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Soybeans Close 13¢ Lower Friday

Wet weather could trouble soybean planting.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets finish weaker.

At the close, the July corn futures finished 7¾¢ lower at $4.42¾. Dec. corn futures ended 7½¢ lower at $4.53½.
 
July soybean futures closed 12¾¢ lower at $9.02¾. November soybean futures closed 13½¢ lower at $9.27½.

Sep. wheat futures finished ½¢ lower at $5.26.

July soymeal futures closed $7.40 per short ton lower at $315.60. July soy oil futures ended $0.15 lower at 28.44¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.38 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 48 points higher.

Al Kluis, Kluis Advisors, says the market could trade sideways for a while.

“We had a nice rebound in U.S. grain prices on Thursday. However, we seem to be in this sideways trading channel. We really have not come out with any new fresh bullish input, yet grain prices continue to keep a premium since this year’s U.S. crop is still a huge question. Export demand continues to slow, however. Since the crop size is very uncertain, we expect to drift sideways,” Kluis told customers in a daily note.

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Thursday’s Grain Market Review

It’s an up day for the CME Group’s farm markets.

At the close, July corn futures finished 9¢ higher at $4.50; December corn futures finished 7¾¢ higher at $4.61¼.
 
July soybean futures settled 12¼¢ higher at $9.15¼; November soybean futures closed 12¼¢ higher at $9.41.

September wheat futures ended 5¢ higher at $5.31¾.

July soy meal futures closed $6.10 per short ton higher at $323.00. July soy oil futures finished 0.22¢ higher at 28.59¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.12 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 210 points higher.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says buyers are stepping back into the market as they found value against technical support.

“Appears that this market took a little bit of a breath before moving back higher again. Monday we saw pressure on the larger financial sector given unrest in the Middle East. We may have seen a slight ‘risk off’ mode from the outside fund money that was largely driving this market. Also the opportunity to take some profits and reposition,” O’Connell says.

He added, “Weather models for the extended forecast models did indicate slightly better weather, with a little less rain and warmer temps moving into the extended forecast, also placing pressure on the market early in the week.” 

Al Kluis, Kluis Advisors, says investors have a lot of information coming at them to digest.

“Since wheat prices continue to find some resistance, corn will, too. The combination of some very overbought grain prices plus good wheat ratings had the market ripe for a correction. We still have a lot of the growing season to get through; volatility is sure to be with us all summer long,” Kluis told customers in a daily note.

Kluis added, “This break in U.S. grain prices is just more of a correction. The bull spreads have been back working the last two days after getting dinged on Monday. Typically, when the bull spreads work, the market will work its way higher.”

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

  • Export sales of 189,000 metric tons of soybeans for delivery to unknown destinations. Of the total, 126,000 metric tons is for delivery during the 2018/2019 marketing year and 63,000 metric tons for delivery during the 2019/2020 marketing year.
  • Export sales of 122,000 metric tons of corn for delivery to Mexico. Of the total, 52,000 metric tons is for delivery during the 2018/2019 marketing year and 70,000 metric tons for delivery during the 2019/2020 marketing year.

 
The marketing year for corn and soybeans began September 1.

Separetely, the USDA Weekly Export Sales Report Thursday showed soybean sales that exceeded the trade’s expectations, while corn sales dropped below.

  • Wheat: 87,600 metric tons (mt) vs. the trade’s expectations of between 150,000 and 500,000 mt
  • Corn: 399,200 mt vs. the trade’s expectation of between 400,000 and 800,000 mt
  • Soybeans: 771,500 mt vs. the trade’s expectations of between 300,000 and 700,000 mt  
  • Soybean meal: 147,300 mt vs. the trade’s expectations of between 100,000 and 350,000 mt

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets continue to see profit-taking.

At the close, July corn futures finished 8¾¢ lower at $4.41; December corn futures finished 9¾¢ lower at $4.53¼.
 
July soybean futures closed 10½¢ lower at $9.03¼; November soybean futures settled 11½¢ lower at $9.28¼.

July wheat futures finished 9¼¢ lower at $5.22¼.

July soy meal futures closed $5.10 per short ton lower at $316.90. July soy oil futures settled 0.04¢ higher at 28.37¢ per pound.

In the outside markets, the NYMEX crude oil market is 29¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 18 points higher.

Jack Scoville, PRICE Futures Group, says investors are taking a pause.

“It is a bit of liquidation. We have options expiration this week, the G-20 meetings, the USDA quarterly stocks, and planted area report next week, so we are backing and filling. I doubt we have seen the end of this rally, but we are in a pause that refreshes. Much more quiet today than in the last week, so people are taking it easy and waiting for the down move to show signs of turning before hopping back in,” Scoville says.

Al Kluis, Kluis Advisors, says investors are eyeballing each weekly crop condition rating.

“Traders are trying to determine just how many corn acres are getting planted. The confusion is coming from acres that actually got planted vs. acres being designated as prevent plant. One factor from the Crop Progress Report that will be very important in the next few weeks will be emergence. The U.S. corn and soybean crops are still well below the five-year average for emergence,” Kluis told customers in a daily note.

Kluis added, “At some point soon, we should start to hear the concern about how far behind this year is when it comes to heat units for corn and sunshine for soybeans.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets drop, due to a price-unfriendly Crop Progress Report.

At the close, July corn futures finished 5¢ lower at $4.49¾; December corn futures finished 5¼¢ lower at $4.63.
 
July soybean futures closed ¾¢ higher at $9.13½; November soybean futures finished ¾¢ higher at $9.40¼.

July wheat futures closed 8¢ lower at $5.31½.

July soy meal futures closed $2.30 per short ton lower at $322.00. July soy oil futures finished 0.19¢ higher at 28.23¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.01 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 379 points higher.

Jason Roose, U.S. Commodities, says profit-taking pressures prices.

“Grains are mixed today with corn leading the way lower in a risk off trade profit-taking Tuesday. Also, poor exports and an unchanged crop condition rating on corn were enough to limit the current rally. Volatility is still high on uncertainties on acres and conditions of the short crop,” Roose says.

Al Kluis, Kluis Advisors, says investors reacted negatively to the Monday Crop Progress Report.

“The Crop Progress Reports were viewed as negative for the grain markets,” Kluis told customers in a daily note.

Kluis added, “The USDA crop progress is difficult to fully understand. U.S. corn farmers are reported to have 96% of the nation’s corn crop planted. Did the individual farmer get all of his corn acres planted? Or did he just give up? We will not know until the August USDA crop production estimate. That is when the USDA will plug in the corn acres that farmers reported as their planted acreage at each local FSA office.”

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets remain well supported from planting delay concerns.

At the close, July corn futures finished 1¾¢ higher at $4.54¾; December corn futures ended 5¢ higher at $4.68½.
 
July soybean futures settled 16¢ higher at $9.12¾; November soybean futures closed 16¢ higher at $9.39½.

July wheat futures ended 1¢ higher at $5.39½.

July soy meal futures closed 80¢ per short ton higher at $324.30. July soy oil futures settled 0.53¢ higher at 28.14¢ per pound.

In the outside markets, the NYMEX crude oil market is 41¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 57 points higher.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says the markets are offering selling opportunities for farmers.

“Corn is finding continued strength, as buyers have been flooding to the market. Funds have moved from their massive short position that took July corn as low at $3.43 to a net long positive of approximately 130,000 contracts. This has moved the July contract over a $1 higher. The funds typically can move to a long position of 200-250k contracts without much effort.  Certainly this year is one where they could also push the envelope on the long side. Interestingly enough this market has also moved into a 'shortage' mind-set, and we've seen spreads narrow in the 2019/2020 marketing year. I would suggest that this market still has some gas left in the tank for higher ground. It almost seems predestined for trying to ink a $5,” O’Connell says.  

O’Connell added, “Beans are simply borrowing strength from corn. Lots of risk left in that market. We tested the $9.40 resistance this morning and have stepped back a bit since then.  Should we get confirmation that the bean crop is planted this market is prone to step back and see that corn:bean ratio widen.”

Al Kluis, Kluis Advisors, says the fund investors caught short this market may be now pushing it up.

“The way July CBOT corn is gaining on the rest of the contract shows how many funds were caught short the July call options. This sets up some extreme volatility into the close of the July corn option trading on Friday, June 21. Stay tuned,” Kluis told customers in a daily note.

Kluis added, “Watch the spread between July and December 2019 corn. In early May, the December contract was trading 20¢ higher than the July contract. But Friday, it was only 10.5¢ over. With this squeeze in the July corn options, I expect the July contract to go possibly go to a premium to the December corn this week.”

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