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3 Big Things Today, January 4

Soybeans Modestly Higher Overnight; Above-Trend Corn Yields Keeping Lid on Prices.

1. Soybeans Slightly Higher Overnight, Corn Little Changed

Soybeans were again modestly higher overnight amid ongoing concerns about dry weather in Brazil and on speculation that China is buying despite the dearth of available information.

Commodity Weather Group said in a forecast yesterday that dry weather will hit more than a third of Brazil’s crop areas starting in the middle of this month. Temperatures are already in the upper 90s in some parts of the South American country, the forecaster said.

High temperatures will become more prevalent in northern and central states, which will sap soil moisture starting next week, CWG said.

On the trade front, Bloomberg reported that China is back in the market for U.S. soybeans after taking a break over the holidays, citing sources familiar with the situation. Chicago research firm AgResource said state-run buyers in China likely have purchased about 1.5 million metric tons in recent days.

Still, many traders are hesitant to get too long on soybeans due to the lack of information from the USDA due to the partial government shutdown, which is now entering its 14th day.

Soybeans for March delivery rose 2½¢ to $9.15¼ a bushel overnight on the Chicago Board of Trade. Soy meal was unchanged at $316.70 a short ton, and soy oil added 0.19¢ to 28.62¢ a pound.

Corn gained ½¢ to $3.80¼ a bushel overnight.

Wheat was up 2½¢ to $5.16¼ a bushel, while Kansas City futures gained 3¢ to $5.06½ a bushel overnight.  

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2. Corn Demand Immune From Trade Issues, Above-Trend Yields Keep Lid on Prices

Low corn prices aren’t a new phenomenon as they’ve been depressed for several years, and while trade concerns this year are again threatening crop futures, corn has largely been unaffected due to strong demand for U.S. supplies.

Exports of the grain from the U.S. from September 1 through December 13 – the latest available data due to the partial government shutdown – jumped 76% year over year. Export sales, meanwhile, rose 17% from the same period a year earlier.

Instead, it’s above-trend yields that are keeping supply strong and, thus, depressing prices.

In much of the Corn Belt, yields from 2013 to 2018 have been above trend. In Iowa, yields were 8 bushels an acre above the trendline; in Illinois, they’ve been a whopping 20 bushels higher than what would normally be expected, according to data from the University of Illinois released on Thursday.

Iowa and Illinois are the biggest producers of the grain in the U.S.

It’s not just those two states, however. Nebraska is 8 bushels above trend in the past six years, Missouri is 12 bushels higher than normal, Wisconsin was up 10 bushels, and Indiana topped trend by 12 bushels an acre, university data show.

In fact, every state east of the Missouri River, plus Nebraska, South Dakota, and North Dakota, were all above trend from 2013 to 2018.

Not surprisingly, prices have been correspondingly low.

In the 2012-2013 marketing year, after the epic drought that devastated the Midwest, prices averaged $6.89 a bushel, according to the USDA. That fell to $4.46 a bushel in 2013-2014 and has since been at $3.70, $3.61, $3.36, and $3.36 a bushel in each year since.

Prices for the 2018-2019 marketing year that started on September 1 have yet to be seen, of course, but the USDA pegs them in a wide range for now from $3.25 to $3.95 a bushel.

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3. Weather Likely to Be Relatively Quiet For Much of Midwest This Weekend

The weather maps look relatively quiet for much of the Midwest today with only some light snow expected in parts of South Dakota this weekend.

The National Weather Service is predicting some light “wintry precipitation” for parts of  east-central South Dakota and perhaps some counties in southwest Minnesota, “though at this time (it) is expected to be very light.”

Some minor ice-jam flooding is possible in parts of central Nebraska along the North Platte River near Lewellen on Monday, the NWS said in a report early this morning.

Farther east, parts of eastern Iowa may see rainfall on Sunday along with strong winds, the agency said. The storm front may be preceded by some patchy fog in the area.

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