Soybeans add to weekly gains Friday

All eyes are on next Tuesday’s USDA Report.

On Friday, the CME Group’s farm markets lean on the soybean complex to move higher.

At the close, the March corn futures finished 2¼¢ higher at $4.96¼. May corn futures closed 2¢ higher at $4.97½. 
 
March soybean futures closed 19½¢ higher at $13.74¾. May soybean futures closed 17½¢ higher at $13.71½.

March wheat futures ended 3½¢ lower at $6.38¾. 

March soymeal futures settled $7.40 short term higher at $439.60.

March soy oil futures closed 0.20¢ lower at 43.59¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.18 per barrel higher (+2.32%) at $52.01. The U.S. dollar is higher, and the Dow Jones Industrials are 69 points lower (-0.33%) at 30,971 points.

On Friday, private exporters reported to the USDA export sales of 204,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year. 

The marketing year for soybeans began Sept. 1.

Bob Linneman, Kluis Advisors, says that investors were excited to see a daily export sales report with soybean sales announcements on Thursday morning. 

“Although this is a good sign, the weekly export sales numbers were a marketing-year low. Soybean prices managed to end the day about 6¢ lower, which was 13¢ off the low on Thursday. Corn futures continue to find support during intraday setbacks. The buzz over Argentina (which is not exporting any more corn until new-crop harvest gets underway) does open the door for U.S. corn for a short time frame,” Linneman stated in a daily note to customers.

Linneman added, “Will the USDA report next week provide enough fuel to keep feeding the grain bulls? At current prices, it would appear that traders are expecting to see some very friendly data. If they do not get what they want, then be prepared to test downside support on a quick move.”

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Thursday’s Grain Market Review

The bears controlled Thursday’s CME Group’s farm markets.

At the close, the March corn futures settled 1¢ lower at $4.94. May corn futures finished ½¢ lower at $4.95. 
 
March soybean futures closed 6¼¢ lower at $13.55½. May soybean futures finished 6½¢ lower at $13.53½.

March wheat futures closed 5¼¢ lower at $6.42¼. 

March soymeal futures closed $6.10 short term lower at $432.20.

March soy oil futures closed 0.05¢ lower at 43.79¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.28 per barrel higher (+0.55%) at $50.91. The U.S. dollar is higher, and the Dow Jones Industrials are 253 points higher (+0.82%) at 31,082 points.

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

  • Export sales of 213,350 metric tons of soybeans received during the reporting period for delivery to unknown destinations during the 2020/2021 marketing year.
  • Export sales of 130,000 metric tons of soybeans for delivery to unknown destinations during the 2021/2022 marketing year.  

The marketing year for soybeans began Sept. 1.

Separately, the USDA’s Weekly Export Sales Report Thursday shows weak demand figures for corn.

Corn = 748,900 metric tons vs. the trade’s expectations of between 600,000 mmt.-1.20 mmt. 

Soybeans = 116,800 mt. vs. trade’s expectations of 400,000 mmt. to 800,000 mmt. China canceled 5 to 6 cargoes.

Wheat = 275,300 mt.

Soybean meal = 124,800 mt.

Bob Linneman, Kluis Advisors, says that all eyes are on next week’s USDA report. 

“Corn was able to pop over the $5 mark on Wednesday. Although prices did not close over this milestone, it is quite impressive to see corn this high. Soybeans also hit new highs as the March contract reached $13.78. With the big USDA report slated for next Tuesday, we should not be surprised to see some profit-taking unfold in coming days. Keep a watch on the U.S. dollar as the daily chart posted a ‘doji candle’ yesterday.  A close over 90 could indicate the trend is ready to change,” Linneman stated in a daily note to customers.

Linneman added, “At current prices, grain traders are predicting a very bullish report next week. But will the USDA provide data to support current prices? If the bulls don’t get what they are looking for, then we could see an aggressive selloff for a few days.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets closed off their highs.

At the close, the March corn futures finished 3¼¢ higher at $4.95. May corn futures closed 3¼¢ higher at $4.96. 
 
March soybean futures closed 14 1/2¢ higher at $13.61 1/2. May soybean futures closed 14¢ higher at $13.60.

March wheat futures settled 6 1/2¢ lower at $6.47 1/4. 

March soymeal futures finished $6.50 short term higher at $438.30.

March soy oil futures settled 0.24 of a cent higher at 43.84¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.10 per barrel higher (+0.20%) at $50.03. The U.S. dollar is lower, and the Dow Jones Industrials are 484 points higher (+1.59%) 30,876 points.

On Wednesday, private exporters reported to the USDA export sales of 102,616 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.  

The marketing year for corn began Sept. 1.

Peter J. Meyer, S&P Global Platt’s Head of Grain and Oilseed Analytics, says that the story remains on the production side, Argentina remains the focus..

“Whether it’s the weather or port workers/inspectors/farmer strikes, there’s nothing but price support coming from Argentina.  This uncertainty has led to little to no selling by those producers that are fortunate enough to still own some old crop corn and soybeans.  Given the steep discount in new crop, there’s very little interest in hedging there as well.  The market is in wait and see mode with the Crop Production, Quarterly Stocks, and WASDE reports next week, while the Funds continue to add to record length in front of the reports.  The path of least resistance remains higher until next week and the Funds are taking full advantage," Meyer says.

Bob Linneman, Kluis Advisors, says that this week’s rally is grounded in global crop concerns. 

“Trade concern about weather and yield potential in Argentina were the main driving forces.  Corn had a 14¢ trading range and closed 8¢ higher, soybeans had a 60¢ trading range and closed 34¢ higher, while wheat futures closed 8¢ to 12¢ higher,” Linneman stated in a daily note to customers.

Kluis added, “The USDA Crop Production and supply/demand reports next week need to be very bullish to keep this rally going. The Relative Strength Index (RSI) is a momentum indicator that I watch. The RSI index shows an extremely overbought market on the daily, weekly, and monthly charts.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets close off their daily highs, still sharply higher.

At the close, the March corn futures finished 8¢ higher at $4.91¾. May corn futures ended 8¼¢ higher at $4.92¾. 
 
March soybean futures closed 34¢ higher at $13.47½. May soybean futures closed 35¢ higher at $13.46½.

March wheat futures finished 12¢ higher at $6.54¼. 

March soymeal futures closed $8.10 short term higher at $431.80.

March soy oil futures closed 1.47¢ higher at 43.60¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.29 per barrel higher (+4.81%) at $49.91. The U.S. dollar is lower, and the Dow Jones Industrials are 259 points higher (+0.82%) 30,473 points.

Al Kluis, Kluis Advisors, says that the outside investors still have their prints on the market. 

“The latest CFTC report showed funds adding to their long positions in corn and soybeans, but the net position was less than expected. If the funds jump back into the market in a big way, then it can take prices higher, because farmers are not reluctant sellers,” Kluis stated in a daily note to customers.

Kluis added, “The most recent report from my source on South America’s crop shows projections moving lower. The size of the Argentine corn and soybean crops have dropped by 1 million metric tons, and the size of the Brazilian soybean crop has dropped by 2 MMT.  For all of South America, the total corn crop is now 5 million metric tons (200 million bushels) less than last year and the total soybean crop is just 10 million bushels higher than last year and trending lower.”

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Monday’s Grain Market Review

On Monday, the CME Group’s soybean markets closed off their daily highs, as South America’s crop continues to battle dry weather.

At the close, the March corn futures closed ¼¢ lower at $4.83. May corn futures finished 1¢ higher at $4.84¼. 
 
March soybean futures settled 2¢ higher at $13.13, after reaching as high as $13.42. May soybean futures settled 4½¢ higher at $13.11¼, below its daily high of $13.39.

March wheat futures closed 1½¢ higher at $6.42¼. 

March soymeal futures closed $5.70 short term lower at $423.70.

March soy oil futures settled 0.27¢ lower at 42.13¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.03 per barrel lower (-2.14%) at $47.49. The U.S. dollar is lower, and the Dow Jones Industrials are 552 points lower (-1.81%) 30,054 points.

Britt O’Connell, ever.ag, says that volatile is the best way to describe the grain markets, as of late.  

“The overnight trade saw both corn and soybeans post significant gains that started to fade as we entered into the midday trade. Soybeans continue to be the leader while corn and wheat have been benefactors of the move. Fears of tightening U.S. stocks paired with concerns over South America’s crop fanned the flames in the bean market. On January 12, the USDA will take its monthly evaluation of the U.S. supply and demand balance sheet. The January report has historically proven to be volatile and, as it stands today, seems reasonable to assume for this year,” O’Connell says.  

Should the USDA trim either production or raise demand, both exports and crush have been strong for soybeans, ending stocks are at risk of falling below 100 million bushels, she says.  

“If the ending stocks are estimated below 100 million bushels, it would be a level not seen since the recovery of the 2012 drought and massive corn acres planted in 2013. That year soybean stocks ended the year at a mere 92 million. Some analysts believe the number could be as small as 75 million bushels,” O’Connell says.  

Meanwhile, corn hasn’t carried much of a story, but as the report approaches, analysts are expecting the USDA to lower ending stocks, likely a combination of production reduction and possibly raising the export estimates, she says.  

“Strong Chinese corn demand will remain the greatest reason to be optimistic for higher corn prices,” O’Connell says.

Al Kluis, Kluis Advisors, says that the grain markets are off to a great start.

“For the first time ever, I see a gap on my weekly, monthly, and even yearly continuation charts for corn and soybeans. The bull spreads firming in corn and soybean futures show continued strong demand. I see no evidence yet of price rationing. The gap higher sets up our next price targets,” Kluis stated in a daily note to customers.

Kluis added, “I am watching weather and crop conditions in Argentina where I see no major rain events in the forecast. Now their yield potential will continue to drop. Corn production in the five main grain-producing countries is already below last year. It is just a matter of weeks until the soybean production falls as well.”

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