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Corn Market Has a Story, Moves Up Friday

China is in the market for U.S. corn.

DES MOINES, Iowa -- On Friday, the CME Group’s corn market remains higher, while soybeans have weakended further.

At the close, the May futures finished 2¢ higher at $3.78 1/2. July futures closed 2¢ higher at $3.87 1/2.

May soybean futures ended 6 3/4¢ lower at $9.03 3/4. July soybean futures finished 7¢ lower at $9.17 3/4.

May wheat futures finished 1/2¢ lower at $4.66.

May soymeal futures finished 0.30 per short ton lower at $315.00. May soy oil futures closed 0.44 lower at 28.66¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.94 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 321 points lower.

Private exporters reported to the U.S. Department of Agriculture export sales of 300,000 metric tons of corn for delivery to China during the 2018/2019 marketing year.
 
The marketing year for corn began Sept. 1.

Jack Scoville, PRICE Futures Group, says that investors are weighing the significance of China buying U.S. corn.

“Yes, it is the big question.  But I think we have been firm anyway and this has been talked about.  Still, China did buy and it did support the market, as it created some new spec buying.  We ran into strong overhead resistance at $3.80, basis the May futures and also found some farm selling at that level,” Scoville says.

Scoville added, “I think we will rally more once we see the damage but we need to take some profits and fade from resistance a bit,” Scoville says.

On Friday, private exporters reported to the USDA export sales of 300,000 metric tons of corn for delivery to China during the 2018/2019 marketing year.
 
The marketing year for corn began September 1.

Al Kluis, Kluis Advisors, says the U.S.-China trade talk is getting to be old hat for investors.

“Thirty-day forecasts suggest a continuation of the cold-and-wet pattern for the Plains. Crude oil hit a new five-month high on Thursday as prices surpassed the $60 mark. The damage caused by flooding in the Dakotas, Minnesota, Iowa, and Nebraska won’t be known for weeks. Traders have plenty of material to digest as spring unfolds across the heart of the U.S.,” Kluis told customers in a daily note.

He added, “Will the Commitments of Traders Report (to be released this afternoon) show funds adding to their short positions in the grains? Open interest in corn is suggesting new buyers are entering the market. If validated, then this would mean the funds holding shorts have not started exiting those positions yet.”

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Thursday’s Grain Market Review

On Thursday, the CME Group’s farm markets ened with strength, driven by the funds’ short-covering.

At the close, May futures finished 4¾¢ higher at $3.76¼; July futures are 4½¢ higher at $3.85.
 
May soybean futures settled 4½¢ higher at $9.10½; July soybean futures ended 4¾¢ higher at $9.24¼.

May wheat futures closed 1¾¢ higher at $4.66½.

May soy meal futures closed $3.70 per short ton higher at $315.30. May soy oil futures settled 0.17¢ lower at 29.10¢ per pound.

In the outside markets, the NYMEX crude oil market is 14¢ lower, the U.S. dollar is higher, and the Dow Jones Industrials are 242 points higher.

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

  • Corn: 795,900 metric tons vs. the trade’s expectations of between 600,000 and 1.300,000 mmt
  • Soybeans: 335,100 mmt vs. the trade’s expectations of between 800,000 and 1.5 mmt
  • Wheat: 437,400 mt vs. the trade’s expectations of between 350,000 and 1.2 mmt
  • Soybean meal: 97,400 mmt vs. the trade’s expectations of between 100,000 and 400,000 mmt

Britt O’Connell, cash adviser for Commodity Risk Management Group, says corn has found support.  

“Corn is up about nickel, which is as high as futures have been in a couple of weeks. The U.S. branch of one of China’s state-owned grain buyers is rumored to be a buyer of U.S. corn this morning from both the PNW and the Gulf,” O’Connell says.  

O’Connell adds, “Many millions of bushels of barge corn have traded so far this morning, so hopefully where there is smoke there is fire. If it is confirmed that China is importing U.S. corn, are speculative funds going to hold their near-record short futures positions?”

Al Kluis, Kluis Advisors, says the U.S.-China trade talk is getting to be old hat for investors.

“It is almost as if the market is trying to put everyone to sleep. Talks with China continue to progress. However, the market is running out of patience, and wants to see some action – enough with the talk already,” Kluis told customers in a daily note.

He added, “The Fed’s announcement of no more interest rate hikes this year in the U.S. has many traders thinking we could possibly see an interest rate reduction by the year-end. This news put pressure on the U.S. dollar. That is positive to U.S. grain and meat prices.”

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets’ price action finished slightly higher.

At the close, May futures finished ¼¢ higher at $3.71½; July futures are 1¢ higher at $3.81.
 
May soybean futures ended 2¢ higher at $9.06; July soybean futures settled 2¢ higher at $9.19¼.

May wheat futures closed 8¼¢ higher at $4.64¾.

May soy meal futures closed 80¢ per short ton higher at $311.60. May soy oil futures settled 0.03¢ higher at 29.27¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.09 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 18 points higher.

Jason Roose, U.S. Commodities, says the bullish market factors are lining up.

“Grains are higher today, while finding value in a market that has limited downside. The bullish factors such as a wet Midwest, uncertain future weather forecasts, tightening basis levels indicating that our domestic demand is strong at these levels, trade negotiations with the U.S. and China will continue to give the market volatility with consistent demand the final outcome,” Roose says.

Al Kluis, Kluis Advisors, says the outside markets could lead the way higher.

“So far this week, there appear to be willing buyers on breaks. Is this a sign that funds are trying to quietly cover shorts on any pullback? That idea sure seems legitimate as spring planting is just around the corner,” Kluis told customers in a daily note.

He added, “With the funds holding a record-short position in corn, I suspect fund managers are a little nervous given the current 30-day forecast. Those fund managers do not want to see prices close over last week’s high because it would likely trigger short covering.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s wheat, corn, and beans weaken.

At the close, May futures finished ¼¢ lower at $3.71¼; July futures finished even at $3.80¾.
 
May soybean futures settled 1¾¢ lower at $9.04; July soybean futures settled 1¾¢ lower at $9.17½.

May wheat futures closed ¼¢ lower at $4.56½.

May soy meal futures finished $1 per short ton higher at $310.80. May soy oil futures closed 0.20¢ lower at 29.24¢ per pound.

In the outside markets, the NYMEX crude oil market is 16¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 60 points lower.

Al Kluis, Kluis Advisors, says the outside markets could lead the way higher.

“With crude oil and ethanol making new highs for 2019 on Monday, corn prices will eventually move higher,” Kluis told customers in a daily note.

He added, “Will the low for the week in the grain markets come in on Monday or early Tuesday, with the high on Thursday or Friday again this week? That pattern could signal a possible change of trend. A close today or later this week above $3.75 in May corn and $9.12 in May soybeans will be a positive signal for corn and soybean prices.”

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Monday’s Grain Market Review

On Monday, the CME Group soybean, corn, and wheat markets end lower.

At the close, May futures finished 1¾¢ lower at $3.71; July futures closed 1½¢ lower at $3.80¾.
 
May soybean futures finished 3½¢ lower at $9.05¾; July soybean futures finished 3¾¢ lower at $9.19¼.

May wheat futures ended 5¼¢ lower at $4.56¾.

May soy meal futures closed $1 per short ton lower at $309.80. May soy oil futures finished 0.01¢ higher at 29.44¢ per pound.

In the outside markets, the NYMEX crude oil market is 46¢ higher, the U.S. dollar is higher, and the Dow Jones Industrials are 28 points higher.

Al Kluis, Kluis Advisors, says investors will be watching the outside investors’ trading activity in the coming weeks.

“The funds are short a record amount of corn futures and a huge amount of soybeans and wheat. As funds buy back this huge short position, the grain markets may show a positive rally ahead of the USDA reports at the end of March,” Kluis told customers in a daily note.

He added, “Will grain prices make a low early in the week? From early January until last week, the corn, soybean, and wheat market could rally on Sunday night and into the early trade on Monday, then fade into the close on Friday. Prices were in a downtrend. Last week the low came in early and the high for the week came in on Friday. Can this signal a major change of trend?”

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