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Afternoon Market Recap for Feb. 14, 2019

Grains see red on Valentine’s Day.

Prices trend uniformly lower amid trade concerns, export data

USDA is releasing stale export data for one more week, but the latest round (which covered the week ending January 3) out this morning featured plenty of marketing-year lows, which kicked off some technical selling for most grain prices. Of particular concern were some large Chinese soybean cancellations, which helped propel soybeans double digits lower in the Valentine’s Day session. Some wheat contracts were also down double digits after absorbing some disappointing export data.

Drought’s footprint in the Midwest and Plains continues to be nearly nonexistent, according to the latest updates to the U.S. Drought Monitor. The percentage of the entire U.S. affected by drought increased slightly, however, now covering 32.2% of the country. That’s largely due to lingering problems in the Southwest and West. NOAA’s longer-range forecast through April shows some drier-than-normal conditions are likely across the Great Lakes Region as we roll into spring.

On Wall St., poor retail sales data and lingering concerns over U.S.-China trade kept stocks moderately suppressed this morning, but the Dow mostly recovered later in the session, slipping 11 points in afternoon trading to 25,531. Energy prices continued to climb, with crude oil moving back above $54 per barrel, and with gasoline and diesel making significant gains today. The U.S. Dollar firmed slightly.

Corn prices moved about 1% lower Thursday on some technical selling partially spurred by spillover weakness from soybeans and wheat. March futures dropped 4 cents to $3.7475, with May futures down 3.75 cents to $3.83.

Corn basis bids were largely unchanged Thursday but did firm 1 to 3 cents at several interior river terminals and fade 2 cents lower at an Iowa ethanol plant today. Farmer sales have been generally slow this week.

Corn exports for the week ending January 3 reached 18.1 million bushels, which came in 9% below the prior week’s tally and 64% lower than the prior four-week average. Totals also fell below expectations of analysts, who expected the agency to report corn sales between 19.7 million and 39.4 million bushels.

Corn export shipments reached a marketing-year low after posting a total of just 26.2 million bushels, slumping 34% below the prior four-week average. Mexico was the No. 1 destination, with 9.9 million bushels.

Forecasters at the Climate Prediction Center have given a 55% chance for weak El Niño conditions to persist at least into the spring. “Due to the expected weak strength, widespread or significant global impacts are not anticipated,” the CPC noted in its latest monthly forecast.

The Rosario Grains Exchange expects Argentina’s 2018/19 corn crop to reach a record production of 1.831 billion bushels, up from prior estimates of 1.732 billion bushels.

France’s Strategie Grains expects EU corn production for 2018/19 to trend slightly higher year-over-year, reaching 2.370 billion bushels. The consultancy also expects EU corn production to trend another 4% higher in 2019/20.

South Korea purchased a total of 7.2 million bushels of corn from optional origins in two private deals. The grain is for arrival by between late May and early July.

Preliminary volume estimates were for 221,749 contracts, down sharply from Wednesday’s final count of 470,655.

Soybean prices slumped more than 1% Thursday after a dismal round of export data from USDA this morning prompted some technical selling. March and May futures each tumbled 13 cents lower to land at $9.0350 and $9.1775, respectively.

Soybean export sales for the week ending January 3 found a marketing-year low after total net reductions from China and unknown destinations outweighed gains from elsewhere across the world, leaving a total deficit of 22.5 million bushels for the week.

 Soybean export shipments fared much better after reaching 33.4 million bushels but remained 1% below the prior week’s total and 8% below the prior four-week average. China was the top destination, with 4.9 million bushels.

Soybean basis bids were mostly unchanged Thursday but did firm by 5 cents at an Ohio elevator and an Ohio river terminal to help drum up more sales in that area.

According to the Rosario Grains Exchange, Argentina’s 2018/19 soybean crop could come in a bit better than previously expecting, adding another 73.5 million bushels from prior estimates to reach 1.911 billion bushels after reviewing initial harvest yields averaging 45.8 bushels per acre.

China’s soybean imports in January rose 29% month-over-month to reach 271 million bushels. China is the world’s top soybean importer. The country also imported 859,000 metric tons of vegetable oils last month, up 16.1% from December totals.

Preliminary volume estimates were for 133,325 contracts, easing from Wednesday’s final count of 144,861.

Wheat prices fell sharply Thursday amid export and oversupply concerns, with some contracts sinking nearly 3%. March Chicago SRW futures dropped 15.25 cents to $5.07, March Kansas City HRW futures fell 11.75 cents to $4.8225, and March MGEX spring wheat futures lost 5 cents to $5.75.

Wheat export sales landed on a marketing-year low, falling 76% below the prior four-week average after posting net sales of 4.8 million bushels for the week ending January 3. Analysts had provided more bullish estimates that ranged between 7.3 million and 18.4 million bushels.

Wheat export shipments of 10.7 million bushels were also pointed downward, falling 33% lower than the prior week’s tally and 44% below the prior four-week average. The Philippines came in as the No. 1 destination, with 3.0 million bushels.

France’s Strategie Grains says European Union soft wheat production for 2018/19 could reach 4.666 billion bushels, trending 10.6% lower year-over-year. The consultancy expects EU wheat production in 2019/20 to rebound to 5.379 billion bushels, however.

Ukraine’s agriculture minister reports that most of the country’s winter grain crops are in good or satisfactory condition. The country planted about 18.533 million acres of winter grains for harvest later this year.

Algeria purchased 22.0 million bushels of milling wheat, expected to be sourced primarily from France (the country’s top provider), in a tender that closed earlier today. The grain is for shipment in March and April.

Traders reported that South Korea purchased 3.1 million bushels of U.S. milling wheat from the U.S. earlier this week. The grain is for shipment between May and June.

Preliminary volume estimates were for 180,705 CBOT contracts, up from Wednesday’s final count of 163,435.

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