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Corn Rallies 14¢, Wheat Ends Up 19¢ Friday

Crop Progress Report delayed next week, due to holiday.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets close sharply higher, as continued rainfall stays in the Midwest.

At the close, the July corn futures finished 14½¢ higher at $4.41¼, the highest for a front-month contract in a year. Dec. corn futures closed 11¾¢ higher at $4.19¾.
 
July soybean futures ended 8¼¢ higher at $8.29¾. November soybean futures closed 8¢ higher at $8.56¼.

July wheat futures closed 19¾¢ higher at $4.89½.

July soymeal futures closed $3.30 per short ton higher at $300.50. July soy oil futures finished 0.23¢ cent higher at 27.01¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.68 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 95 points higher.

Private exporters reported to the U.S. Department of Agriculture export sales of 113,000 metric tons of corn for delivery to Mexico during the 2018/2019 marketing year.

The marketing year for corn began Sept. 1.

Jack Scoville, PRICE Futures Group, says that the rally in the farm markets is all about weather, today, and lots of talk of prevent plant going on.

“Let’s face it. There were maybe about 40 million acres of corn left to be planted as of last Monday and maybe we get to 60% planted by the end of the weekend. That means maybe 40 million left to go.  Obviously, some of that will get planted, maybe most of it, but maybe not 10 million acres. That could take us down to nothing for ending stocks projections or close enough anyway to mean a major rally might be getting started. This is really something, and we need drier weather that is not really in the forecast,” Scoville says.  

Jason Roose, U.S. Commodities, agrees that investors are digesting weather news.

“Grains are adding risk premium today with concerns of continued delays in planting with a wet long-range forecast. In fact, price direction will be dominated by weather for the next few weeks,” Roose says.

Al Kluis, Kluis Advisors, says that investors who miss a day of the news will miss a lot.

“Well, the government announced on Thursday there will be another round of aid paid to farmers over the next few months. The kicker: Farmers have to plant a crop. Meanwhile, the wet weather is leaning toward an increase in potential soybeans. On the flip side, the weather remains very wet for the next two weeks,” Kluis told customers in a daily note.

Kluis added, “With the wet weather we had across much of the U.S., the planting pace for U.S. corn next Tuesday afternoon will show around 62% planted. That would be well behind the five-year average pace.”

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets finish weaker.

At the close, the July corn futures finished 4¾¢ lower at $3.89¾. Dec. corn futures closed 4¾¢ lower at $4.08.
 
July soybean futures closed 7¢ lower at $8.21½. November soybean futures settled 7¢ lower at $8.48¼.

July wheat futures closed 2½¢ lower at $4.70¼.

July soymeal futures settled $1.10 per short ton lower at $297.20. July soy oil futures closed 0.53¢ lower at 26.78¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.54 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 402 points lower.

Britt O’Connell, cash advisor for Commodity Risk Management Group, says that the market seems a bit lost on how to interpret how the newest round of MFP payments could affect planting.

“Corn found higher ground overnight, breaking thru $4.13-$4.15 resistance and then backing off.  Whether that be because of more details being announced around MFP or simply some profit taking as we tested key resistance is hard to say. Should we break higher, our next resistance would come in at $4.29½, last summer’s high. Old crop has struggled with breaching $4 futures. This market is cautiously optimistic,” O’Connell says.  

O’Connell adds, “The struggle is real in beans – can’t catch a positive story line to save its life. To be honest, I’m not sure how much upside the soybean market has here – could it limit corn’s move higher? I doubt it, but I have had a lot of clients in the last 10 days call in to say they are planting all corn and no beans, switching acres even late and confident that even at a reduced yield they can fair better with corn than beans. All the more reason for producers to be active sellers in corn market today,” O’Connell says.

Al Kluis, Kluis Advisors, says the slow planting progress brings up a lot of questions for investors.

“The wheat market seems to be finding a little resistance this week. We will need the wheat market to extend its rally in order for the corn market to keep trending higher. We are quickly getting oversold, and we could see a correction in the grain markets,” Kluis told customers in a daily note.

Kluis added, “Producers need to be a bit cautious about getting too bulled up in the corn market. Yes, the U.S. crop is getting smaller; however, so is demand. We will likely carry more old-crop corn bushels into the new marketing year. Exports are dropping off, and we have poor ethanol margins.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets end higher.

At the close, July corn futures finished ¼¢ higher at $3.94½; December corn futures closed 2¼¢ higher at $4.12¾.
 
July soybean futures finished 6½¢ higher at $8.28½; November soybean futures finished 6¾¢ higher at $8.55½.

July wheat futures closed 6¢ lower at $4.72¾.

July soy meal futures closed $3 per short ton higher at $298.30. July soy oil futures ended 0.17¢ higher at 27.31¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.82 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 57 points lower.

On Wednesday, private exporters reported to the USDA export sales of 131,000 metric tons of soybeans for delivery to unknown destinations. Of the total, 110,000 metric tons is for delivery during the 2018/2019 marketing year, and 21,000 metric tons is for delivery during the 2019/2020 marketing year.

The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says investors will remain focused on the slow planting progress.

“Traders are still trying to determine how all of the corn acres will get planted in the U.S. Of the acres that have been planted, we are getting reports that replants are occurring as emergence was terrible. This emergence problem will persist. The cool, wet conditions we are experiencing will further hinder the development – and the production potential – of the U.S. corn crop this year,” Kluis told customers in a daily note.

Kluis added, “The breakaway gap higher on Monday evening suggests short-term upside corn market targets of $4.21 and $4.34. Momentum is overbought, however, the forecast remains wet. All eyes will remain on the forecasts.”

Mike North, president, Commodity Risk Management Group, says the soybean market is volatile due to President Trump’s plan to pay producers $2 per bushel for China trade damage. However, corn still has the bullish story.

“Regarding the MFP 2.0 payment, there is no determined basis yet on production. Initially, it was thought to be tied to 2019 production; now, it may be more a matter of 2019 plantings and some degree of historic yields. That is all up for grabs at this point. That did not slow the soybeans down from responding quickly to this news and departing quickly from their highs yesterday,” North says.  

North added, “Corn is still the anchor to the market as ongoing concern of lost acres and declining yields tear away at projected ending stocks. Technically, corn tested another level of resistance before coming off its highs. All in all, there is great uncertainty at this point. Expect volatility to continue.”

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Tuesday’s Grain Market Review

On Tuesday, investors are building in all of the bullishness from the USDA’s Crop Progress Report Monday.

At the close, uly corn futures finished 5¼¢ higher at $3.94¼; December corn futures closed 6¢ higher at $4.10½.
 
July soybean futures settled 9¾¢ lower at $8.22; November soybean futures closed 9¼¢ higher at $8.48½.

July wheat futures finished ½¢ higher at $4.78¾.

July soy meal futures closed $2 per short ton lower at $295.30. July soy oil futures ended 0.36¢ lower at 27.14¢ per pound.

In the outside markets, the NYMEX crude oil market is 17¢ lower, the U.S. dollar is higher, and the Dow Jones Industrials are 182 points higher.

Al Kluis, Kluis Advisors, says the slow planting progress brings up a lot of questions for investors.

“The most bullish part of the USDA Crop Progress Report on Monday was that soybeans are only 19% planted,” Kluis told customers in a daily note.

Kluis added, “How much corn will get planted by late this week? In the northern Corn Belt, corn planted after Memorial Day only has 77% of the normal yield potential. I estimate that over 32 million acres of corn in the U.S. will be planted after the Memorial Day holiday. This make the prevent-plant alternative more attractive all the time.”

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Monday’s Grain Market Review

On Monday, the buyers consistently helped out the CME Group’s farm markets.

At the close, July corn futures finished 5¾¢ higher at $3.89, reaching an 11-month high of $3.91; December corn futures closed 6½¢ higher at $4.04½.
 
July soybean futures closed 10¢ higher at $8.31¾; November soybean futures finished 10½¢ higher at $8.57¾.

July wheat futures closed 13¼¢ higher at $4.78¼.

July soy meal futures ended $3 per short ton higher at $297.30. July soy oil futures settled 0.28¢ higher at 27.50¢ per pound.

In the outside markets, the NYMEX crude oil market is 38¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 130 points lower.

Britt O'Connell, cash advisor for Commodity Risk Management Group, says the grain complex has found continued strength into the start of the week on weather, politics, and fund short covering.

“From a weather front, we continue to see significant rainfall predictions for a large portion of the Corn Belt; moreover, significant rains were seen this weekend in many areas. So, the planting

struggle continues.  Some farmers, in the Decatur, Illinois, area haven’t turned a wheel. We will continue to watch the planting progress reports carefully. I would suspect that while we will remain

behind the five-year average, good progress was made last week in a lot of areas,” O’Connell says.

O’Connell adds, “The Friday announcement of tariff removals from corn (along with dairy products) from Mexico has certainly helped give this market some support from a demand perspective.

This is something that was certainly welcomed in an environment where supplies have weighed on this market for a long time. Hopefully, the USMCA trade agreement is soon signed and this is

the beginning of a better story line in trade. Lastly, and certainly not least, open interest has been increasing in the corn contract indicating that the funds are not just covering their short

positions, but also becoming buyers. This is a decent recipe for continued strength. New-crop December corn is testing some stiff resistance at the 4.05 area today.”

Al Kluis, Kluis Advisors, says investors are getting even shorter in the soybean market.

“The trade continues to buy corn and sell soybeans on the wet weather pattern, and the thought is that U.S. farmers will plant less corn and more soybeans. The CFTC position report Friday also showed funds a lot shorter than I had  expected,” Kluis told customers in a daily note.

Kluis added, “The USDA Crop Progress Report today will show nationwide corn planting at about 52% complete. I also expect corn emergence to be way behind because of cool, wet conditions.”

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