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Afternoon Market Recap for Aug. 23, 2019

Trade woes clip soybean prices

Corn prices also drop moderately, with most wheat prices firming Friday

Grain prices were mixed but mostly lower Friday, with negative U.S.-China trade headlines dragging down corn and soybean futures in the session. But winter wheat contracts climbed nearly 1.75% today on some more technical buying, as spring wheat futures continued to drop on harvest pressure.

Cooler, wetter weather will be common across large portions of the Corn Belt over the next several days, as daytime highs will land cooler-than-normal across most of the central U.S. at least through the end of next week. The latest seven-day precipitation map from NOAA shows widespread accumulations of 1” to 2” or more rainfall across the bulk of the Midwest and Plains through August 30.

On Wall St., President Donald Trump ordered American companies to seek out “alternatives to China,” which jostled stock prices substantially lower. The Dow slumped 564 points in afternoon trading to 25,687. Energy futures also fell Friday amid U.S.-China trade woes, with crude oil dropping more than 2% to fall back below $55 per barrel. Gasoline and diesel were down around 1.25%. The U.S. Dollar softened moderately.

Corn prices fell about 1% Friday on a round of technical selling, prompted by worries over recent escalations in the ongoing U.S.-China trade war. September futures fell 3.5 cents to $3.5975, with December futures down 3.25 cents to $3.6775.

Corn basis bids were steady to firm Friday, adding 6 cents at a Nebraska processor and 9 cents at an Illinois river terminal, and picking up a penny at two Midwestern ethanol plants today.

While the National Corn Growers Association is applauding the Trump Administration’s decision to issue another round of Market Facilitation Program (MFP) payments this year, the group also notes that the payment rate for corn is 14 cents per bushel while calculating the fallout of the ongoing trade war at around 40 cents per bushel. NCGA is requesting a variety of actions that will provide shorter- and longer-term farmer benefits, which are outlined here.

Meantime, the Trump Administration is unlikely to rescind any of the 31 biofuel wavers it issued to oil refineries earlier this month but is looking into other ways to dampen the blow to ethanol demand that move could create, according to sources close with the matter. September ethanol futures fell around 2% this afternoon.

Mexico purchased 12.9 million bushels of U.S. corn Wednesday, marking just the third large grain sale private exporters reported to USDA so far this month.

In France, consultancy FranceAgriMer now estimates 62% of the country’s corn crop is in good-to-excellent condition, up from 60% a week ago but down substantially from late June, with hot and dry conditions prevalent over the past several weeks.

China continues to draw down its state reserves of corn, selling another 18.97 million bushels at auction earlier today, which was 26.8% of the total available for sale.

Taiwan purchased 2.6 million bushels of corn from Brazil in an international tender that closed yesterday. The grain is for shipment in November.

South Korean millers purchased 1.1 million bushels of U.S. wheat this week, which included soft white wheat, hard red winter wheat and spring wheat. The grain is for shipment between late November and late December.

Preliminary volume estimates were for 414,681 contracts, trending 31% above Thursday’s final count of 315,453.

Soybean prices saw double-digit declines Friday as the U.S. and China each ramped up rhetoric in the two countries’ ongoing trade war. September futures tumbled 12.75 cents to $8.4325, with November futures slumping another 12.25 cents to $8.5650.

Soybean basis bids moved 5 to 10 cents higher at two Midwestern processors Friday but were largely steady elsewhere across the central U.S. today.

More shots were fired in the ongoing trade war between the U.S. and China earlier this week, as China announced a new round of tariffs ranging between 5% and 10% on a total of $75 billion in U.S. goods will take effect between September 1 and December 15. The American auto industry is the primary target of these new tariffs.

President Donald Trump took to Twitter (as he often does), biting back with a statement that included, “We don’t need China and, frankly, would be far better off without them,” which doesn’t inspire confidence that the ongoing trade war will be settled any time soon.

But U.S. agricultural goods will also soon face the pinch of these latest Chinese tariffs. U.S. soybeans will see an additional 5% tariff starting September 1. Tariffs totaling 10% will also be levied against U.S. corn and wheat starting December 15.

Preliminary volume estimates were for 235,363 contracts, rebounding 51% above Thursday’s final count of 155,374.

Wheat prices were uneven but higher Friday on some technical buying. Chicago SRW contracts saw the biggest upside, picking up nearly 1.75% in today’s session, while Kansas City HRW and MGEX spring wheat contracts found much more meager gains. September Chicago SRW futures gained 8 cents to $4.7525, September Kansas City HRW futures crept up 0.25 cents to $3.9150, and September MGEX spring wheat futures also inched ahead 0.25 cents to $4.9875.

Germany’s DBV farmers association expects the country’s 2019 winter wheat production to rebound 18.5% over 2018’s drought-stressed crop to reach 848.8 million bushels. Some areas are still producing in overly dry conditions, however.

The Philippines purchased 2.2 million bushels of feed wheat, likely sourced from the Black Sea region, in a deal earlier this week. The grain is for shipment in November.

Preliminary volume estimates were for 91,432 CBOT contracts, moving slightly ahead of Thursday’s final count of 86,726.

grainstable

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