Grains closed mixed on Thursday:
Corn + 2 ½ cents/bu (Dec @ 4.16 ¼ )
Soybeans + 1 ¾ cents/bu (Nov @ 10.73 ¾ )
Chi Wheat – 7 cents/bu (Dec @ 6.22 ¾ )
Cdn $-0.00065 (76.100 cents)
WTI Crude Oil +0.61/barrel (40.64)
A very volatile day in grain futures trading today. The markets traded both sides of unchanged overnight, and initially started the day slightly lower, but that weakness was erased in corn and soybean futures trade after the release of the USDA Weekly Export Sales Report and after USDA announcements of some Flash Sales. Nearby corn and soybean futures both rallied to new highs for the recent move, before giving up most of those gains in the last 2 ½ hours of trading. Wheat was weaker all day on good prospects for rains in USA winter wheat growing regions.
The aforementioned USDA Weekly Export Sales Report showed very good sales totals for corn and for soybeans, with wheat falling into the midrange of analyst estimates. A sales report summary is listed below, but it is noteworthy that China represented 1.222 million tonnes of the total soybean sales (55%), and China was credited with buying 433,000 tonnes of corn (24%). China also was reported to have bought small amounts of USA soyoil (11,000 tonnes or 30% of weekly sales), and soymeal (20,000 tonnes or 5%). Chinese buying of oil and meal are VERY positive signs for the soy complex, as China traditionally prefers to buy raw beans and process them domestically. Sales data is listed in thousands of tonnes:
As part of their Daily Sales Reporting system, the USDA also announced Flash Sales for the following commodities/destinations today:
- 152,404 tonnes of soybeans to Mexico
- 132,000 tonnes of soybeans to Unknown
- 130,000 tonnes of white wheat to South Korea
Market bulls will be disappointed by the soft close of the market today, but fundamentally, things have not changed that much since yesterday, other than rains for the USA Southern Plains. 50% of the hard red winter wheat belt is expected to get over an inch of rain in the next few days, with the soft winter wheat belt also expected to receive similar amounts with 100% coverage. However, Russia remains dry, and to that end, Russian export wheat offers rose by $5/tonne today.
Argentina looks to get good rains over the next week, but Brazilian accumulations are still leaving a large dry area in the south. Afternoon weather maps are actually drier for Brazil in the 6 to 10 and 11 to 15 day windows. There should be good planting progress in areas that have received rains, but more rain in Brazil is definitely needed.
On the day today, funds were believed to have been buyers of 7,000 corn contracts (now long 238,000), buyers of 2,000 soybean contracts (now long 254,000), while selling 4,000 Chicago wheat contracts (still long 68,000).
We expected to see more two sided trade overnight. Market direction tomorrow will be a function of the fund appetite to continue buying going into the weekend. Fundamentally, there is no reason for the market to fall apart yet, as demand for USA grains remains strong. Farmer selling will be muted somewhat by the wet weather. Traders will be looking to South American/Brazilian/USA weather maps to give some direction.