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Ag Markets Fade Friday

USDA will release its June Supply/Demand numbers, next week.

DES MOINES, Iowa -- On Friday, the CME Group's farm markets retreat.

At the close, the July corn futures finished 4 3/4¢ lower at $4.15 3/4. Dec. corn futures finished 4 3/4¢ lower at $4.33 3/4.
 
July soybean futures settled 12 1/2¢ lower at $8.56 1/2. November soybean futures ended 12 3/4¢ lower at $8.83.

July wheat futures closed 5 1/2¢ lower at $5.04 1/2.

July soymeal futures closed $3.60 per short ton lower at $312.30. July soy oil futures settled $0.38 cent lower at 27.38¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.56 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 311 points higher.

On Friday, private exporters reported to the U.S. Department of Agriculture export sales of 110,000 metric tons of soybeans for delivery to Egypt. Of the total, 55,000 metric tons is for delivery during the 2018/2019 marketing year and 55,000 metric tons is for delivery during the 2019/2020 marketing year.

The marketing year for soybeans began Sept. 1.

Peter J. Meyer, S&P Global Platt’s Head of Grain and Oilseed Analytics, says that soybeans have certainly benefitted from the corn story the past few weeks, but there remains very little of a demand story.  

“I suspect that some weak longs are exiting both markets, while concern is growing that old crop demand in corn and beans could be measurably cut in the June WASDE next week,” Meyer says.  

Specifically to beans, even though corn planting is done for many, bean planting is still ongoing with the real possibility that bean acreage will be higher than the Prospective Plantings report once all is said and done, Meyer says.  

“Both markets feel a bit tired without any fresh, bullish data points. So, it feels like liquidation, today, before the WASDE on Tuesday.  Quite frankly, no matter how much analysis you read, no one knows with any certainty how these crops will end up, but we all know that demand is somewhat suspect as evident in the ongoing 2018/’19 Marketing Year when supplies were/are plentiful and demand still lagged,” Meyer says.

Al Kluis, Kluis Advisors, says that investors are coming to the reality that there will be less U.S. corn acres this year.

“This week, corn was under pressure after weekly export sales showed a net loss due to some cancelations. The tariff talks between the U.S. and Mexico also seem to be escalating. We shook off weakness and turned our focus to the reality that the U.S. corn crop just will not be there,” Kluis told customers in a daily note.

Kluis added, “Next week, the USDA will lower the planted acres on both corn and soybeans, and the national corn yield. However, I don’t think they will lower them as much as the traders will be expecting. They will monitor the crop size each month and make appropriate adjustments.”

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Thursday's Grain Market Review

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

At the close, the July corn futures finished 5¾¢ higher at $4.20½. Dec. corn futures ended 5¢ higher at $4.38½.
 
July soybean futures settled 1¢ lower at $8.68¾. November soybean futures ended 2¢ lower at $8.95½.

July wheat futures closed 19¼¢ higher at $5.10.

July soymeal futures closed $1.80 per short ton lower at $315.90. July soy oil futures settled 0.54¢ higher at 27.76¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.41 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 86 points higher.

Jason Roose, U.S. Commodities, agrees that investors are digesting weather news.

“After a two day downward correction, corn and beans are finding support. The uncertainties are bringing volatility such as better planting weather, poor exports, and trade talks monitored on a daily basis. But the weather will still be the dominant issue the next few weeks with acre and yield adjustments for corn and soybeans,” Roose says.

Al Kluis, Kluis Advisors, says that the pressure on U.S. grain prices continues.

“The wheat market has been the main culprit of the sell-off in the corn market. Weather has definitely turned to the drier and warmer side, and that is allowing corn to get planted. However, the late-planted corn will keep the grain markets volatile throughout the growing season,” Kluis told customers in a daily note.

On Thursday, the USDA’s Weekly Export Sales Report favorable soybean, wheat figures.

  • Corn = 32,300 metric tons vs. the trade’s expectations of between 550,000 and 1.30 mmt.
  • Soybeans = 583,700 mt. vs. the trade’s expectations of between 250,000 mt. and 500,000 mt.
  • Wheat = 527,900 mt. the trade’s expectations of between 100,000 and 450,000 mt.
  • Soybean meal = 112,900 mt. the trade’s expectations of between 100,000 and 350,000 mt.

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm markets trade weaker, as the session went along.

At the close, the July corn futures finished 10½¢ lower at $4.14¾. Dec. corn futures closed 10½¢ lower at $4.33½
 
July soybean futures closed 12¢ lower at $8.69½. November soybean futures finished 12¢ lower at $8.97¼.

July wheat futures closed 16½¢ lower at $4.90¾.

July soymeal futures settled $3.30 per short ton lower at $317.70. July soy oil futures ended 0.27¢ lower at 27.22¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.88 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 183 points higher.

Matt Tranel, Risk Management Advisor for Commodity Risk Management Group, says that the markets are experiencing broad-based selling.

“It appears that traders aren’t buying into the USDA’s Crop Progress report number that was released on Monday.  The range of guesses for planting was 68% to 72% with an average guess of 71%. The report came out at 67%.  The Monday overnight session into Tuesday morning was higher, even gaping higher Monday night. Ever since then the market has been coming straight down. A lot of traders believe that progress was closer to 72% to 74% in actuality as many farmers were planting Saturday and Sunday, which might not have been reflected appropriately,” Tranel says.  

The other news is that Mexico is in Washington, D.C., today discussing the tariffs that would go into effect beginning June 10 if Mexico doesn’t do more to curb illegal immigration into the United States, he says. 

“Should those tariffs go into play, the trade is worried about retaliation. Mexico is the No. 1 export market for corn, wheat, dairy, and No. 2 export market for soybeans. Risk premium is being taken out of the market as a result,” Tranel says.

Al Kluis, Kluis Advisors, says that investors are watching the impact the wheat market is having on corn.

“Will lower wheat prices continue to pull corn and soybean prices down at the same time? The improved winter wheat crop ratings on Monday afternoon were a surprise for traders and many analysts,” Kluis told customers in a daily note.

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets closed mostly higher, with wheat leading by double digits.

At the close, the July corn futures finished 2¾¢ lower at $4.24¼. Dec. corn futures closed 2¢ lower at $4.41¾.
 
July soybean futures ended 1¼¢ higher at $8.79. November soybean futures ended 1½¢ higher at $9.06½.

July wheat futures closed 16¾¢ higher at $5.19¾.

July soymeal futures settled $0.80 per short ton lower at $320.50. July soy oil futures ended 0.25¢ cent lower at 27.34¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.70 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 4 points higher.

USDA Crop Progress Report showed corn plantings behind even more than the trade had thought.

This morning, Al Kluis, Kluis Advisors, noted that investors are eager to see this afternoon’s USDA Crop Progress Report at 3 p.m. CDT.

“The USDA Crop Progress Report today will show nationwide corn planting at about 70% complete. This would suggest 27 million acres of corn will be planted the first time in the month of June, and possibly 1 to 2 million acres of corn will need to be replanted in June,” Kluis told customers in a daily note.

Kluis added, “I am watching the wheat-corn spread. With nearby KC wheat futures trading at $4.78 per bushel, it is difficult for me to believe the $5 corn projections. Yes, corn has traded above wheat. However, it does not stay above the price of wheat for very long.”

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