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Afternoon Market Recap for Dec. 12, 2019

Grains rally on exports, trade.

Corn, soybeans and wheat finish solidly in the green Thursday

Grain prices grabbed some positive export and trade news today, moving steadily higher throughout the morning, and with some contracts holding onto gains of nearly 3% by the close. Corn and wheat saw the biggest upside after traders absorbed better-than-expected export data from USDA. Soybeans also climbed moderately higher on hopes that a partial trade agreement between the U.S. and China edging closer to fruition.

ENSO conditions are expected to remain neutral through the winter, with government forecasters issuing a 70% likelihood that will happen. And ENSO-neutral conditions are 65% of continuing through next spring, per NOAA’s Climate Prediction Center. NOAA’s winter outlook calls for warmer-than-normal winter weather throughout the southern two-thirds of the country, with wetter-than-average weather probable through parts of the Northern Plains, upper Midwest and Great Lakes regions.

On Wall St., the Dow jumped another 137 points in afternoon trading to 28,048 on U.S.-China trade optimism after an encouraging tweet from President Donald Trump this morning before returning his focus on ongoing impeachment hearings. “Getting VERY close to a BIG DEAL with China,” he tweeted. They want it, and so do we!” Energy futures also saw moderate gains, with crude oil adding another 1% in afternoon trading to crest back over $59 per barrel, and with gasoline and diesel also trending higher. The U.S. Dollar firmed moderately.

Corn prices were red-hot Thursday, climbing nearly 3% higher on a round of short-covering and technical buying spurred by trade optimism and better-than-expected export data from USDA this morning. December futures rose 9.25 cents to $3.67, with March futures up 6.5 cents to $3.7775.

Corn basis bids were steady to soft Thursday, dropping 4 to 5 cents lower across a handful of Midwestern locations today.

Corn export sales reached 34.4 million bushels this past week, trending 60% higher than a week ago and 28% above the prior four-week average. That total also topped all analyst guesses, which ranged between 15.7 million and 31.5 million bushels. Mexico took the lion’s share, with 20.4 million bushels.

Corn export shipments of 20.9 million bushels were 7% higher than the prior week’s total but down 12% from the prior four-week average. Mexico was the No. 1 destination, with 10.3 million bushels.

And earlier this morning, private exporters reported to USDA a mammoth sale of nearly 63.0 million bushels of corn for delivery to Mexico. Of the total, just over two-thirds is for delivery during the 2019/20 marketing year, which began September 1, with the remainder for delivery in 2020/21. It was the fifth-largest single purchase of U.S. corn by Mexico on record.

European consultancy Strategie Grains projects the 2020 EU corn crop at 2.642 billion bushels, moving 5.7% higher year-over-year, if realized.

South Korea purchased 2.6 million bushels of corn in a private deal earlier this week, expected to be sourced from the Black Sea Region. The grain is for arrival by the end of March.

Preliminary volume estimates were for 243,259 contracts, coming in 22% above Wednesday’s final count of 198,764.

Soybean prices took a moderate jump higher Thursday morning on some more welcome U.S.-China trade news and held onto those gains as the session wore on. January futures rose 4.75 cents to $8.9825, with March futures up 4 cents to $9.12.

Soybean basis bids were mixed at interior river terminals and Midwestern processors today, moving as much as 2 cents lower and 5 cents higher, as farmer sales have remained generally slow this week amid hopes they will see higher prices following a partial trade agreement between the U.S. and China.

Dow Jones reported this morning that U.S. negotiators have offered to cancel 15% tariffs it has threatened to levy on $160 million in Chinese goods and reduce existing tariffs on another $360 billion in Chinese goods. It’s a move that has been largely interpreted as a sign that a phase-one trade deal between the two countries is eminent. Is also contingent on China cooperating with its end of the deal, however.

Soybean export sales climbed 54% above the prior week’s tally of 25.1 million bushels to reach 38.6 million bushels, but that remains 17% below the prior four-week tally. Still, the total landed on the high end of analyst estimates, which ranged between 18.4 million and 40.4 million bushels. Unknown destinations (9.2 million) and China (8.9 million) topped all destinations last week.

China still has more than 87 million bushels in outstanding U.S. soybean sales, although a flurry of purchases earlier this week will help draw down that total as the two countries continue to work toward a partial trade agreement.

Soybean export shipments fared better, at 53.0 million bushels, but still slipped 4% below the prior week’s tally and 13% below the prior four-week average. China accounted for the bulk of this volume, with nearly 33.0 million bushels.

Preliminary volume estimates were for 242,845 contracts, slipping 13% below Wednesday’s final count of 279,666.

Wheat prices jumped significantly higher, with some contracts finishing up nearly 3%, after better-than-expected export data and general U.S.-China trade optimism triggered some technical buying and short-covering. March Chicago SRW futures added 11 cents to $5.3025, March Kansas City HRW futures gained 12 cents to $4.4275, and March MGEX spring wheat futures picked up 4.75 cents to $5.23.

Wheat export sales jumped from 8.4 million bushels to 18.5 million bushels this past week, which was a 33% improvement from the prior four-week average. It also topped all analyst estimates, with guesses ranging between 7.3 million and 16.5 million. Japan was the No. 1 destination, with 3.7 million.

Wheat export shipments rebounded from a marketing year low with 14.3 million bushels last week, but that still remained 4% below the prior four-week average. Japan was the top destination, with 2.6 million bushels.

Consultancy Strategie Grains is expecting 2020 European Union soft wheat production to fall 3.6% year-over-year to 5.162 billion bushels. EU barley production next year is expected to move fractionally higher, meantime, to 2.857 billion bushels.

Japan purchased 6.3 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closed earlier today. Of the total, just over half was sourced from the U.S.

South Korean flour mills purchased 1.3 million bushels of wheat from Australia in a tender, which is for shipment in April and May.

Tunisia issued an international tender to purchase 3.7 million bushels of durum wheat, 3.4 million bushels of soft wheat and 2.3 million bushels of animal feed barley, all from optional origins, that closes Friday. The grain is for shipment between January and March.

Preliminary volume estimates were for 98,200 CBOT contracts, moving moderately above Wednesday’s final count of 70,108.


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