Grain futures closed mixed on Monday:
Corn + 3 ¾ cents/bu (Mar @ 3.99 ½ )
Soybeans – 3 ¾ cents/bu (Mar @ 9.42 ¼ )
Chi Wheat – 2 ½ cents/bu (Mar @ 5.62 ¼ )
Cdn $ -0.00010 (76.565 cents)
WTI Crude Oil -1.00/barrel (58.04)
Grain markets tried to add onto Friday’s market gains early on in the overnight session, but saw soybeans and wheat values both weaken as we moved into morning. Friday’s USDA January Crop Report did not provide much in the way of bullish input. Unexpected yield increases for the 2019 USA soybean and corn crop left us with bigger average 2019/20 USA grain carryouts than analysts had been expecting. Despite that fact however, we rallied off of our post report lows in the last hour of trading on Friday, and managed to end the day higher. Today, in the absence of any fresh demand news, the bean and wheat markets decided to sell of somewhat.
Of course, market bulls point towards Wednesday’s signing of the Phase One trade agreement between the Chinese and Americans as the beginning of massive new demand for USA grains. There are plenty of naysayers that suggest that China will be hard pressed to import what is being suggested, but the proof will be in the pudding. Apparently, an English translation of the agreement will be made available on Wednesday, but China is rumored to have asked the USA not to release specific commodity purchase volumes. Some suggest that this is because China does not want to admit domestically to what it has committed to, others suggest that China does not want to anger it’s farm population, but whatever the case, we won’t know the “official” impact of the deal for some time yet. What we do know is the uncertainty over what the deal might contain is making traders nervous – funds have a big short in corn futures, so a rise in prices in that environment is not totally unfathomable, and funds had small longs in soybeans and wheat, so a small drop in prices is not a big surprise either.
While the USDA did not confirm any “flash” daily business in corn export sales today, we did see export basis bids rise by roughly 4 cents/bu today. That could be a sign of export inquiries or of actual business. Either way, the farmer continues to be a tight holder of his corn at current values, so the futures market rallied in an attempt to pry some corn out of storage. Brazilian corn exports have dropped dramatically lately, and while some point to this as a sign of reduced global demand, perhaps the Brazilian farmer is becoming a tighter holder of his remaining corn as well.
Soybeans remain the perceived biggest benefactor of a China/USA trade deal. However, no new Chinese business was announced or even rumored today. It is interesting to note that there has been little in the way of confirmation of Chinese buying of South American beans in the last few trading sessions either. Most analysts believe that the USA will garner most of the Chinese demand for soybeans for the next month, but then will see that demand shift south in Feb/March due to lower South American prices. Again, it is difficult to know how the trade agreement might disrupt those anticipated trade flows. Soybean export loadings last week in the weekly USDA export inspections report were within trade expectations, similar in size to the same week last year. Midday weather maps called for some decent southern Brazil and Argentinian rains for the 6 to 10 day windows, moisture looks to be sufficient at the moment for crop development, but is far from being considered excessive.
Wheat markets were quiet today. Trade is struggling with the USDA winter wheat acreage projection in Friday’s Crop Report. The acreage of wheat is still less than was planted last year, but was still 630,000 acres more than the average trade guess. Egypt is back in the market today bidding for wheat, but the fear is that USA wheat prices remain inflated when compared to Russian and French competition. While the USA is not expected to participate in this latest inquiry, the bigger question will be, can Egyptian purchase prices continue to ratchet higher, like they did in the last tender?
In it’s morning Weekly Export Inspection Report, the USDA showed shipments that were within the ranges of trade expectations, but continued to show that the USA is far behind the pace needed to meet the current USDA projected export sales totals. Of the 41.8 million bushels of soybeans shipped last week, 15.2 million bushels were destined for China. Today’s cumulative year to date shipments show corn shipping to be 148 million bushels (8%) behind the pace needed to hit the annual target, while soybean shipping is 131 million bushels (7%) behind the pace needed. Soft Red Winter Wheat shipping is actually 6 million bushels (6%) ahead of the pace required to hit the USDA’s projections. Actual data is listed below, in millions of bushels:
Actual Expectations Last Week 10 Week Average
Corn 18.1 17.7 to 25.6 21.7 20.2
Soybean 41.8 18.4 to 40.4 38.2 50.5
Wheat 17.4 11.0 to 18.4 15.5 15.7
On the day today, funds were thought to have been buyers of 9,000 corn contracts (now short 77,000), sellers of 3,000 soybean contracts (now short 1,000), and sellers of 3,000 Chicago wheat contracts (now long 33,000).
Our Wanstead Farmers Curling Funspiel will be held this Thursday, January 16th at the Forest Curling Club. Curling starts at 9:30 am, and will end at roughly 2:30 pm. There is still room for a few hearty souls, but we need to hear from you right away, as teams will be finalized tomorrow afternoon!! In addition to a few curling games, there will be prizes for closest draw to the button, a pulled pork lunch, and the great grain and agronomy discussion that you have come to expect! The best part – admission is free.