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New Soybean Demand Still Can’t Spark Soybean Rally Friday

China made even more purchase of U.S. soybeans.

DES MOINES, Iowa -- Friday’s agricultural commodities investors continue to see more demand coming from China, still only edging the market up slightly.

At the close, the March corn futures finished ½¢ higher at $3.84¾. May futures finished ½¢ higher at $3.92¼.

January soybean futures closed 6½¢ lower at $9.00½. March soybean futures ended 6¾¢ lower at $9.13¾.


March wheat futures finished 6¢ lower at $5.30.



January soymeal futures settled 1.20¢ per short ton lower at $307.30.

 January soy oil futures closed 0.34¢ lower at 28.49¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.68 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 500 points lower.

Jack Scoville, The PRICE Futures Group’s Senior Market Analyst, says that we are watching China and its buying, but we have a lot of soybeans to sell.  

“The market backed off the second half of the week after the sales and wants to see more and more before getting too excited,” Scoville says.  

Scoville adds, “Also, Brazil is growing a huge crop again, and the higher U.S. dollar not good for demand.”

Corn rallying on news that China could buy corn, he says.

“That is something we had not expected here. But March corn needs to take out $3.90 with some volume to get anyone excited about the up side. Another disappointing day in wheat – it seems to come down after new highs only to tally again with more new highs. That pattern could stay the same into next week,” Scoville says.

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Thursday’s Grain Market Review

On Thursday, the CME Group’s commodities investors sell off soybeans, while digesting a lot of export information.

At the close, the March corn futures finished 1¢ lower at $3.84. May futures settled 1¢ lower at $3.91¾.

January soybean futures finished 13¢ lower at $9.07. March soybean futures closed 12¾¢ lower at $9.20.

March wheat futures ended 9½¢ higher at $5.36.

January soymeal futures closed 4.10¢ per short ton lower at $308.50. January soy oil futures closed 0.21¢ lower at 28.83¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.44 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 47 points higher.

On Thursday, separate from the Weekly Sales Report, private exporters reported to the USDA export sales of 1,130,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.

Britt O’Connell, cash advisor for Commodity Risk Management Group, says that it appears as if there was optimism regarding trade with China had been priced into the market already.  

“China has purchased roughly 2 million tonnes of soybean, and are rumored to possibly purchase another 5 million tonnes. The market has rallied $1 off its August lows and is now approaching an overbought condition,” O’Connell says.

O’Connell adds, “Traders could be looking to take profit on long positions – causing them to then be sellers – and push the market once again lower. We cannot forget among all of this trade commotion that we still have the highest stocks-to-use ratio in U.S. history, with 955 million bushels in ending stocks.”

The U.S. prior stocks-to-use ratio record was in the 2006/07 marketing year at 574 million with prices sub-$7.00.  

“While a deal with China would feel good and the market would likely respond favorably, it will eventually have recon price against supply,” O’Connell says.   

Al Kluis, Kluis Advisors, says the news of China buying U.S. soybeans may be baked into the market.

“The soybean market is setting up for a classic ‘buy the rumor and sell the fact.’ The market has already been creeping up in anticipation of China announcing a significant purchase of U.S. soybeans. Can we sustain the rally after an announcement is made,” Kluis stated in a daily note to customers.
 
The marketing year for soybeans began September 1.

On Thursday, the USDA released its Weekly USDA Sales Report Thursday. Here are the totals and the complete reports.

  • Corn: 1.064 million metric tons vs. the trade’s expectations of between 1,000,000 and 1,500,000 mmt
  • Soybeans: 795,300 mt vs. the trade’s expectations of between 750,000 and 1,000,000 mmt
  • Wheat: 754,100 mt vs. the trade’s expectations of between 500,000 and 750,000 mt
  • Soy meal: 50,500 mt vs. the trade’s expectations of between 200,000 and 450,000 mt

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Wednesday’s Grain Market Review

On Wednesday, the CME Group is seeing the buyers step into the commodities space.

Late Wednesday, Reuters news service reported that China has bought what equates to 18 million bushels of U.S. soybeans for delivery in 2019.

At the close, March corn futures settled ¼¢ higher at $3.85; May futures finished ½¢ higher at $3.92.

January soybean futures closed 5¢ higher at $9.20; March soybean futures finished 5¢ higher at $9.33.

March wheat futures closed 5½¢ higher at $5.26½.

January soy meal futures ended $1.70 per short ton higher at $312.60. January soy oil futures ended 0.08¢ higher at 29.04¢ per pound.

In the outside markets, the NYMEX crude oil market is 45¢ lower, the U.S. dollar is lower, and the Dow Jones Industrials are 157 points higher.

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

  • Export sales of 130,632 metric tons of soybeans for delivery to Mexico during the 2018/2019 marketing year 
  • Export sales of 110,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year 

 
The marketing year for soybeans began September 1.

Al Kluis, Kluis Advisors, says although yesterday’s USDA Supply/Demand Report offered bearish elements, the market bears remain nervous.

“There were some bearish adjustments to corn stocks to account for the poor ethanol margins. World soybean stocks increased more than what the trade was expecting. Wheat traders were dealt some bearish news, as world stocks also increased more than expected. Overall this sounds bearish, however, corn and soybean prices ended higher on the day,” Kluis stated to customers in a daily report.

Kluis added, “The continued rumbling that China is very close to announcing a soybean purchase from the U.S. has the bears nervous.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets lean higher, awaiting the updated supply/demand numbers by the USDA.

In early trading, March corn futures are ¾¢ higher at $3.84; May futures are 1¢ higher at $3.92.

January soybean futures are 2¾¢ higher at $9.12; March soybean futures are 3¢ higher at $9.25.

March wheat futures are steady at $5.25. January soy meal futures are 60¢ per short ton lower at $309.40. January soy oil futures are 0.12¢ higher at 28.88¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.14 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 291 points higher.

Ray Grabanski, president of Progressive Ag Marketing, Inc, says the markets are a bit higher this morning after news of trade meeting between the U.S. and China.

“Last night’s conversation between China's Vice Premier Liu and U.S. Treasury Secretary Mnuchin and Trade Representative Lighthizer met over some of the terms of the trade negotiations over the next months. They discussed the large purchases of U.S. ag products and revisions of China intellectual property laws,” Grabanski stated in a weekly article.

He added, “The discussion clearly set up to deflect distractions of the arrest of the CFO of Chinese company Huawei in Canada December 1 (the U.S. is trying to extradite her for a U.S. trial) and the market reaction to that whole scenario.”  

That has brought soybeans into positive territory today, Grabanski says.


On Monday, FAS Program issued a trade announcement 9 a.m., which reported export sales of 1,645,920 metric tons of corn for delivery to Mexico.

Of the total 1,104,900 metric tons is for delivery during the 2018/2019 marketing year and 541,020 metric tons is for delivery during the 2019/2020 marketing year.

The correct announcement is as follows:

  • Export sales of 1,645,920 metric tons of corn for delivery to Mexico. Of the total 1,104,900 metric tons is for delivery during the 2018/2019 marketing year and 541,020 metric tons is for delivery during the 2019/2020 marketing year.
  • Export sales of 125,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year. The marketing year for corn and soybeans began September 1.
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