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Afternoon Market Recap for Jan. 16, 2020

Corn prices take a tumble.

Wheat also finishes with significant losses, with soybeans down moderately today

Grain prices spilled into the red Thursday amid uncertainty over whether the partial trade agreement yesterday between the U.S. and China will lead to substantially higher sales, which triggered a round of technical selling. China has pledged to buy $12.5 billion more in U.S. agricultural goods this year, but only if “market conditions” are favorable. Corn futures tumbled nearly 3% lower, with some wheat contracts down more than 2% today. Soybean losses were more moderate, falling around 0.5%.

The latest 72-hour cumulative precipitation map from NOAA still shows moderate rain and snow probable for a large portion of the Corn Belt through January 20. Further out, NOAA’s 8-to-14-day forecasts show near-normal or slightly below-normal temperatures likely in the central U.S. from January 23-29, with generally wetter-than-normal temperatures probable outside of the Great Lakes region.

On Wall St., another round of positive economic data pushed the Dow more than 180 points higher in afternoon trading to a record 29,212. Energy futures were mixed, with crude oil and gasoline each trending more than 1% higher, while diesel shrank around 0.7% lower this afternoon. The U.S. Dollar firmed slightly.

Corn prices eroded steadily throughout Thursday’s session on a round of technical selling and profit-taking, despite some generally positive export data from USDA out this morning. Favorable South American weather forecasts applied additional headwinds. March futures finished 12 cents lower to $3.7550, with May futures tumbling 11.5 cents to $3.8250.

Corn basis bids slipped 2 cents lower at an Illinois processor but held steady elsewhere across the central U.S. Thursday, as farmer sales have remained sluggish for the most part this week.

Corn exports notched 30.9 million bushels in old crop sales last week, moving far above the prior week’s tally of 6.4 million bushels. Total volume was on the high end of trade guesses that ranged between 19.7 million and 37.4 million bushels. Cumulative totals for the 2019/20 marketing year are still just at 371.4 million bushels, however – still trending less than half of the prior marketing year’s pace so far.

Corn export shipments moved 8% above the prior four-week average, with 21.4 million bushels. Mexico (7.6 million) and Colombia (7.1 million) accounted for about two-thirds of the total.

The EPA reported that the U.S. generated 1.30 billion ethanol blending credits last month, up from 1.21 billion in November. The U.S. generated an additional 374 million biodiesel blending credits in December, also moderately ahead of November’s tally of 309 million.

The U.S. Senate has approved the U.S.-Mexico-Canada (USMCA) trade agreement by a vote of 89 to 10, sending it to President Donald Trump to sign. Trump has been public about his support for the agreement and is expected to sign it soon. Mexico and Canada are two of the top three customers of U.S. agricultural goods.

USDA is seeking public input on a new ethanol sales infrastructure incentive program it hopes will expand the availability of domestic biofuels through expanded sales opportunities. “Feedback from farmers, retailers and biofuels producers is critical to the success of this future program,” according to Agriculture Secretary Sonny Perdue. “Under the leadership of President Trump, USDA remains committed to fulfilling a key promise to American farmers to enhance the promotion of biofuels.” Click here to learn more about the program.

Analyst APK-Inform has raised its estimates for Ukraine’s 2019 corn harvest by 2.6%, now reaching 1.362 billion bushels. Export forecasts also improved 1.9%, now at 1.083 billion bushels.

In the European Union, consultancy Strategie Grains has fractionally upped its forecast for 2020 corn production from December estimates, now reaching 2.646 billion bushels.

The Farm Futures Business Summit and Ag Finance Boot Camp begins in a few short days, held January 22-24 in Coralville, Iowa. Sharpen your networking skills and gather the intel you need to run your farm more efficiently and profitably. A “last chance” discount is still available. Click here to learn more.

Preliminary volume estimates were for 322,470 contracts, gaining moderate traction over Wednesday’s final count of 244,593.

Soybean prices followed corn lower Thursday on some technical selling in a somewhat choppy session, although losses weren’t nearly as severe. March and May futures each lost 4.75 cents to close at $9.24 and $9.3725, respectively.

Soybean basis bids were steady to mixed Thursday, falling 3 to 5 cents lower at two Midwestern processors while firming a penny at an Ohio elevator today.

Private exporters reported to USDA the sale of 180,000 metric tons of soybean cake and meal to the Philippines for delivery during the 2019/20 marketing year, which began October 1.

Soybean export sales inched 3% above its prior four-week average, reaching 26.1 million bushels and landing in the middle of trade guesses, which ranged between 14.7 million and 31.2 million bushels. China (8.0 million) and the Netherlands (7.3 million) accounted for more than half of the total. Cumulative totals this marketing year remain 30% higher than a year ago, at 854 million bushels.

Soybean export shipments were also up 14% week-over-week and 13% higher than the prior four-week average, at just under 47.0 million bushels. China took nearly a third of the total amount, with 15.2 million bushels.

Yesterday’s signing of the phase-one trade deal between the U.S. and China drew bullish sentiment on the stock markets while cooling grain prices. Critics contend it may represent a short-term solution that won’t boost prices and keeps current tariffs in place. Farm Futures policy editor Jacqui Fatka maps out six potential shortfalls of the current deal – click here to learn more.

Preliminary volume estimates were for 153,986 contracts, falling moderately below Wednesday’s final count of 207,337.

Wheat prices were clipped by a round of technical selling and profit-taking Thursday, with some contracts down more than 2% in today’s choppy session. Kansas City HRW contracts took the most damage, with March futures dropping 12.25 cents to $4.8425. March Chicago SRW futures fell 8 cents to $5.6525, while March MGEX spring wheat futures lost 6 cents to $5.49.

Wheat export sales rebounded noticeably from marketing-year lows last week to reach 26.1 million bushels in old crop and new crop sales. The tally beat also beat out all analyst estimates, which ranged between 7.3 million and 18.4 million bushels. Cumulative totals for the 2019/20 marketing year are now at 550 million bushels, besting last year’s pace by more than 20%.

Wheat export shipments also improved 30% week-over-week and firmed 6% above the prior four-week average, with 16.9 million bushels. The Philippines (3.1million), South Korea (3.0 million) and Mexico (2.7 million) accounted for more than half of the volume.

Based on better global demand prospects, EU’s Strategie Grains consultancy expects the region’s soft wheat exports for 2019/20 to climb 6.3% above its December estimates to reach 1.121 billion bushels, even amid an uptick in sales from competitors such as Ukraine and Argentina.

Japan purchased 4.3 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closed earlier today. Just over half of the total was sourced from the U.S.

Taiwan purchased more than 3.6 million bushels of milling wheat from the U.S. in a tender that closed earlier today. The grain is for shipment in March and April.

Tunisia issued an international tender to purchase 4.3 million bushels of durum wheat, 3.7 million bushels of soft wheat and 3.4 million bushels of animal feed barley from optional origins. The tender closes tomorrow, and the grain is for shipment between February and March.

Preliminary volume estimates were for 87,523 CBOT contracts, retreating moderately below Wednesday’s final count of 140,619.


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