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Afternoon Market Recap for Jan. 21, 2020

Looking for Chinese purchases.

Corn and soybeans slump Tuesday, as wheat continues to firm

Grain markets were mixed but mostly lower after taking a breather Monday for the Martin Luther King, Jr. holiday. Soybeans saw steep cuts as additional Chinese purchases have failed to materialize so far nearly a week after the U.S. and China inked a partial trade deal. Corn took moderate cuts on technical selling spurred by spillover weakness from soybeans and lousy export inspection data out this morning. Wheat bucked the overall trend, with some contracts up as much as 2% today as the focus returned to rising prices and tightening demand overseas.

The Corn Belt could see some light accumulation of rain and snow over the next three days, with some heavier totals coming in farther south, according to the latest 72-hour cumulative precipitation map from NOAA. Next week, the prospect of warmer, wetter weather is likely for much of the country, based on NOAA’s latest 8-to-14-day forecasts, updated Monday.

On Wall St., a deadly virus from China (coronavirus) made its way to the U.S. mainland, which spooked investors and sent airline stocks tumbling, with the Dow dropping 178 points in afternoon trading to 29,170. Energy prices were mixed but mostly lower, with crude oil down slightly to hover below $59 per barrel. Diesel saw sharper cuts of around 1%, meantime, with gasoline up around 0.5%. The U.S. Dollar softened slightly.

Be sure to tune into later this week for event highlights from our 2020 Farm Futures Business Summit and Ag Finance Boot Camp, held January 22-24 in Coralville, Iowa. Click here to learn more about this event.

Corn prices fell around 0.5% Tuesday on technical selling spurred in part by spillover weakness from sagging soybean prices. A poor round of export inspection data from USDA this morning applied additional headwinds. March and May futures each dropped 1.75 cents to close at $3.8750 and $3.9350, respectively.

Corn basis bids were mixed Tuesday, sliding as much as 4 cents lower at an Indiana ethanol plant while firming as much as 3 cents at an Iowa processor today, signaling some uneven demand needs around the Midwest.

Corn export inspections fell 28% for the week ending January 16, landing at 13.6 million bushels. That was also well below the average trade guess of 24.6 million bushels. Cumulative totals for 2019/20 are still less than half of last year’s pace, now at 371.3 million bushels. Mexico (6.0 million) and Colombia (4.7 million) accounted for the bulk of the total.

South Korea continued its flurry of recent corn purchases last week, buying another 2.7 million bushels in a private deal (likely from South America). The grain is for shipment in early April.

Ukraine’s corn exports this marketing year have reached 559.7 million bushels as of January 20, per the country’s UkrAgroConsult consultancy. Ukraine’s total grain exports are up 29% year-over-year so far.

Preliminary volume estimates were for 260,553 contracts, falling substantially lower than Friday’s final count of 460,924.

Soybean prices took a double-digit tumble Tuesday on some technical selling as traders hold for news of additional Chinese purchases following last week’s signing of a phase-one trade deal between the U.S. and China. March futures tumbled 13.75 cents to $9.16, with May futures dropping 13.25 cents to $9.2975.

Soybean basis bids were mostly steady across the central U.S. Tuesday but did slip a penny lower at an Ohio elevator today.

Soybean export inspections for the week ending January 16 moved slightly higher week-over-week to 41.1 million bushels. That total also moderately bested the average trade guess of 33.1 million bushels. Cumulative totals for 2019/20 are now at 888.1 million bushels, which is outpacing last year by 23%. China took nearly half of the total, with 20.2 million bushels.

What if meeting the goals of the phase-one trade deal with China still doesn’t help grain prices? Click here to learn more about why the market may need to see hard evidence of demand before buying in to boost prices in our latest Ag Marketing IQ blog.

Meantime, speaking at the American Farm Bureau Federation convention, U.S. Agriculture Secretary Sonny Perdue said the third and final round of Market Facilitation Program (MFP) payments are “imminent – although you can define that how you want to in Washington, D.C.” Purdue told attendees he is still awaiting word from the Office of Management and Budget on a firm date the payments will be issued. Perdue also said not to expect additional MFP payments in 2020.

Preliminary volume estimates were for 180,972 contracts, versus Friday’s final count of 162,208.

Wheat prices continue climbing higher since hitting a seasonal low last September, as focus remains on higher global prices and tightening stocks for now. March Chicago SRW futures gained 11 cents to $5.8150, March Kansas City HRW futures added 6 cents to $5.0025 (closing above $5 per bushel for the first time in almost a year), and March MGEX spring wheat futures picked up 2.25 cents to $5.62.

Wheat export inspections fell 22% to just below 16.0 million bushels for the week ending January 26, which was also below the average trade guess of 18.4 million bushels. Cumulative totals for 2019/20 are now at 584.9 million bushels, maintaining a 14% lead over last year’s pace. Indonesia was the No. 1 destination, with 4.2 million bushels.

Ukraine’s wheat exports this marketing year have reached 568.1 million bushels as of January 20, per the country’s UkrAgroConsult consultancy.

Japan issued a regular tender to purchase nearly 4.0 million bushels of food-quality wheat from the United States and Canada that closes Thursday. Of the total, more than 76% is expected to be sourced from the U.S.

Jordan purchased 2.2 million bushels of hard milling wheat from optional origins in a tender that closed earlier today. The grain is for shipment in late July.

Syria canceled its international tender to purchase 7.3 million bushels of soft wheat from Russia, echoing a cancellation for a similar tender issued a month ago.

Preliminary volume estimates were for 118,142 CBOT contracts, versus Friday’s final count of 101,838.


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