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3 Big Things, March 16, 2018
The soybean futures market continues to be fed bullish news, helping that complex lead ag markets Friday.
Meanwhile, private crop estimates, world weather, and outside money flow continue to be eyed by investors.
1. Market Outlook
In overnight trading, the May corn futures are ¼¢ lower at $3.86; July futures are ¼¢ lower at $3.94. May soybean futures are 5¾¢ higher at $10.46; July soybean futures are 5¾¢ higher at $10.57. May wheat futures are 1¼¢ lower at $4.77. In the outside markets, the NYMEX crude oil market is 20¢ higher, the U.S. dollar is lower, and the Dow Jones Industrials are 77 points higher.
On Friday, the macroeconomic factors include a report on U.S. consumers with the University of Michigan’s outlook on consumer sentiment for March. Wednesday’s retail sales report indicated that February’s sales declined for a third straight month, but consumer confidence remains high.
Also, February data on housing starts, building permits, industrial production, and capacity utilization have been released. The January reading on job openings is also set for release in the morning. Some notable companies will release earnings reports.
2. Money Flow
This afternoon’s Commitments of Traders Report will be watched by investors. Last week, the funds were very aggressive in the corn futures. The question for today is whether the outside investors continue to get long the corn market. Keep in mind, the USDA March Prospective Plantings Report will be released in less than two weeks. Funds are expected to be positioning themselves ahead of that report.
3. Strong Demand
The grain markets continue to build in crop-loss premium into the soybean market. On Thursday, the Buenos Aires Grain Exchange estimated Argentina’s drought-stricken soybean crop down to 40 million metric tons, from the previous 46 mmt. There is rain in the forecast for today and this weekend in the hard-hit areas. Unfortunately, the damage has been done to Argentina’s soybean crop and investors now watch to see just how far the crop estimates will fall.
Also, better-than-expected weekly soybean exports Thursday indicate stronger demand for U.S. soybeans. Cory Bratland, Kluis Commodities broker, says this is a surprising market factor. “If we see weekly sales continue on the recent pace, the USDA will have to increase its annual export projections.
For corn sales, Latin American buyers are snatching up U.S. corn at a pace not seen since the mid-1990s, due to short supplies in Argentina and Brazil, accord to a Reuters report Friday. U.S. corn sales totaled more than 2.5 million tonnes in Thursday’s USDA Weekly Export Sales Report. That amount marked the highest weekly sales for a single marketing year in 23 years, according to the USDA. For nine weeks, sales have averaged an unprecedented 1.8 million tonnes a week.