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The Farm Markets Trade Mixed, As Investors Await Santa Claus Rally

Fresh soybean sales reported Friday.

DES MOINES, Iowa -- More fresh sales of corn and soybeans, more lackluster farm markets Friday.

At the close, the March corn futures finished 3 1/4¢ higher at $3.78 1/2. May futures ended 3 1/4¢ higher at $3.86 3/4.
 
January soybean futures closed 8 3/4¢ lower at $8.84. March soybean futures ended 8 1/2¢ lower at $8.97.

March wheat futures finished 9 1/2¢ lower at $5.14.

January soymeal futures closed 1.90¢ per short ton lower at $310.10. January soy oil futures finished 0.31 lower at 28.17¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.28 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 246 points lower.

Private exporters reported to the U.S. Department of Agriculture the following activity:

  • Export sales of 222,504 metric tons of corn for delivery to unknown destinations during the 2018/2019 marketing year; and
  • Export sales of 115,500 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.

The marketing year for corn and soybeans began Sept. 1.

Michael Rusch, Regional Sales Director- Ag/Commercial | Stewart-Peterson, says that corn futures saw technical breakdown yesterday, which saw extended selling as prices pushed to their lowest level since the last week of November.

“The market is rebounding today on short covering, with the Mar contract holding the key 3.75 psychological support level. Corn futures are seeing strength despite outside markets, as well as selling pressure in other grains. On the demand front, the USDA announced a sale of 8.7 million bushels to unknown destinations for the 2018/19 crop year. The demand pace remains strong, and that is a bullish factor supporting corn price,” Rusch says.

Rusch adds, “Bean futures continue to see selling pressure, as prices are challenging key-moving average support near the 8.85 area in the Jan contract. Despite seeing China step back into the soybean market, sales to the world's largest importer of beans have been less than impressive overall, as the market has handled a "buy the rumor, sell the fact" mentality.”

The USDA did announce an additional sale of 4.2 million bushels to unknown destinations for the current marketing year.

“Despite ramp up in export sales movement in recent sessions, the pace is still trailing USDA projections and may lead to an additional reduction of export demand goals in the future, therefore carrying an increasing carryout. Soybean futures are also seeing pressure as forecasts in South America are bringing potential beneficial rains to some key areas that need it, as they start to develop their crop for this year,” Rusch says.

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Thursday's Grain Market Review

On Thursday, investors have more proof that China is back in the buying business of U.S. soybeans. Will they react to it?

At the close, the March corn futures finished 6 1/2¢ lower at $3.75 1/4. May futures closed 6 3/4¢ lower at $3.83.
 
January soybean futures settled 6 1/2¢ lower at $8.93 1/2. March soybean futures finished 6 3/4¢ lower at $9.06 1/4.

March wheat futures finished 1¢ higher at $5.23 1/2.

January soymeal futures closed 0.10¢ per short ton lower at $307.70. January soy oil futures finished 0.24 lower at 28.48¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.00 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 475 points lower.

Pete Meyer, SPGlobal senior market analyst, says that current Chinese purchases of U.S. soybeans is a start, but falls short.

“The Chinese purchases of 3.5 million metric tons, so far, is a proverbial drop in the bucket when compared to last year’s roughly 36.0 mmt. in total purchases.  While ultimately helpful, it remains our opinion that China will need to buy somewhere between 8.0 mmt and 10.0 mmt just to get to the export estimate of 1.9 billion bushels in the December WASDE,” Meyer says.  

Meyer adds, “The market is also well aware that Brazilian supplies are just around the corner and while there are some concerns about recent dryness in southern growing areas, any loss of production should be offset by other areas of the country.”

The USDA estimated Brazilian production at 122.0 mmt in December, up 1.5 mmt from November, in a month that usually sees very little change, Meyer says.  

“USDA also raised Brazilian exports from 77.0 mmt to 81 mmt, now 52% of total global exports against roughly a 33% market share for U.S. exporters.  In our opinion, U.S. exporters still have a long way to go, while Brazil readies its exports for market,” Meyer says.

Private exporters reported to the USDA the following activity:

  • Export sales of 204,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.
  • Export sales of 257,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.
  • Export sales of 100,000 metric tons of soybean meal for delivery to Colombia during the 2018/2019 marketing year.
  • Export sales of 426,800 metric tons of corn for delivery to Mexico. Of the total, 373,455 metric tons is for delivery during the 2018/2019 marketing year and 53,345 metric tons is for delivery during the 2019/2020 marketing year.

The marketing year for corn and soybeans began September 1; soybean cake and meal began October 1.

Also Thursday, the USDA released its Weekly Export Sales Report showing corn and soybean sales at the high end of expectations.

  • Corn: 2.516 million metric vs. the trade’s expectations of between 2,300,000 and 2,900,000 mt
  • Soybeans: 2.962 mmt vs. trade’s expectations of between 2,100,000 and 2,700,000 mmt
  • Wheat: 313,600 mt vs.trade’s expectations of between 500,000 and 750,000 mt
  • Soy meal: 300,000 mt vs. the trade’s expectations of between 100,000 and 450,000 mt

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets have lost the interest of the buyers.

At the close, March corn futures closed 3¾¢ lower at $3.81¼; May futures finished 3¾¢ lower at $3.89¾.

January soybean futures settled 7¾¢ lower at $9; March soybean futures closed 7¾¢ lower at $9.13.

March wheat futures finished 10¼¢ lower at $5.22½.

January soy meal futures ended 2.60¢ per short ton lower at $307.80. January soy oil futures closed 0.08¢ higher at 28.75¢ per pound.

In the outside markets, the NYMEX crude oil market is 95¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 141 points higher.

On Wednesday, private exporters reported to the USDA export sales of 1,199,000 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 grain traders appear content with the recent trading range for corn and soybeans.

“Corn futures have been stuck in an 8¢ trading range for the last 13 trading sessions. Soybeans have spent most of the last 13 sessions inside a 20¢ range,” Kluis stated in a daily note to customers.

Kluis added, “What will it take to break out of this range? The easy answer: A trade deal with China. The less-predictable answers include the Fed decision on interest rates (which will be announced today) and how that could impact the U.S. dollar and the equity market.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets gain little strength.

At the close, March corn futures finished 1½¢ higher at $3.85½; May futures ended 1¾¢ higher at $3.93½.
 
January soybean futures closed 3¢ higher at $9.07¾; March soybean futures settled 2¾¢ higher at $9.20¾.

March wheat futures closed 2½¢ lower at $5.32¾.

January soy meal futures finished 1.30¢ per short ton higher at $310.40. January soy oil futures closed 0.24¢ higher at 28.41¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.58 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 82 points higher.

Jason Roose, U.S. Commodities, says investors are already eyeing the upcoming holidays.

“Grains are cautiously higher today with light holiday buying in corn and soybeans as weather turns dry in Brazil. Optimistic demand on all grains has also been giving the market short-term support,” Roose says.

Al Kluis, Kluis Advisors, says with the current low volume in the grain markets, any bullish or bearish news will have a large and fast impact on the CBOT futures prices.

“I am waiting for the Wednesday Federal Reserve Board meeting to see if short-term rates go up .25%. Most importantly, how many rate increases will they project for 2019? The language in their published minutes will have a huge impact on not only interest rates but also the U.S. dollar and the commodity markets,” Kluis stated in a daily note to customers.

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets closed mostly higher, trading in a narrow range.

At the close, March corn futures closed ¾¢ lower at $3.84; May futures finished ½¢ lower at $3.91¾.
 
January soybean futures finished 4½¢ higher at $9.04¾;  March soybean futures settled 4½¢ higher at $9.18.

March wheat futures closed 5¼¢ higher at $5.35½.

January soy meal futures settled 1.80¢ per short ton higher at $309.10. January soy oil futures closed 0.32¢ lower at 28.17¢ per pound.
 
In the outside markets, the NYMEX crude oil market is $1.97 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 427 points lower.

Al Kluis, Kluis Advisors, says the trade expects more new soybean sales to be announced each day to China. “On Friday, with no new announcements, the soybean market closed lower. In the overnight trade, after a lower start in the stock and commodity markets, prices are slightly higher,” Kluis stated in a daily note to customers.

He added, “Can March corn and March CBOT wheat hold their large continuation gaps on the charts? With the large gap higher on the corn continuation chart, nearby corn futures are at the highest price level since June 2018.”

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