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Afternoon Market Recap for Aug. 22, 2019

Exports inject a little hope

Corn and wheat move higher, while soybeans slip Thursday

A healthy round of export data was enough to push some grain prices higher Thursday, although soybeans didn’t jump on the bandwagon after improving weather prospects could help yield potential while U.S.-China trade relations remain relatively frigid. Winter wheat futures saw the biggest upside, with some contracts rising as much as 2% today.

Relatively cool weather has returned to the central U.S. and should remain that way for some time, with daytime highs expected to come in below-normal across the central U.S. through at least the end of next week. The middle third of the country will continue to see moderate rainfall through August 27, gathering up another 1” to 2” of accumulation during that time, per the latest five-day cumulative precipitation map from NOAA.

The latest round of moisture may quell the latest drought trends. The latest updates to the U.S. Drought Monitor, out this morning, showed drought’s foothold across the country gained ground for a fifth consecutive week, reaching 26.4% for the week ending August 20. Current problem areas in the Midwest include significant portions of Iowa, Illinois and Indiana. Large parts of the Southeast, Southwest and Pacific Northwest are also currently affected.

On Wall St., the yield curve saw an inversion for the third time in the past two weeks, which triggered fresh fears over a possible recession. A poor round of manufacturing data, which contracted for the first time in almost a decade, created additional headwinds today. Even so, investors seemed content to hold for updates from the latest Federal Reserve meeting, which kicked off today. The Dow still moved 94 points higher in afternoon trading to 26,296, although the Nasdaq was down around 0.2%.

Energy futures continued to feel downward pressure from ongoing demand concerns, as crude oil dropped another 0.5% to just above $55 per barrel. Gasoline and diesel were also down moderately this afternoon. The U.S. Dollar softened slightly

Corn prices tilted slightly higher Thursday amid some technical maneuvering, helped a bit by some positive export data from USDA this morning. September and December futures each crept 0.75 cents higher to reach $3.63225 and $3.71, respectively.

Corn basis bids were largely flat Thursday but did move 2 to 5 cents higher at two Midwestern ethanol plants today.

Corn exports bested the prior week’s tally of 14.3 million bushels and trade estimates of 10.7 million bushels last week after total sales reached 16.6 million bushels for the week ending August 15. Corn export shipments were for 21.3 million bushels. Mexico remains the leading destination for U.S. corn export commitments as the 2018/19 marketing year nears its close, with 31% of the total.

President Donald Trump again met with cabinet members Thursday to discuss how to increase biofuel demand after the administration received sharp criticism from the agriculture industry for awarding 31 hardship waivers to refineries earlier in August. Likely proposals include reversing some of those waivers and increasing the use of E15 fuel blends.

Ahead of a Statistics Canada crop production report next Wednesday, a group of analysts expects the agency to report Canada’s 2019 corn production at 551.2 million bushels, which would trend slightly 2018’s total, if realized.

China sold 17.4 million bushels of its state reserves of corn at auction today, which was 11.1% of the total available for sale.

Preliminary volume estimates were for 283,200 contracts, dropping 27% below Wednesday’s final count of 386,990.

Soybean prices saw moderate cuts Thursday on some technical selling as the U.S.-China trade war drags on, and with possible yield-boosting weather ahead in the mid-range forecasts. Solid export data from USDA this morning kept losses in check, however. September futures dropped 4.5 cents to $8.56, with November futures down 4.25 cents to $8.6875.

Soybean basis bids were steady to mixed Thursday after gaining 4 cents at two interior river terminals but dropping 5 cents lower at an Iowa processor today.

Soybean exports found 1.0 million bushels in old crop sales plus another 29.1 million bushels in new crop sales last week, for a total of 30.1 million bushels. That was moderately ahead of the prior week’s tally of 26.0 million bushels and nearly double the average trade guess of 16.5 million bushels.

Soybean export shipments fared even better last week, at 43.1 million bushels. As the 2018/19 marketing year winds down, China remains the No. 1 destination for U.S. soybean export commitments, with 29% of the total.

Preliminary volume estimates were for 156,827 contracts, climbing 46% above Wednesday’s final count of 107,632.

Wheat prices were mixed but mostly higher Thursday on some technical maneuvering. Winter wheat futures were helped by a healthy round of export data from USDA, which prompted some technical buying. September Chicago SRW futures gained 4.75 cents to $4.6725, September Kansas City HRW futures climbed 8 cents to $3.9325, and September MGEX spring wheat futures dropped 3.75 cents to $4.9850 – closing below the $5 mark for the first time.

Wheat exports last week saw about 21.9 million bushels in old crop sales and another 200,000 bushels in new crop sales for a total of 22.0 million bushels. That beat out trade estimates of 14.1 million bushels and landed higher than the prior week’s tally of 14.1 million bushels.

Wheat export shipments were for 24.3 million bushels last week. About 10 weeks into the 2019/20 marketing year, Mexico leads all destinations for U.S. wheat export commitments, accounting for 14% of the total.

Analysts offered a Canadian all-wheat production estimate of 1.189 billion bushels ahead of an official update from Statistics Canada, out next Wednesday. That tally would slightly exceed the country’s 2018 production total, if realized.

Japan purchased 4.0 million bushels of food-quality wheat from the U.S. and Canada in a regular tender that closed earlier today. About 53% of the total was sourced from the U.S. The grain is for shipment in October

Preliminary volume estimates were for 86,726 CBOT contracts, dipping 11% below Wednesday’s final count of 97,961.


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