Ag markets finish higher Friday

Lack of demand at the Gulf weakens basis, analyst says.

On Friday, the CME Group’s farm markets close higher.

At the close, the Dec. corn futures finished 2¼¢ higher at $4.10¾. March corn futures settled 1¼¢ higher at $4.19. 

January soybean futures closed 2½¢ higher at $11.48½. March soybean futures closed 3¾¢ higher at $11.48.

Dec. wheat futures closed 5½¢ higher at $5.93½. 

Dec. soymeal futures settled unchanged at $388.10.

Dec. soy oil futures closed 0.20¢ higher at 37.25¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.95 per barrel lower (-2.31%) at $40.17. The U.S. dollar is lower, and the Dow Jones Industrials are 377 points higher (+1.30%) 29,457 points.

Jack Scoville, PRICE Futures Group, says that the markets are all up, led by the soybean complex. 

“Beans got the most bullish fundamentals with the tight ending stocks. Corn stocks are relatively tight, too, but nothing like the beans,” Scoville says. Wheat still depends on Russia, but Russian prices hold firm and there is little difference between the U.S. and Russia on an FOB basis. Still not going to get Egyptian business, due to logistics. But the U.S. wheat price is close to attracting many importers.”  

Scoville added, “There is not top built anywhere just yet and no feeling of a blow-off top made yet. So, I think there is more upside, over time, although the correction down could extend a bit more next week,” Scoville says.

Separately, the USDA’s Weekly Export Sales Report Friday shows strong demand figures for soybeans.

  • Corn = 978,300 metric tons vs. the trade’s expectations of between 700,000 mmt. and 1.8 mmt. An unknown and Mexico were the biggest buyers.
  • Soybeans = 1.468 million metric tons. vs. trade’s expectations of 800,000 mmt. to 1.8 mmt. Of that total, China bought 745,600 mt.
  • Wheat = 300,500 mt. 
  • Soybean meal = 145,300 mt.

Bob Linneman, Kluis Advisors, says that this week’s weakness could be tied to the lack of demand at the Gulf.

“When the Gulf basis weakens, it normally indicates no immediate need for grain. Is this super-bearish? No, it is not super-bearish. However, it allows the market to back-and-fill. This gives traders a chance to adjust positions, and allows an opportunity for those waiting to jump in when the market pulls back. Another reason for the setback could be fears of potential economic slowdown if we see a repeat of closures like earlier this year,” Linneman told customers in a daily note.    

He added, “Profit-taking after a bullish reaction to USDA report on Tuesday is allowing the momentum indicators on the charts to cool off.”

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On Thursday, the CME Group’s farm markets pull back after a strong start to the week.

At the close, the Dec. corn futures settled 9¢ lower at $4.08¾. March corn futures closed 8½¢ lower at $4.18½. 

January soybean futures finished 7¢ lower at $11.45½. March soybean futures closed 6¾¢ lower at $11.44½.

Dec. wheat futures closed 9¾¢ lower at $5.88½. 

Dec. soymeal futures settled $4.60 per short ton lower at $388.10.

Dec. soy oil futures finished 0.08¢ lower at 37.05¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.31 per barrel lower (-0.75%) at $41.14. The U.S. dollar is lower, and the Dow Jones Industrials are 366 points lower (-1.32%) 29,009 points.

Jason Ward, Northstar Commodity, says that today’s weaker markets are responding to investors taking profits.

“I think it is money that is seeing consistently negative headlines about COVID cases and deaths and asking themselves “should I take some off the table,” Ward says.
 
Ward says that “Regardless of how positive the fundamentals are, which they are very positive, especially soybeans, it is money that drives these markets, and it takes buyers. And, right now those buyers are cashing in some chips from a very bullish USDA report. Regardless of the reason they are doing so, they are doing it.”
 
Ward added, “I don’t see it as a changing trend for weather in South America, still plenty dry for S. Brazil and Argentina, which is creating more concern about first-crop corn, and we are getting more and more reports of producers waiting to seed soybeans in Argentina until more rainfall arrives.”
 
Ward sees the market action as a constructive correction in price, and one that likely won’t ration demand.

“In the case of soybeans, rationing needs to be done. But, I personally think the COVID scenario is on peoples’ minds,” Ward says.

Al Kluis, Kluis Advisors, says that despite yesterday’s price setback, the market’s trend is higher.

“It is healthy for futures to back-and-fill on the charts. Crude oil prices have rallied $9.42 from low to high in the past 10 days. The high on Wednesday was the highest level since September 2. The energy bulls are hopeful that a COVID vaccine will ignite energy demand across the globe. This rally in the energy market might be a bit premature. Further headlines suggest mass production and distribution has not been thoroughly tackled yet,” Kluis told customers in a daily note.    

He added, “The weekly export sales report is delayed until Friday due to the Veterans Day holiday Wednesday. The corn and export data is only going to get more important given the tighter balance sheets provided by the USDA this week.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets have trimmed the euphoria from Tuesday’s USDA report.

At the close, the Dec. corn futures closed 5¾¢ lower at $4.17½. March corn futures finished 4¢ lower at $4.27½. 

January soybean futures ended 6½¢ higher at $11.52¼. March soybean futures settled 7¾¢ higher at $11.51¾.

Dec. wheat futures closed 10½¢ lower at $5.98. 

Dec. soymeal futures closed $2.10 per short ton lower at $392.70.

Dec. soy oil futures closed 1.07¢ higher at 37.13¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.14 per barrel higher (0.34%) at $41.50. The U.S. dollar is higher, and the Dow Jones Industrials are 83 points lower (- 0.28%) at 29,337 points.

Al Kluis, Kluis Advisors, says that investors continue to eye global weather and today’s USDA November Supply/Demand Report.

“The USDA reports, Tuesday, are realistic but may be understating soybean export demand. Projected ending stocks are only 190 million bushels. This number may move lower in future reports as larger exports are factored in,” Kluis told customers in a daily note.    

He added, “I am watching weather and weather forecasts in Southern Brazil and northern Argentina. Many private trade analysts are taking the South American corn crop lower because of delayed planting and dry conditions. If the dry conditions continue into December, then it will then start to impact soybean yield potential as well.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group's farm markets react positively to the USDA tightening stocks in its November Supply/Demand Report.

At the close, the Dec. corn futures finished 15 1/4¢ higher at $4.23. March corn futures ended 15 1/2¢ higher at $4.31. 

January soybean futures closed 35 3/4¢ higher at $11.46 1/4. March soybean futures closed 35 1/2¢ higher at $11.44.

Dec. wheat futures closed 11¢ higher at $6.08 1/2. 

Dec. soymeal futures settled $10.70 per short ton higher at $394.80.

Dec. soy oil futures closed 0.58 cent higher at 36.06¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.10 per barrel higher (2.73%) at $41.39. The U.S. dollar is higher, and the Dow Jones Industrials are 241 points higher (+ 0.83%) at 29,399 points.

On Tuesday, private exporters reported to the USDA export sales of 130,000 metric tons of corn for delivery to South Korea during the 2020/2021 marketing year.

The marketing year for corn began Sept. 1.

The USDA Crop Progress report, Monday, showed corn harvest at  91% complete, soybeans at 92% complete, and the winter wheat crop rating showed the winter wheat crop rated 45% good to excellent.

Al Kluis, Kluis Advisors, says that investors continue to eye global weather and today’s USDA November Supply/Demand Report.

“To keep the rally going in the grain markets, we need to have a bullish report – and bullish response – today. Rain in South America, again this week, looks like it will underperform. Not a total bust, but many areas remain very dry in southern Brazil and much of Argentina,” Kluis told customers in a daily note.    

He added, “I am watching the Chinese corn import projections from today’s USDA report. The USDA has been plugging in corn imports by China at 7.0 million metric tons (mmt) or 275 million bushels. The Ag Attaché in China is projecting Chinese imports at 22 mmt (865 million bushels). I doubt that the USDA report will move that high in the report today, but I think that China will eventually need to import over 20 mmt of corn.”

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Monday’s Grain Market Review

On Monday, a broad market rally, from the encouraging news about a vaccine for the coronavirus, helped the CME Group’s ag commodities close mostly higher.

At the close, the Dec. corn futures finished ¾¢ higher at $4.07½. March corn futures settled 1½¢ higher at $4.15¾. 

January soybean futures finished 9¢ higher at $11.10¼. March soybean futures closed 9½¢ higher at $11.08¼.

Dec. wheat futures closed 4¼¢ lower at $5.97¾. 

Dec. soymeal futures closed $1.70 per short ton higher at $384.10.

Dec. soy oil futures settled 0.14¢ higher at 35.48¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.28 per barrel higher (8.83%) at $40.42. The U.S. dollar is higher, and the Dow Jones Industrials are 1,283 points (4.52%) higher at 29,607 points.

On Monday, private exporters reported to the USDA export sales of 123,000 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.  

The marketing year for soybeans began Sept. 1.

Bob Linneman, Kluis Advisors, says that investors will be watching global weather and tomorrow’s USDA November Supply/Demand Report.

“At the current pace of corn and soybean exports, the USDA will increase export projections and take ending stocks lower in the report tomorrow. I see no evidence of price rationing at this time,” Linneman told customers in a daily note.    

He added, “I am watching the weather reports for Argentina. The Buenos Aires Grain Exchange dropped the projected size of the 2021 soybean crop in Argentina from 49 million metric tons (mmt) last year to 46.5 mmt this year. This projection is 7 mmt (257 million bushels) lower than the last USDA estimate.”

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