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Afternoon Market Recap for Dec. 5, 2019

Soybeans continue to track higher.

Corn and wheat futures take moderate declines in Thursday’s session

Grain markets were mixed but mostly lower Thursday, as corn and wheat futures trended moderately lower on a round of technical selling following the latest lackluster USDA export data out this morning. Soybeans continued to climb higher, in contrast, as the latest round of optimism regarding U.S.-China trade relations hasn’t yet run out, and financial stress from a major Argentine crusher lent additional support.

The latest updates to the U.S. Drought Monitor, out Thursday morning, showed drought’s footprint across the country diminished slightly, now afflicting 31.8% of the country for the week ending December 3, versus 32.9% the week prior. Much of the Midwest and Plains remains unaffected, with drought persisting and worsening in parts of the Southwest and West. NOAA’s December outlook shows the probability for wetter-than-normal conditions this month across much of the Corn Belt.

Wall St. saw a relatively quiet day Thursday, with the Dow tracking 14 points higher in early afternoon trading to 27,664 as traders await more details regarding ongoing U.S.-China trade negotiations. Energy futures also saw small gains this afternoon, with crude oil staying above $58 per barrel Gasoline (+1%) and natural gas (+1.5%) found bigger gains. The U.S. Dollar softened moderately.

Corn prices tipped moderately lower after a poor round of export data from USDA this morning kicked off more technical selling. December futures dropped 3.25 cents to $3.6550, with March futures down 1.75 cents to $3.7675.

Corn basis bids were narrowly mixed across the central U.S. Thursday, dropping 1 to 3 cents lower at three interior river terminals while firming 2 cents at an Iowa processor today. Farmer sales have remained generally light this week.

Corn export sales were disappointing last week but closer in line to analyst estimates of 27.6 million bushels after tallying 21.5 million bushels in old crop sales, plus another 94,000 bushels in new crop sales. Corn’s total for the week ending November 28 also fell 32% from the prior week’s tally and 18% below the prior four-week average.

Corn export shipments were also down 22% week-over-week, landing at 19.5 million bushels. Mexico accounted for more than half of that total, with 11.3 million bushels.

Farmers reporting to Feedback From The Field have seen decent corn yields, on average. Last month, respondents noted an average of 167.4 bushels per acre, which was slightly above USDA’s latest estimates of 167 bpa. Click here to read the latest round of farmer anecdotes and view our interactive map, and click this link to tell us what’s happening in your area.

Preliminary volume estimates were for 157,691 contracts, falling 16% below Wednesday’s final count of 188,536.

Soybean prices followed soymeal prices higher Thursday after an Argentina crusher reported major financial stress, seeking to restructure some $350 million in debt. General optimism regarding U.S.-China trade negotiations provided additional tailwinds today as futures moved higher for a third-consecutive session. January and March futures each added 6.25 cents to reach $8.8425 and $8.9875, respectively.

Soybean basis bids were mostly steady to firm Thursday, trending a nickel higher at two Midwestern processors and a penny higher at an Illinois river terminal. An Ohio elevator bucked the overall trend after dropping 3 cents lower today.

Private exporters reported to USDA the sale of 9.0 million bushels of soybeans for delivery to unknown destinations. A little less than half of the total is for delivery during the 2019/20 marketing year, which began September 1, with the remainder for delivery in 2020/21.

Soybeans have been the shining star in USDA’s export sales reports for the past several weeks, but exports faded significantly this past week after reaching just 25.1 million bushels. Analysts were anticipating a much more robust total, with an average trade guess of 36.7 million bushels. Totals also tumbled 59% from a week ago and were 55% below the prior four-week average.

China took nearly half of the total, with 11.0 million bushels. But China also bought the fewest amount of U.S. soybeans in six weeks as the trade war between the two countries drags on. China has indicated that current tariffs must be lowered if it is to reach an interim trade deal with the U.S. Chinese purchases of U.S. soybeans typically sees a seasonal peak during the fall months.

Soybean export shipments were better but still 10% below the prior four-week average, with 55.0 million bushels. China snapped up more than two-thirds of that total, with 37.6 million bushels.

In Argentina, soy crushing giant Vicentin reported it has struggled to repay $350 million in debts and wants to restructure those debts amid a general economic slowdown. “This is a question of a particular company's short-term financial situation,” says Gustavo Idigoras, head of CIARA-CEC. “The crushing industry in Argentina is going through a difficult situation since October last year when the government decided to raise taxes on exports of soy products.” Soymeal futures rose about 1.75% today on technical buying largely spurred by this news.

Preliminary volume estimates were for 203,027 contracts, moving slightly ahead of Wednesday’s final count of 188,059.

Wheat prices suffered another setback Thursday, as a tepid round of export data from USDA kicked off another round of technical selling that pushed prices moderately lower today. December Chicago SRW futures fell 3 cents to $5.32, while December Kansas City HRW futures closed down 5.25 cents to $4.3525. While some MGEX spring wheat contracts also moved lower, December futures bucked the overall trend after picking up 1.75 cents to $4.99.

Wheat export sales only gathered 8.4 million bushels last week, slumping 63% from the prior week and dropping 45% below the prior four-week average. Analysts were hoping for a much better haul, with an average trade guess of 18.4 million bushels. Unknown destinations took nearly half of the total, with 3.7 million bushels.

Wheat export inspections shrank to a marketing year low, with just 8.5 million bushels – spilling 48% below the prior four-week average. Italy was the No. 1 destination, with 2.3 million bushels.

Russia’s wheat exports through the first 10 months of 2019 have topped 971 million bushels. That is trending 28% below the country’s pace a year ago.

Algeria purchased 18.4 million bushels of milling wheat in an international tender earlier today. The grain, which was likely sourced from France and Argentina, is for shipment in January and February.

Japan purchased 5.9 million bushels of food-quality wheat from the U.S. and Canada in a regular tender that closed earlier today. The U.S. accounted for nearly 57% of the total.

Preliminary volume estimates were for 64,478 CBOT contracts, down another 12% from Wednesday’s final count of 73,602.


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