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Afternoon Market Recap for March 20, 2019

Grain prices capture “spring greening."

Wheat leads the charge with gains of more than 1%, with corn and soybeans up fractionally

It’s the first day of spring, and grains spent the day in the green thanks to some short-covering in wheat, along with some light technical buying in corn and soybeans. Some wheat contracts finished the session nearly 2% higher, with other commodities finding much more modest gains.

A pattern of slightly above-normal temperatures across much of the central U.S. should prevail into early next week. The latest cumulative seven-day precipitation forecast from NOAA shows another 1” or more rainfall probable for much of the Corn Belt between today and March 27.

The Central Plains and Upper Midwest have hopefully seen the worst of flooding in recent days – now states such as Kansas, Missouri, Arkansas and Mississippi are bracing for their own round of problems as flood-laden waters make their way downstream. NOAA is predicting significant flooding in these areas. Additional rain and snowmelt in further north could compound current problems.

The Federal Reserve announced no interest rate hikes after its meetings concluded earlier today. That wasn’t enough to prop up the Dow, which slipped 48 points in afternoon trading to 25,839. Energy prices continue to rise, with crude oil up nearly 1% this afternoon and nearing $60 per barrel. Gasoline and diesel found more modest gains. The U.S. Dollar softened slightly.

Corn prices finished Thursday fractionally higher on some light technical buying. May and July futures each firmed 0.25 cents to close at $3.7150 and $3.81, respectively.

Corn basis bids were mixed Tuesday, moving 1 to 4 cents lower at some Midwestern locations but ticking 1 to 2 cents higher at several others today, amid generally sluggish farmer sales.

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show corn sales between 23.6 million and 51.2 million bushels for the week ending March 14.

For the week ending March 15, ethanol production eased fractionally from the week prior to an average of 1.004 million barrels per day. Totals also fall below the prior five-week average of just over 1.016 million daily barrels.

Ukraine’s 2018/19 corn exports have reached 736 million bushels as of March 20, up significantly from a year ago. The country’s total grain exports are expected to increase 24% year-over-year.

Flooding in the Plains and Midwest has negatively impacted the amount of grain traveling U.S. railways last week, which was down 21.7% year-over-year with 18,619 carloads. Cumulative totals for 2019 reached 232,915 carloads, which is 4% below last year’s pace.

Preliminary volume estimates were for 115,151 contracts, falling significantly below Tuesday’s final count of 278,990.

Soybean prices made small inroads Wednesday on some light technical buying, as U.S.-China trade negotiations are likely to resume next week. May and July futures each picked up 2 cents to close at $9.06 and $9.1950, respectively.

Soybean basis bids were mixed Tuesday, falling 2 to 9 cents across several interior river terminals but firming 2 to 5 cents at multiple Midwestern processors today.

U.S.-China trade talks are expected to resume next week, with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin heading to Beijing. It may be difficult to alter China’s stance on intellectual property policies, according to some sources. Overall, talks are said to be progressing positively, however.

China’s latest struggles with African Swine Fever could limit the country’s soybean import needs moving forward. A report earlier this month from the country’s ministry of agriculture indicated its hog herd is already down more than 16% from a year ago, and it’s unclear how ASF will continue to play out in the near future.

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show soybean sales totaling between 22.0 million and 64.3 million bushels for the week ending March 14.

Analysts also estimate USDA will report soymeal sales between 150,000 and 400,000 metric tons last week, plus another 8,000 to 30,000 MT of soyoil sales.

Malaysia’s palm oil exports March 1-20 have reached 925,431 metric tons, up 0.8% over the same period in February.

Preliminary volume estimates were for 76,214 contracts, down 41% from Tuesday’s final count of 130,207.

Wheat prices continued to firm Wednesday on weather-related concerns spilling out of key production areas in the Midwest and Plains, with some contracts climbing nearly 2% in the session. May Chicago SRW futures gained 8.25 cents to $4.6475, May Kansas City HRW futures added 8.25 cents to $4.44, and May MGEX spring wheat futures picked up 6.25 cents to $5.7025.

Ahead of Thursday morning’s USDA export report, analysts expect the agency to show wheat sales totaling between 11.0 million and 24.8 million bushels for the week ending March 14. Even at the high end of those estimates, wheat exports will struggle to keep pace with USDA forecasts.

Ukraine’s wheat exports for its 2018/19 marketing year, which concludes June 30, have reached 475.8 million bushels as of March 20.

Brazil’s government has agreed to import more than 27.5 million bushels of wheat from the U.S. and other origins without the usual 10% tariff attached to it. The move has drawn some criticism from Brazilian and Argentinian farmers.

Taiwan issued an international tender to purchase 4.0 million bushels of milling wheat from the U.S. that closes Friday. The grain is for shipment in May or June.

Jordan issued a tender to purchase 4.4 million bushels of milling wheat from optional origins after failing to buy a similar amount earlier this week amid low trader participation. The new tender deadline is for March 26.

China continues to attempt to draw down its 2013 imported wheat stockpile, selling another 37,000 bushels today, which was just 0.2% of the total available for sale.

Preliminary volume estimates were for 50,142 CBOT contracts, down another 41% from Tuesday’s final count of 85,047.

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