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Afternoon Market Recap for Dec. 10, 2019

All quiet on the WASDE front.

USDA’s latest supply and demand data fails to move the needle much on grain prices

Some World Agricultural Supply and Demand Estimates (WASDE) reports from USDA have shocked the grain market. The agency’s December report was not one of them after leaving corn and soybean production data unchanged from its November estimates. As such, grain futures didn’t see much action Tuesday, with most commodities tacking on small gains in today’s session.

Sharply colder weather has settled into the central U.S., but a warming trend will leave daytime highs above normal in some areas by this weekend. That will be short-lived, however, as below-normal temperatures are expected to return to the region by early next week. The southern U.S. should see moderate rain and even some snow over the next three days, but in the central U.S., only the upper Midwest is expecting some light moisture through December 13, per the latest 72-hour cumulative precipitation map from NOAA.

It was a quiet day for the most part on Wall St. as investors awaited more details regarding U.S.-China trade negotiations and the USMCA, which is closer than ever to being ratified. The Dow inched 10 points higher in afternoon trading to 27,920. Energy futures moved moderately higher, with crude oil remaining just above $59 per barrel. The U.S. Dollar softened slightly.

Corn prices were narrowly mixed following USDA’s latest supply and demand data, which mirrored the agency’s November estimates. December futures tipped lower as the session wore on, closing down 2.5 cents to $3.6325. But March futures held on for modest gains, picking up 1.25 cents to $3.77.

Corn basis bids were mostly steady to firm across the central U.S. Tuesday, moving as much as 14 cents higher at a Nebraska processor today. Farmers may be holding on for higher prices after the next two rounds of supply and demand data from USDA.

Basis for corn, soybeans and wheat is significantly tighter across the country from strong end-user bids, limited pipeline supplies, and lack of farmer selling amid an uncertain fall harvest, according to a new report from CoBank’s Knowledge Exchange division. Click here to learn more.

USDA’s latest projection for this year’s U.S. corn production is now at 13.661 billion bushels, based on average yields of 167.0 bushels per acre across 81.8 million harvested acres. Those figures were unchanged from November, with many analysts expecting potentially substantial revisions next month instead.

Domestic carryout was also unaltered, at 1.910 billion bushels. Analysts expected that number to move slightly higher, with an average trade guess of 1.919 billion bushels. With that, USDA’s projection for season-average farm prices is also unchanged, at $3.85 per bushel.

The Trump Administration signed off on proposed changes to the USCMA trade agreement. “We’re within inches, maybe millimeters of a deal,” Commerce Secretary Wilber Ross told reporters at Fox Business News this morning. Click here to find out the latest updates on this critical trade agreement, which Ross hopes will be voted on by Congress later this week or soon after.

Brazil’s Conab estimates the country’s 2019/20 total corn production will reach 3.874 billion bushels, which is fractionally higher than its November estimates but 1.6% lower year-over-year, if realized. Conab held its corn export estimates steady from last month, at 1.339 billion bushels.

France’s farm ministry is holding steady its 2019 corn production estimates from an earlier projection of 496 million bushels.

Preliminary volume estimates were for 137,649 contracts, up slightly from Monday’s final count of 125,763.

Soybean prices found moderate gains again Tuesday after USDA’s supply and demand data failed to throw any bad surprises at traders, who are still generally optimistic a partial U.S.-China trade deal is nearing completion. January futures closed back above $9 per bushel for the first time in nearly three weeks, picking up 4 cents to $9.0125. March futures added 3.75 cents to $9.1550.

Soybean basis bids were mixed but mostly higher across the central U.S. Tuesday, moving 7 cents higher at an Ohio elevator and 6 cents higher at an Illinois river terminal today.

As with corn, USDA left its soybean production data alone in its monthly WASDE report this morning, calling for a 2019 harvest of 3.550 billion bushels, based on average yields of 46.9 bpa across 75.9 million harvested acres. Ending domestic stocks were also unaffected, at 475 million bushels.

The agency did offer a downward revision to the average farm price for 2019/20, moving that number 15 cents lower to $8.85 per bushel.

Brazil’s Conab now estimates the country’s 2019/20 soybean production at 4.449 billion bushels, which is fractionally higher than its November estimates and 5.3% higher year-over-year, if realized. Conab’s latest soybean export estimates are steady from a month ago, at 2.646 billion bushels.

Investors are expecting the U.S. to delay or suspend 15% tariffs on $160 billion in Chinese imports ahead of the December 15 deadline when they are currently set to go into effect. That move would be seen as a major goodwill gesture as the two countries continue to build toward a partial trade agreement.

Preliminary volume estimates were for 185,849 contracts, down significantly from Monday’s final count of 346,995.

Wheat prices picked up modest gains after USDA released some supportive supply and demand data this morning, which prompted some technical buying. March Chicago SRW futures added a penny to $5.2375, March Kansas City HRW futures rose 4.75 cents to $4.3075, and March MGEX spring wheat futures also gained 4.75 cents to $5.1550.

USDA’s supply and demand data for wheat showed the most alterations from its November WASDE report after factoring in lower domestic supplies, higher exports and lower ending stocks. USDA added 25 million bushels to its wheat export estimates, bringing the total up to 975 million bushels this marketing year based on the decent pace of exports over the past month.

And with domestic wheat stocks falling from 1.014 billion in November down to 974 million bushels, that marks the lowest level in five years.

Brazil’s Conab expects the country’s 2019 wheat imports to reach 249.9 million bushels, which is 5.6% lower than its November projection.

France’s farm ministry expects the country’s winter wheat acreage to drop 4.8% year-over-year to 11.688 million acres after heavy rains disrupted planting earlier this fall.

South Korea purchased 2.2 million bushels of feed wheat from optional origins in an international tender that closed earlier today. The grain could be sourced from a variety of countries, including the U.S., and is for arrival by May 1, 2020.

Japan seeks to purchase 6.3 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closes Thursday. Just over half of the total is expected to be sourced from the U.S.

The Philippines purchased 3.7 million bushels of feed wheat from optional origins in a tender earlier this week. Shipment could be between February and April, although additional details were not immediately available.

Preliminary volume estimates were for 67,707 CBOT contracts, down a hair from Monday’s final count of 68,478.


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