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Farm Markets Await USDA Data, Friday

Investors expect larger ending stocks in USDA reports.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets show little life, ahead of the USDA Supply/Demand and WASDE Reports.

The government releases the new data at 11 a.m. CT.

In early trading, the May futures are ¼¢ higher at $3.65; July futures are ½¢ higher at $3.74.
 
May soybean futures are 3¼¢ lower at $8.99¼; July soybean futures are 3½¢ lower at $9.13.

May wheat futures are 2½¢ higher at $4.40.

May soy meal futures are 70¢ per short ton lower at $305.60. May soy oil futures are 0.12¢ lower at 29.55¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.03 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 168 points lower.

Private exporters reported to the USDA export sales of 664,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.

The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says investors will be watching today’s CFTC Report for market direction, going forward.

“Funds continue to pile on the short positions; the wheat market just cannot find any support. The path of least resistance has been lower lately. Until the wheat market can find some support, the corn market will continue to drift lower,” Kluis told customers in a daily note.

He added, “Since ending the government shutdown, the Commitments of Traders Reports have been on a staggered release schedule to get caught up. The report released at 2:30 p.m. CT today will  get us up to date and provide the most current positions. How short will the funds be on corn and soybeans?”

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Thursday’s Grain Market Review

The CME Group’s farm futures markets turn mixed, with investors awaiting fresh trade news.

At the close, the May futures finished 7½¢ lower at $3.65¼; July futures ended 6 3/4¢ lower at $3.74¼.
 
May soybean futures closed ½¢ higher at $9.02½; July soybean futures closed ¾¢ higher at $9.16.

May wheat futures settled 11¾¢ lower at $4.38¼.

May soy meal futures ended 20¢ per short ton higher at $306.30. May soy oil futures closed 0.11¢ lower at 29.67¢ per pound.

In the outside markets, the NYMEX crude oil market is 40¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 212 points lower.

Jack Scoville, PRICE Futures Group, says the markets ignored the strong export sales.

“It’s not really clear why corn is down so much, or wheat either. I know it is big spec selling, but I see no real fundamental except for the threat of changes to tomorrow’s WASDE Report. If tomorrow’s report leaves ending stocks higher or something, it would be bearish,” Scoville says.

Scoville added, “Corn’s feed demand category never has been strong this year, and there are fears of more cuts to ethanol demand in tomorrow’s USDA Supply/Demand Report. But wheat demand is growing finally and the market not reacting due to weaker world values, I guess. There is more talk of China buying soybeans again (reportedly 500,000 tons for June-September delivery, according Reuters newswire). So, beans are higher.”

On Thursday, the USDA’s Weekly Export Sales Report strong corn, weak soybean figures.

  • Corn: 1.25 million metric tons vs. the trade’s expectations of between 700,000 and 1,700,000 mmt
  • Soybeans: 383,400 mt vs. the trade’s expectations of between 600,000 and 1,200,000 mt
  • Wheat: 826,700 mt vs. the trade’s expectations of between 200,000 and 550,000 mt
  • Soybean meal: 259,200 mt vs. the trade’s expectations of between 100,000 and 250,000 mt

Al Kluis, Kluis Advisors, says investors are buying the soybean market.

“It feels like the market is fed up with all the talk and speculation of a trade deal, and the market wants to see some action. A trade deal is still not confirmed. The market does not like the unknown, so they headed to the sidelines to wait for some news that a deal is done,” Kluis told customers in a daily note.

He added, “With the funds getting into rather large short positions ahead of spring planting in the U.S., we could have some interesting markets the next 90 days.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s soybean and wheat markets finish double-digits lower.

At the close, the May futures settled 3¼¢ lower at $3.72½; July futures finished 3½¢ lower at $3.81.
 
May soybean futures finished 11¾¢ lower at $9.02; July soybean futures closed 12¢ lower at $9.15¾.

May wheat futures ended 12¼¢ lower at $4.50.

May soy meal futures settled $3.90 per short ton lower at $306.10. May soy oil futures finished 0.24¢ lower at 29.78¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.29 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 90 points lower.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says commodities markets continue to struggle finding positive territory as we move through the trading day.

“Funds have continued to be sellers of all three commodities carrying an estimated short position of 160,000 contracts on corn, 92,000 contracts on soybeans, and 110,000 on wheat,” O’Connell says.

O’Connell adds, “With no news to spur this market higher, the unknown around trade and burdensome supplies continue to provide pressure. While corn in itself has a decent story line in regard to supply and demand, wheat and soybeans are dealing with some of the largest supplies in history, pulling corn down with them.”

Al Kluis, Kluis Advisors, says investors are selling wheat, putting pressure on the grains.

“This Friday, we will receive the regular Commitments of Traders Report with the most current information. Will the report show the funds holding very large short positions in all the grains?” Kluis asked in a daily note.

He added, “Corn prices may retrace the recent selloff with more enthusiasm if wheat continues to post higher highs and higher lows on the daily chart.”

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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, the May futures finished 1¢ higher at $3.75¾; July futures closed 1¼¢ higher at $3.84½.
 
May soybean futures finished 2¼¢ lower at $9.13¾; July soybean futures finished 2¼¢ lower at $9.27¾.

May wheat futures settled 7¼¢ higher at $4.62¾.

May soy meal futures ended 50¢ per short ton lower at $310. May soy oil futures closed 0.06¢ lower at 30.02¢ per pound.

In the outside markets, the NYMEX crude oil market is 2¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 23 points higher.

Al Kluis, Kluis Advisors, says investors are buying the soybean market.

“The CFTC recent report (that is still two weeks old) showed how short funds are. I think the odds are good the CFTC Commitments of Traders Reports today and again on Friday will show even larger fund shorts. The large fund short is one of the most positive fundamentals in the grain markets,” Kluis told customers in a daily note.

He added, “When funds get this short, it almost always creates a rally. It is not if it will happen, but when.”

Ray Grabanski, president of Progressive Ag Marketing, Inc., says that the corn market is building a bullish story.

“While everyone wants to talk up the bearish tone of all markets, following February (typically not the time to be selling), here’s a bullish view. If corn acreage doesn't expand 3 million acres, that’s 528 million bushels (mb) less production. USDA only projected 1.6 billion carryout in 2019-2020. So, subtracting 528 mb leaves barely 1 billion bushels. Now add summer weather uncertainty, and we now have a bull market in corn,” Grabanski stated in a weekly column.  

Grabanski added, “Add a few Chinese purchases once the U.S.-China agreement is hashed out, and we have a full-fledged bull market in corn.”

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Monday’s Grain Market Review

On Monday, the week’s CME Group soybean market closed higher, yet off its daily 12¢ high.

At the close, the May futures finished 1¾¢ higher at $3.74¾; July futures ended 1¾¢ higher at $3.83¼.
 
May soybean futures settled 4½¢ higher at $9.16; July soybean futures closed 4½¢ higher at $9.30.

May wheat futures finished 1¾¢ lower at $4.55½.

May soy meal futures finished $3.10 per short ton higher at $310.50. May soy oil futures closed 0.16¢ lower at 30.08¢ per pound.

In the outside markets, the NYMEX crude oil market is 64¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 206 points lower.

Al Kluis, Kluis Advisors, says investors are buying the soybean market.

“The news that President Trump and Premier XI may meet on March 27 is viewed as positive for the stock and commodity markets around the world,” Kluis told customers in a daily note.

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