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Grain Markets Chop Friday

Corn has traded both sides of zero.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets search for buyers.

At the close, the Dec. corn futures finished 1¢ lower at $3.71. March corn futures are 1¢ lower at $3.83 3/4.
 
Nov. soybean futures closed 5 1/2¢ lower at $8.83. Jan. soybean futures ended 5¢ lower at $8.97.

Dec. wheat futures closed 3¢ higher at $4.87 1/4.

December soymeal futures closed $0.50 per short ton lower at $295.10. December soy oil futures closed $0.33 lower at 28.84¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.59 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 127 points lower.

On Friday, private exporters reported to the U.S. Department of Agriculture export sales of 126,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.

The marketing year for soybeans began Sept. 1.

Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that investors are awaiting Monday’s USDA September Quarterly Grain Stocks Reports.
“Markets are softer, today, heading into the weekend.  It's rainy, it’s been a quiet week, corn and beans have found a range, and apparently traders checked out,” O’Connell says.  

USDA Report Outlook

Most are staying put ahead of the report on Monday, she says.  For Monday’s Quarterly Grain Stocks Report, the trade expects the USDA to peg U.S. Sept. 1 corn stocks at 2.42 billion bushels, soybeans at 982 million bushels and wheat at 2.318 billion bushels.

“The USDA’s estimates on September 1 grain stocks will be our carry in numbers for the current marketing year.  None of these could be considered tight, if the USDA uses the lowest trade estimates,” O’Connell says.  

In its WASDE Report, the USDA is not expected to adjust U.S. corn and soybean yield estimates or harvested acreage, she says.

“The demand side of the equation has dominated the discussion and will for yet another month.  Sample size seems too small yet on yield reports.  Corn has a poor demand story.  As of Sept 19, the cumulative corn sales were at 17.6% of the USDA's 2019/2020 forecast.  This is behind the 5-year average of 26.2%.  With the ethanol industry continuing to struggle, we could see further reduction in that basket,” O’Connell says.  

While beans have record stocks to chew through, the demand side of the equation is a little better, she says.  

“We have seen record U.S. crushings for the month of August and the year.  While exports haven't been stellar, they have caught the attention of the trade recently, with Chinese purchases over the last two weeks up to 1.56 million tonnes.

O’Connell added, “Should both of these markets remain strong, beans could find support.  Without help from either poor yields or weather scares in S.A., it will likely be hard for beans to find a lot of reason to move significantly higher.  In light of the stocks situation, I would call stability a good thing,” O’Connell says.

Al Kluis, Kluis Advisors, says that the markets could remain in a sideways trading pattern.
 
“Soybeans were at the upper end of the range, while wheat and corn continue to struggle. However, even after a couple of good weeks of soybean exports, we are still well behind the pace we need. Even with a smaller corn crop this year, the smaller demand means we will have plenty of corn. This will limit rallies. Expect markets to remain choppy in a sideways pattern going into next week,” Kluis told customers in a daily note.

Kluis added, “The strong basis for corn will eventually slip away and get wider. With corn futures well off their summer highs (and the total crop size still in question), producers have been reluctant to sell. In addition, the MFP payments have helped keep cash in some producers’ pockets, so fewer need to sell off their last few bushels,” Kluis stated.

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Thursday’s Grain Market Review

On Thursday, the CME Group’s soybean and wheat markets lead the way upward.

At the close, the Dec. corn futures finished 1¾¢ lower at $3.72½. March corn futures ended ¾¢ lower at $3.84¾.
 
Nov. soybean futures closed ¾¢ lower at $8.88¼. Jan. soybean futures finished ½¢ lower at $9.02½.

Dec. wheat futures settled 7¢ higher at $4.84¼.

December soymeal futures closed $2.00 per short ton lower at $295.60. December soy oil futures closed 0.03¢ lower at 29.17¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.06 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 29 points lower.

Jack Scoville, PRICE Futures Group, says that the soybean market is reacting positively to China’s recent purchase of U.S. soybeans.

“Corn is down on the bad weekly export sales. Soybeans sales were good and that is supporting, but the funds are trying to sell the rally. Trump keeps talking up Chinese buying and says a deal could come soon, but we want a deal before getting too excited anymore,” Scoville says.  

Scoville adds, “The harvest weather looks wet, but not cold enough in the Midwest to threaten crops. Montana and out that way and into Canada are seeing the growing season come to a close. Otherwise, investors are taking into account that China is on holiday next week for the 70th anniversary of Communism in that country,” Scoville says.

On Wednesday, private exporters reported to the USDA export sales of 257,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.

The marketing year for soybeans began September 1.

On Thursday, the USDA’s Weekly Export Sales Report shows strong soybean figures. Here are the totals:

  • Corn: 494,000 metric tons vs. the trade’s expectations of between 600,000 and 1,300,000 mmt
  • Soybeans: 1.03 mmt vs. the trade’s expectations of between 800,000 and 1,300,000 mmt
  • Wheat: 283,200 mt vs. the trade’s expectations of between 200,000 and 500,000 mt
  • Soybean meal: 164,300 mt vs. the trade’s expectations of between 200,000 and 550,000 mt

Al Kluis, Kluis Advisors, says that the markets are trying to push through resistance levels.
 
“Soybeans are finding a little bit of resistance as harvest is just getting under way. The close in the corn market on Tuesday was very promising. We could continue to see December corn futures push toward the gap between $3.88 and $3.92. The president made a comment on Wednesday that a trade deal with China could be coming sooner rather than later. This should help keep support under the grain prices,” Kluis told customers in a daily note.

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s soybean market ignored the fresh sales to China.

At the close, December corn futures finished ½¢ lower at $3.74¼; March corn futures ended unchanged at $3.85½.
 
November soybean futures settled 5¢ lower at $8.89¼; January soybean futures closed 4¼¢ lower at $9.03¼.

December wheat futures closed 4½¢ lower at $4.77¼.

December soy meal futures settled $1.90 per short ton lower at $297.60. December soy oil futures closed 0.13¢ lower at 29.20¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.18 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 162 points higher.

On Wednesday, private exporters reported to the USDA export sales of 581,000 metric tons of soybeans for delivery to China during the 2019/2020 marketing year.

The marketing year for soybeans began September 1.

Dustin Johnson, AgYield senior strategist, says today’s listless trade is hard to read.

“Not really sure about today’s action, other than perhaps weakness from a sharply higher U.S. dollar index. Today’s soybean sale to China was favorable this morning, but also was expected. Ethanol’s weekly production is down but bigger drawdown in stocks than expected. Overall, the markets are fairly quiet from our point of view,” Johnson says.

Al Kluis, Kluis Advisors, says investors will like the China’s soybean purchase announced this morning.
 
“Ever since the pop on Monday, reports have been floating that China made another round of soybean purchases from the U.S. If those rumors are not confirmed soon, then the bears will likely push prices lower in the short term,” Kluis told customers in a daily note.

Basis levels appear to be tighter than normal across most of the Midwest, Kluis says. “That is quite unusual for this time of year. It would not be surprising to see this continue until traders are convinced the U.S. has produced a large crop,” Kluis stated in a daily note to customers.

Kluis added, “Spring wheat continues to grind higher as poor harvest conditions in North Dakota are causing quality concerns. Further harvest delays in Canada are also adding strength in spring wheat. Recall that the funds held a record short position in spring wheat just a few weeks ago. If the funds are going to cover that position, then it is likely we have further upside potential in spring wheat,” Kluis stated.

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets trade in a narrow range.

At the close, December corn futures finished 1¼¢ higher at $3.74½; March corn futures ended 1¼¢ higher at $3.85½.
 
November soybean futures finished 1¾¢ higher at $8.94¾; January soybean futures are 1¼¢ higher at $9.07½.

December wheat futures settled 1¾¢ lower at $4.81¼.

December soy meal futures closed 90¢ per short ton higher at $299.50. December soy oil futures closed 0.02¢ higher at 29.33¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.33 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 152 points lower.

Jason Roose, U.S. Commodities, says the markets are set up for support.

“Grains are trading higher on additional purchases from China, strong end user demand, and disappointing early yield reports. Also, cool temperatures, for next week, in the northern Corn Belt would not be beneficial for the late-planted crops,” Roose says.

Al Kluis, Kluis Advisors, says investors will be tracking the soybean market’s performance.
 
“When soybeans close higher in the month of September – which has happened only about 20% of the time in the last 30 years – it signals higher soybean prices in the month of October,” Kluis told customers in a daily note.

Kluis added, “Monday, China bought soybeans again, which rallied the soybean market. This helped pull the corn market higher, as well. Spring wheat was higher on quality concerns and on fund short covering,” Kluis stated.

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets trade on the coattail of the soybean market.

At the close, December corn futures finished 2½¢ higher at $3.73¾; March corn futures ended 2¼¢ higher at $3.84.
 
November soybean futures settled 9¾¢ higher at $8.92¾; January soybean futures finished 9½¢ higher at $9.06½.

December wheat futures settled 1¼¢ lower at $4.83.

December soy meal futures closed $3.60 per short ton higher at $296.80. December soy oil futures finished 0.09¢ lower at 29.31¢ per pound.

In the outside markets, the NYMEX crude oil market is 50¢ per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 42 points higher.

On Monday, Reuters Newswire reported that Chinese importers bought 10 cargoes (600,000 toms) of U.S. soybeans.

Jack Scoville, PRICE Futures Group, says the soybean market is reacting positively to China’s recent purchase of U.S. soybeans.

“Soybeans are the leader, here. I think this mostly has to do with both the U.S. and Chinese trade people saying the talks went well last week. Export sales were good, too, but I think the news is that we are still making progress here and maybe we can even sell a few bushels more of beans before all is said and done. It was a wet weekend, but a wet weekend for corn, too, and it is really the beans that are reacting. Not any producer selling that I know of either, here or in Brazil. Brazil is still too dry. Some places in Parana got rains and will be planting but still dry to the north,” Scoville says.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says the markets finished weaker on Friday after the Chinese delegation cancelled the scheduled farm visits. Turns out it was less about mounting tensions and more about avoiding a media onslaught.

“Corn has recovered back to the top end of the range that it has found comfort. A breakout above 3.80 would be considered bullish and could cause the funds to begin covering their short position at 170,000 contacts. The market would then be eyeing the gap left from 3.88 to 3.9275. While sample size is yet too small, early yield indications from clients in southern Illinois have found a tremendous amount of variability. Yields on corn have been 50 to 100 bpa off.  Beans 10 to 15 off last year. U.S. corn is still 10¢ to 20¢ higher than corn from Argentina. Beans also have found comfort in a range, and today’s move puts them near the top end of that,” O’Connell says.  

Al Kluis, Kluis Advisors, says the grain markets are moving into a trading channel with prices up one week, down the next week.
 
“The lows made two weeks ago in corn and soybeans are important long-term lows. I do not look for a ‘V’ type of bottom, but rather the start of a basing-type market action where the nearby futures post a series of higher highs and higher lows,” Kluis told customers in a daily note.

Kluis added, “I am watching the rain forecast for central Brazil, where it has turned very dry. It is too early to take yields down – yet. However, later planting of the soybeans will result in later planting for double-crop corn. It will also delay when Brazilian soybeans are available for export,” Kluis stated.

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