitting the tape as we speak, don’t know what to trust with U.S. President Trump and China President Xi, but hearing dialogue ongoing with China right now. Market may know something and shorts getting squeezed. This is ultimate pain for market shorts,” the trader says.
Al Kluis, Kluis Advisors, says investors have been ignoring the slow planting pace of corn.
“The trade has been ignoring the slow planting pace for corn and the slow emergence of corn. The focus is all on the trade war. With only 30% of the nation’s corn planted, I am taking my projections for planted corn acres down by 2 million acres. I am also taking the 2019 corn yield down by 2 bushels per acre because of slow planting and emergence,” Kluis told customers in a daily note.
Kluis added, “I am watching the extended forecasts and trying to figure out how much corn can get planted in four or five days before the next rain system moves through. If nationwide corn planting does not reach at least 50% by next Monday, then I will take my acreage and yield projections lower again.”
Private exporters reported to the USDA export sales of 180,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.
The marketing year for soybeans began September 1.
Monday’s Grain Market Review
The CME Group farm futures market sees soybean prices hit a 10-year low before trimming losses Monday.
Falling to $7.92 per bushel, July soybean futures contract dropped to the lowest price for an active front-month contract in 10 years.
At the close, July corn futures finished 4¼¢ higher at $3.56; December corn futures closed 4¼¢ higher at $3.76¼.
July soybean futures ended 7¢ lower at $8.02¼; November soybean futures ended 6½¢ lower at $8.26¾.
July wheat futures settled 12¼¢ higher at $4.37.
July soy meal futures ended unchanged at $287.30. July soy oil futures closed 0.18¢ lower at 26.61¢ per pound.
In the outside markets, the NYMEX crude oil market is 73¢ lower, the U.S. dollar is higher, and the Dow Jones Industrials are 577 points lower.
Britt O’Connell, cash advisor for Commodity Risk Management Group, says the corn market is getting rewarded, finishing higher for four consecutive sessions.
“It’s another ugly and rather depressing day across the grain complex. We opened lower on the overnight trading session and since then have been able to post only modest gains. Friday’s WASDE report was much more bearish than most anticipated and today is a hangover from that. Ending stocks were raised in both corn and beans, maintaining pressure on that market. We also got our first look at the 2019/2020 numbers. They didn’t offer much reprieve either. Projections on corn came in at a staggering 2.485 million – a number we haven’t published in the postethanol era,” O’Connell says.
O’Connell adds, “Certainly, I believe there is reason for that number to be trimmed in time, but the market will continue to trade it until it doesn’t. Soybean ending stock projections for 2019/2020 came in at 970 million bushels – a number if realized would only be second to this year in the record books. The global supply issue mirrors ours in the U.S.”
With nothing to tell the funds that their position is not correct, they continue to hold onto their short positions and even add to them, O’Connell says.
“Weather forecast models have weather a little more favorable for planting progress in the coming week. Eyes will be on planting progress released today at 3:00. Many would expect to see very little progress – for the sake of the markets, let’s hope that is true and we get a very positive reaction from the market,” O’Connell says.
Al Kluis, Kluis Advisors, says it’s important to watch for market lows, as everyone gets bearish.
“I am watching the nearby corn futures. The spike low at $3.38 on the May corn contract put in a possible double bottom with the late September 2018 low at $3.37. On Tuesday (May 14) the May 2019 corn contract stops trading. It will be important to watch if the July 2019 contract drops back to fill that continuation gap. If the gap is not filled in two weeks, then the Friday low (the crop report low) will likely prove to be a major low. Sometimes it takes a very bearish report to put a bottom in,” Kluis told customers in a daily note.
Kluis added, “The USDA Crop Progress Report today will show nationwide corn planting at about 35% complete. It will also be important to note how corn emergence compares to normal.”