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Afternoon Market Recap for Jan. 28, 2020

Bargain buyers prop up corn.

Soybeans and wheat fall lower Tuesday on a round of technical selling

Grain prices were mixed but mostly lower today. Corn emerged as the session’s clear winner, moving more than 1% higher on a round of bargain buying. Soybeans nearly emerged with modest gains but were unable overcome steep overnight losses. Wheat prices showed the biggest downside, with some contracts tracking nearly 1% lower on technical selling spurred by budding export concerns.

The latest 72-hour cumulative precipitation map from NOAA shows only light snow or rain possible through Friday across parts of the Corn Belt. Further out, the agency’s 8-to-14-day forecasts indicate average or slightly below-average temperatures are likely from February 4 to 10, with wetter-than-normal conditions probable for parts of the Northern Plains and upper Midwest during this time.

On Wall St., stock prices finally rebounded after several days of heavy losses from an anxious investor selloff due to the ongoing coronavirus outbreak. The Dow moved 267 points higher in afternoon trading to 28,803. Energy futures also bounced back, with crude oil up 0.6% this afternoon to clear back above $53 per barrel. Gasoline and diesel were also up 1.25% and 2%, respectively. The U.S. Dollar firmed slightly, with copper and gold prices taking modest losses.

Commodity funds were net buyers of corn (+21,000 contracts) today but were net sellers of soybeans (-3,000), soymeal (-2,000), soyoil (-1,000) and CBOT wheat (-3,000).

Corn prices firmed by about 1% Tuesday as bargain buyers entered the fray after slumping significantly over the past two sessions. Another large sale reported to USDA this morning prompted some additional technical buying. March futures gained 6 cents to $3.8650, with May futures up 5.25 cents to $3.92.

Corn basis bids were mostly steady to weak Tuesday, falling 1 to 7 cents lower across a handful of Midwestern locations today. An Illinois processor bucked the overall trend after firming 2 cents higher, however.

Private exporters reported to USDA the sale of 4.9 million bushels of corn for delivery to Mexico during the 2019/20 marketing year, which began September 1. This marks the seventh large corn sale reported to USDA so far this month.

South Africa’s corn acres are expected to rise 9% this season on the heels of favorable weather conditions in recent weeks, reaching 6.178 million acres. The country’s total corn exports have reached 36.6 million bushels through December.

USDA sent a reminder to farmers today about an upcoming February 28 deadline to enroll in the Conservation Resource Program for 2020. “This is the first opportunity for general sign up since 2016, and we want producers and private landowners to know that we have just one month remaining,” according to FSA Administrator Richard Fordyce. “It is critical that they make their final determinations and submit offers very soon to take advantage of this popular conservation program.”

Speaking of USDA, it’s an increasingly popular opinion that the agency would serve farmers better if they simply stopped reporting crop information. Dave Fogel, vice president with Advance Trading, Inc., argues that this wouldn’t really solve any problems – click here to learn more in the latest Ag Marketing IQ blog post.

Preliminary volume estimates were for 425,431 contracts, sliding fractionally lower than Monday’s final count of 426,407.

Soybean prices were down for a sixth consecutive session Tuesday on another round of technical selling as traders await news of Chinese agricultural purchases. Worries about the ongoing coronavirus outbreak applied additional headwinds. March futures slipped 2.25 cents to $8.95, with May futures down 2 cents to $9.09.

Coronavirus anxieties have also kicked palm oil futures significantly lower, including a 10% drop today. And cargo surveyor Amspec notes that Malaysian palm oil exports have trended 5.2% lower so far in January.

Soybean basis bids were mixed at interior river terminals Tuesday, holding steady elsewhere across the central U.S. today.

Traders remain skeptical that the phase-one trade agreement between the U.S. and China will actually result in an additional $50 billion in agricultural exports. Despite China’s lofty promises, the agreement stipulates that “purchases will be made at market prices based on commercial considerations,” which leaves more than a little wiggle room for actual export sales. Soybean futures rose steadily in the weeks leading up to the trade deal, which was signed January 15, but have stalled out significantly through the second half of January.

Meantime, “Economists will tell you that one reason tariffs are rarely effective policy tools for long is that they usually prompt trading partners to do the same, thus hurting everyone involved eventually,” according to Bloomberg. Click here to learn more about the complexities of trade, which tends not to be static and “tends to flow around barriers as businesses adapt.”

Algeria issued an international tender to purchase 35,000 metric tons of soymeal that closes tomorrow, continuing a recent flurry of grain tenders that have also included corn and animal feed barley in recent days.

Preliminary volume estimates were for 142,377 contracts, falling moderately below Monday’s final count of 204,858.

Wheat prices were down 0.5% to 1% Tuesday on another round of technical selling, with lower-than-expected grain inspections yesterday casting new doubts on the pace of exports heading into the spring. Also worth noting: China’s latest purchases of 36.7 million bushels were sourced from Australia, Canada and France. March Chicago SRW futures fell 2.5 cents to $5.6975, March Kansas City HRW futures dropped 4.75 cents to $4.8175, and March MGEX spring wheat futures lost 5 cents to $5.4225.

Syria issued an international tender to purchase 7.3 million bushels of soft wheat from Russia that closes February 17. The country still needs about double the wheat it produces annually amid ongoing widespread conflict in the region.

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

Preliminary volume estimates were for 110,416 CBOT contracts, cooling moderately below Monday’s final count of 151,024.


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