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Afternoon Market Recap for Jan. 23, 2020

Export optimism lifts corn prices.

Soybeans take moderate cuts, with wheat mixed Thursday

Grain prices were mixed again Thursday, with corn firming on some export optimism that triggered some technical buying that pushed futures about 1% higher today. Wheat also finished moderately higher, with the focus remaining on supply and demand fundamentals for now. Soybeans continued to spill into the red, meantime, after the continued lack of Chinese purchases and favorable South American weather forecasts spurred another round of technical selling today.

A round of wintry weather is eastbound, moving out of the Corn Belt by late this weekend, with light to moderate rain and snow probable for most areas east of the Mississippi River through Sunday, per the latest 72-hour cumulative precipitation map from NOAA. Further out, warmer and wetter weather is likely for much of the country from January 30 through February 5, per the agency’s latest 8-to-14-day forecasts.

On Wall St., the WHO calmed some investor fears about the Asian coronavirus, saying it’s a “bit too early to consider this event is a public health emergency of international concern.” Still, the Dow sagged 44 points lower this afternoon to 29,142. Energy futures dropped again Thursday afternoon, with crude oil down another 2.5% this afternoon to fall below $56 per barrel. Gasoline was down nearly 2%, with diesel losses at around 1%. The U.S. Dollar firmed moderately.

Corn prices tilted about 1% higher after two large export sales were announced to Guatemala and unknown destinations this morning, and as analysts have bullish expectations for the next round of USDA export sales data, out Friday morning. March futures gained 5 cents to $3.9375, with May futures picking up 4.25 cents to $3.9850.

Corn basis bids were steady to firm Thursday, rising 1 to 3 cents higher across a handful of Midwestern locations today. Farmer sales remain generally slow through the first three weeks of 2020.

Private exporters announced to USDA two large corn sales this morning. The first sale was for 5.7 million bushels for delivery to Guatemala. Of the total, nearly 80% is for delivery during the 2019/20 marketing year, which began September 1, with the remainder for delivery in 2020/21. The second sale was for 5.6 million bushels for delivery to unknown destinations in 2019/20.

Analysts are expecting a more robust round of export data from USDA tomorrow morning, with trade guesses for corn sales ranging between 27.6 million and 47.2 million bushels for the week ending January 16.

Meantime, Asian feed buyers are paying premiums for corn from Ukraine, one of the few major exporters sitting on higher quality grain. Buyers are cautiously interested in U.S. grain, with a trader in Singapore noting: “This year there are more number three and number four grades of [U.S.] corn, mainly from the crop that gets shipped through Pacific Northwest ports to North Asia.” Ukraine’s corn exports this marketing year are up 27% so far, with 559 million bushels as of January 20.

Recently higher projections for China and U.S. corn production had the International Grains Council (IGC) increasing its global corn crop forecast by 8 million metric tons to reach 1.111 billion MT. That’s still below last year’s projection of 1.129 BMT, however.

IGC also expects a global decline of corn stocks for 2019/20 for a third consecutive year, now estimated at 11.141 billion bushels and down 23% from 2016/17.

Weekly ethanol production fell to an eight-week low for the week ending January 17, according to the U.S. Energy Information Administration. Average daily production last week slipped to 1.049 million barrels. March futures trended about 0.75% higher to $1.353 this afternoon.

The U.S. EPA and the Department of the Army proposed a new "waters of the U.S." rule – now called the Navigable Waters Protection Rule – in an ongoing attempt to offer clarity for farmers and landowners to better understand what water features fall under federal jurisdiction while following congressional intent and adhering to court cases. Farm Futures policy editor Jacqui Fatka takes a closer look – click here to learn more.

Preliminary volume estimates were for 410,527 contracts, up substantially from Wednesday’s final count of 241,651.

Soybean prices shifted moderately lower again in a choppy session Thursday as the absence of recent Chinese purchases and favorable South American weather forecasts drummed up enough headwinds to trigger some more technical selling today. March and May futures each dropped 4.25 cents to close at $9.0950 and $9.2325, respectively.

Soybean basis bids were narrowly mixed at interior river terminals Thursday and held largely steady elsewhere across the central U.S. today.

Ahead of Friday morning’s weekly export sales report from USDA, analysts expect the agency to show soybean sales ranging between 25.7 million and 47.8 million bushels for the week ending January 16, with nearly all trade guesses besting the prior week’s tally of 26.1 million bushels.

Analysts also expect USDA to report an additional 200,000 to 450,000 metric tons of soymeal sales last week, plus another 5,000 to 26,000 MT of soyoil sales.

IGC fractionally raised its 2019/20 global soybean production estimates to 12.566 billion bushels, but that projection is still 5.3% below last year’s record production. Inventories are expected to tighten to just 1.323 billion bushels after the U.S. saw moderate weather-related production cuts last season.

Preliminary volume estimates were for 151,961 contracts, falling short of Wednesday’s final count of 164,917.

Wheat prices were narrowly mixed but mostly lower amid a round of uneven technical maneuvering Thursday. Chicago SRW contracts captured some modest gains, with March futures firming 2.75 cents to $5.8050. March MGEX spring wheat futures also finished fractionally higher, moving up 0.25 cents to $5.5525, but March Kansas City HRW futures slipped 0.75 cents to $4.9175.

Ahead of Friday morning’s weekly export sales report from USDA, analysts expect the agency to show wheat sales ranging between 11.0 million and 29.4 million bushels for the week ending January 16.

IGC is now projecting 2019/20 world wheat production slightly lower, at 27.962 billion bushels – still trending 3.8% above last year’s production. Carryover stocks are also expected to rise.

Japan purchased nearly 4.0 million bushels of food-quality wheat from the U.S. and Canada in a regular tender Thursday, as expected. Of the total, 76% was sourced from the U.S.

Preliminary volume estimates were for 110,712 CBOT contracts, falling 31% below Wednesday’s final count of 159,924.


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