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Ag Markets React Negatively to Global Uncertainty Friday

Investors’ main focus remains on January 10 report.

DES MOINES, Iowa -- On Friday, the CME Group’s farm markets close on their daily lows.

At the close, the March corn futures finished 5¢ lower at $3.86 1/4. May corn futures settled 5¢ lower at $3.93.
 
March soybean futures settled 14 3/4¢ lower at $9.41. May soybean futures settled 14 1/4¢ lower at $9.55 1/2.

March wheat futures closed 5 1/2¢ lower at $5.54 1/4.

March soymeal futures ended $4.40 per short ton lower at $301.20. March soy oil futures closed 0.16 cents lower at 35.08¢ per pound.

In the outside markets, the NYMEX crude oil market is $2.00 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 216 points lower.

Darin Fessler, Lakefront Futures and Options says that the USDA’s chief economist announcing changes to soybean acreage and yield to be made next month has underpinned soybean prices.

“The Iran news is some of it, but the soybean market also was running into resistance on March between $9.50-$9.60 and Nov $9.70-$9.80, and it has run a bit ahead of a major report. There is possible profit taking because of outside uncertainty,” Fessler says.

Disappointed export sales for pork, as China canceled a fair bit, is probably having spillover impact on beans, Fessler says.

Fessler added, “The corn market doesn’t have much of a story right now. It is more or less following what wheat does. Beans and wheat only grain markets currently with a story in our opinion,” Fessler says.

Jack Scoville, PRICE Futures Group, says that the sell-off in the soybean market is not as bad as anticipated.

“The action has not been too bad considering the news.  Some selling initially in response to the U.S. killing the Iranian general, but things have turned sideways since then and might rally back into the close.  Not much else going on in terms of what people are talking about, but the market does not seem to be too concerned, at least the grains don’t.  A correction was needed anyway and this is a bad way to get one, but we got one,” Scoville says.

Al Kluis, Kluis Advisors, says the markets are reacting to tensions between the U.S. and Iran.

“Crude oil is taking a significant jump higher along with metal prices. U.S. grain and stock prices are taking a hit. Expect grain prices to remain somewhat supported today. We still seem to have a favorable environment to own U.S. grains,” Kluis stated in a daily note to customers.

Kluis added, “Corn and soybean prices will stay pretty well supported until we get the release of the crop production report next Friday (January 10).”

Separately, the USDA’s Weekly Export Sales Report Friday shows weak demand figures.

  • Corn: 540,000 metric tons (mt) vs. the trade’s expectations of between 300,000 and 775,000 mt
  • Soybeans: 332,000 mt vs. the trade’s expectations of 350,000 and 1,000,000 mmt
  • Wheat: 333,300 mt vs. the trade’s expectations of between 250,000 and 600,000 mt
  • Soybean meal: 96,200 mt vs. the trade’s expectations of 75,000 and 250,000 mt

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Thursday’s Grain Market Review

On very light trading, the CME Group’s farm markets move slightly higher Thursday.

At the close, March corn futures finished 3¾¢ higher at $3.91¾; May corn futures settled 3¼¢ higher at $3.98.
 
March soybean futures closed ¾¢ higher at $9.56½; May soybean futures finished ¾¢ higher at $9.69½.

March wheat futures closed 1½¢ higher at $5.60¼.

March soy meal futures finished 90¢ per short ton higher at $305.60. March soy oil futures settled 0.47¢ higher at 35.24¢ per pound.

In the outside markets, the NYMEX crude oil market is 10¢ per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 230 points higher.

Because of the New Year’s Holiday, the USDA’s Weekly Export Sales Report will be released Friday.

Jim Bower, Bower Trading Inc., says investors have an eye on the U.S.-China trade agreement.

“The markets are waiting to see the details of the agreement, which will not be released to the public until the agreement is signed. The U.S. has claimed that China agreed to buy $40 billion of U.S. ag products annually in 2020 and 2021, and President Trump has claimed that the purchase obligation is even higher at $50 billion,” Bower stated in a daily note to customers.  

“China has yet to confirm any exact figures on agriculture purchases. Also, there has been no public information about whether China has committed to buy certain amounts of specific commodities,” Bower stated Thursday.

Bower says that the other market factor is the upcoming January 10 USDA crop report.

“It will be highly unlikely that USDA’s January 10 crop report will factor in the new stepped-up Chinese demand from the Phase One; we will most likely have to wait until the February crop report to see any Chinese demand adjustments on the balance sheet if we do get Phase One signed sometime in January,” Bower noted Thursday.

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Tuesday’s Grain Market Review

Soybeans finished 2019 on a strong note, closing higher after President Donald Trump said in a tweet that he will sign the agreement on January 15 at the White House. 

"High level representatives of China will be present," he said on Twitter. "At a later date I will be going to Beijing where talks will begin on Phase Two!"

The South China Morning Post yesterday said Vice Premier Liu He will lead a delegation to Washington this weekend to sign the Phase One trade deal between the countries. 

Completion of the deal will mean at least a partial end to the 18-month trade war between the U.S. and China, the world’s two largest economies, and will improve demand for U.S. agricultural products. 

Soybean futures for March delivery rose 3½¢ to $9.56 a bushel on the Chicago Board of Trade. January soybeans were 4¢ higher at $9.43½ a bushel. The most-active contract rose about 7% in 2019 despite spending the entire year in the shadow of the U.S.-China trade war. 

March soy meal futures jumped $2.70 to $305 a short ton. March soy oil futures lost 0.63¢ to 34.82¢ per pound.

March corn futures lost 1¢ to $3.87¼ a bushel; May corn was down ½¢ at $3.94¾ a bushel. Corn futures finished the year up about 2%. 

March wheat futures added 3½¢ to $5.59½ a bushel. Wheat was the biggest gainer of the three commodities, rising about 11% in 2019. 

In the outside markets, the NYMEX crude oil market closed down 62¢ per barrel, the U.S. dollar was 0.3% lower, and the Dow Jones Industrial Average was down 0.1%.

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Monday’s Market Report

Soybean futures surged Monday after a report saying Chinese Vice Premier Liu He will lead a delegation to the U.S. to sign the Phase One trade deal this week.

The South China Morning Post, citing a source briefed on the matter, reported that Liu will fly to Washington this Saturday to sign the agreement. The source said the U.S. extended an invitation that Liu accepted. 

Neither Beijing nor Washington has confirmed the trip.

China already has started purchasing larger amounts of U.S. agricultural products including soybeans. Making the deal (which was agreed to earlier this month) official could mean increased purchases by the Asian nation and at least a partial end to the 18-month trade war between the world’s largest economies. 

Soybean futures for March delivery jumped 11¢ to $9.42½ a bushel on the Chicago Board of Trade. January soybeans were 9¾¢ higher at $9.39¼ a bushel.

March soymeal futures surged $1.80 to $302.20 a short ton. March soy oil futures added 0.39¢ to 35.43¢ per pound.

March wheat futures turned lower throughout the day, falling ¾¢ to $5.55½ a bushel.

March corn futures lost 1½¢ to $3.88½ a bushel. May corn was down 1¾¢ at $3.96¾ a bushel.

In the outside markets, the NYMEX crude oil market closed down $0.04 per barrel, the U.S. dollar was 0.2% lower, and the Dow Jones Industrial Average was down 0.6%.

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