Grains closed mixed on Thursday:
Corn – 3 ¼ cents/bu (Dec @ 4.22 ½ )
Soybeans + 1 ¾ cents/bu (Jan @ 11.77 ½ )
Chi Wheat – 6 cents/bu (Dec @ 5.91 ¾ )
Cdn $ -0.00090 (76.55 cents)
WTI Crude Oil -0.08/barrel (41.74)
Grains were much weaker in overnight trading, continued optimism over ongoing Chinese demand allowed soybeans and corn to rally off of those lows in the day session, while wheat values actually fell further as the trading day progressed. The basic premise of tightening USA carry out stocks, good domestic and export demand, and concerns over dryness in parts of South America continues to provide underlying support to grain markets.
Traders entered the day today with expectations of a decent USDA Weekly Export Sales Report, and hopes of big USDA Daily Flash Sale announcements, reflecting Tuesday’s rumors of Chinese buying of 12 cargoes of soybeans and 12 cargoes of corn. Those traders got a friendly Weekly Sales Report for corn and soybeans, but unfortunately, there were no Flash Sales confirmations today. The USDA Weekly Export Sales Report showed far better corn and bean sales than expected, with actual sales for both exceeding the highest trade expectations. 39 million bushels of soybeans sold last week were for China (1.061 million tonnes), while 6.9 million bushels of corn sold last week was for China (175,000 tonnes). Sales data is listed below, in thousands of tonnes:
Year to date Chinese corn purchases are now just short of 11 million tonnes from the USA. That total is double any year on record, and is now 84% of the yearly USDA forecast for corn exports to China. Despite good sales last week, the corn market ran into some profit taking selling, as the lack of any new daily sales confirmations was viewed as disappointing. Either the rumored large corn and bean buying on Tuesday did not happen, or it was staged in volumes of under 100,000 tonnes, which would allow the purchases to go undetected until next week’s Weekly Sales Report. Ultimately, the corn market rallied significantly on Tuesday and Wednesday over the rumored Chinese business, so a slight pullback today is understandable.
Soybeans were down as much as 14 cents/bu in the overnight session, but roared back today to close marginally higher. Like corn, the bean market was disappointed by the lack of new sales confirmations. However, today’s Weekly Export Sales Report showed China buying 76.5% of the beans sold for export last week, despite China not being reported significantly in last week’s Daily Flash Sales announcements. Ultimately, the USA soybean carryout remains tight, and expectations of further cuts to 2020 USA bean production and ongoing solid domestic and export bean demand could lead to that carryout shrinking significantly. In this environment, no on really wants to short the soybean complex.
Wheat was weak all day today. Without positive values from the corn market to support it, wheat was left hanging, and there was a total void of bullish wheat news today. Weekly Export Sales for wheat were poor, although, of the 192,400 tonnes of wheat sold, China was a buyer of 125,000 tonnes of white wheat. Russian wheat news was light, as their weather story has gone “dormant”. The USA Southern Plains could get some decent rains in coming days, which will help crop development ahead of winter dormancy.
South American weather forecasts were varied today. Brazil will get some decent rains through the weekend, before turning drier next week. Argentina is mostly dry until it’s 6 to 10 day forecast window, which is expected to provide some of the biggest rains that they have seen all season.
On the day today, funds were thought to have sold 12,000 corn contracts (now long 257,000), while buying 3,000 soybean contracts (now long 254,000), and selling 4,000 Chicago wheat contracts (no long 23,000).