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Afternoon Market Recap for July 16, 2019

Will these rains make grain?

Improved forecasts and climbing crop ratings cause further price cuts

Rain later this week could help late-planted crops across the central U.S., but forecasts dampened corn and soybean futures Tuesday by prompting a round of technical selling that drove prices 1.25% to 1.5% lower. Wheat futures saw more gentle declines, pressured by spillover weakness from other commodities.

A large portion of the Midwest and Plains are under an excessive heat watch later this week, with heat indexes approaching 105-110°F over the next several days. Per the latest five-day cumulative precipitation map from NOAA, a large portion of the upper Midwest will gather another 1.5” to 2” of additional rainfall through Sunday, with pockets of the Mid-South seeing 3” or more during this time.

On Wall St., some positive bank earnings reports kept the Dow slightly buoyant this morning, although President Donald Trump’s comment that U.S.-China trade negotiations have a “long way to go” cast some pessimism in afternoon trading, with the Dow slipping 12 points lower to 27,347. Energy futures moved sharply lower as Gulf of Mexico production remains hampered by Tropical Storm Barry. Crude oil lost 3.6% this afternoon to move back under $58 per barrel, with gasoline and diesel down around 2.5%. The U.S. Dollar firmed moderately.

Corn prices fell around 1.25% Tuesday after USDA reported better-than-expected crop conditions late yesterday afternoon, and with more rain expected across the Corn Belt later this week. September and December futures each dropped 5.75 cents to close at $4.3525 and $4.4125, respectively.

Corn basis bids were largely steady but slightly mixed Tuesday after firming by 4 cents at an Iowa processor and tumbling 9 cents lower at an Illinois river terminal today.

In yesterday afternoon’s crop progress report from USDA, the agency showed corn quality moving from 57% in good-to-excellent condition a week ago up to 58% this past week. Another 30% of the crop is rated fair (down a point from last week), with the remaining 12% rated poor or very poor (unchanged from last week). Analysts had expected quality ratings to decline a point.

Physiologically, 17% of the crop is silking. That’s up from 8% the prior week but far behind 2018’s pace of 59% and the five-year average of 42%.

Preliminary volume estimates were for 282,004 contracts, falling 36% below Monday’s final count of 442,168.

Soybean prices followed corn lower after USDA posted better-than-expected quality ratings late afternoon, and with yield-boosting rains expected across the central U.S. later this week. August and September futures each fell 14 cents to land at $8.8775 and $8.9375, respectively.

Soybean basis bids held steady at most central U.S. locations Tuesday but did dip 3 cents lower at an Illinois river terminal today.

Soybean crop quality ticked a point higher last week, with 54% in good-to-excellent condition. Another 34% of the crop is rated fair (down a point from last week), with the remaining 12% rated poor or very poor (unchanged from last week).

Five percent of the crop still hasn’t emerged by mid-July. And 22% of the crop is now blooming – up from 10% a week ago but far behind 2018’s pace of 62% and the five-year average of 49%.

Preliminary volume estimates were for 177,427 contracts, trending 34% above Monday’s final count of 132,719.

Wheat prices followed corn and soybeans lower on some technical selling prompted by spillover weakness in those crops. Losses were minimal after suffering a steep round of cuts Monday, however. September Chicago SRW futures eased 0.25 cents to $5.0750, September Kansas City HRW futures fell 2.75 cents to $4.4625, and September MGEX spring wheat futures dropped 2.25 cents to $5.3025.

Winter wheat harvest is progressing, just not quite as fast as analysts had anticipated with progress of 57% versus an expected pace of 62%. That’s up from last week’s tally of 47% but moderately behind 2018’s pace of 72% and the five-year average of 71%.

For spring wheat, 78% of the crop is now headed, up from 56% a week ago but moderately behind 2018’s pace of 91% and the five-year average of 87%. Crop condition moved from 78% in good-to-excellent condition a week ago down to 76%.

Russia’s Grain Union says it anticipates 2019/20 wheat exports to range between 1.360 billion and 1.396 billion bushels, with the potential to move as high as 1.470 billion bushels this marketing year. Total production this year is expected to reach 2.866 billion bushels.

Germany’s association of farm cooperatives expects the country’s 2019 wheat production to rebound 17.7% above last year’s drought-stressed crop, reaching 876.3 million bushels. But a round of recent hot, dry weather had the group downsizing its estimates by 3.4% from June.

Taiwan issued an international tender to buy 3.3 million bushels of U.S. milling wheat, with a deadline of July 23. The grain is for shipment between early September and early October.

South Korea purchased 1.1 million bushels of wheat from the U.S. and Canada in a tender that closed earlier today. Two-thirds of the total is expected to be sourced from the U.S. The grain is for arrival in early October.

Preliminary volume estimates were for 72,424 CBOT contracts, dropping another 27% below Monday’s final count of 99,325.

grainstable

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