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Afternoon Market Recap for Nov. 11, 2019

Trade triggers trouble for soybeans

Corn and most wheat contracts also stumble to start the week

Grain prices took a beating Monday, with corn prices down more than 1% and soybeans down nearly 1.5% in the session on a round of technical selling triggered by fresh concerns over U.S.-China trade negotiations. Most wheat contracts moved lower Monday. Kansas City HRW contracts were able to buck the overall trend with some modest technical buying that kept prices barely in the green.

Expect a wild weather ride this week, with daytime highs plummeting 20 to 30 degrees below normal across much of the central U.S. by midweek, then slowly recovering to near-normal temperatures by the end of the weekend. Another relatively dry week is in store for the Corn Belt this coming week, per the latest seven-day cumulative precipitation map from NOAA, although the eastern Corn Belt in particular should see small-but-measurable moisture through November 18.

Lingering concerns over unresolved U.S.-China trade negotiations put a pessimistic start to the week on Wall St., with the Dow dropping more than 100 points this morning before a round of positive earnings reports helped it carve out a 20-point gain in afternoon trading to 27,701. Energy futures were narrowly mixed, with crude oil down slightly while diesel firmed slightly. Gasoline moved the needle the most Monday, falling 0.5% to 1% lower this afternoon. The U.S. Dollar softened slightly.

USDA is closed today in observation of Veteran’s Day. That pushes the agency’s regularly scheduled reports back a day this week. Look for its weekly export inspection report out Tuesday morning and its weekly crop progress report out tomorrow afternoon.

Corn prices retreated another 1% Monday as agreeable harvest weather triggered some technical selling, as did spillover weakness from soybeans. December futures dropped 4 cents to $3.7325, with March futures falling 4.5 cents to $3.82.

Corn basis bids were mixed across the central U.S. as end-users continue to balance slow harvest pace and sluggish farmer sales with poor export demand. Bids moved as much as 7 cents higher at an Illinois processor and as much as 4 cents lower at an Iowa river terminal today.

European Union corn exports for 2019/20 reached 283.5 million bushels as of November 10, trending 18% higher year-over-year.

South Korea purchased 7.5 million bushels of corn in three private deals from optional origins but likely sourced from South America or the Black Sea region. The grain is for shipment between late December and late January.

Preliminary volume estimates were for 345,774 contracts, tumbling significantly below Friday’s final count of 617,188.

Soybean prices soured on the latest developments in ongoing U.S.-China relations (read on for details), which prompted some technical selling and caused prices to spill around 1.5% lower today. Harvest pressure contributed additional headwinds. November futures dropped 14.5 cents to $9.05, with January futures down 14 cents to $9.17.

Soybean basis bids were mixed Monday, spilling 3 cents lower at an Iowa river terminal while firming by 1 to 5 cents across a handful of other Midwestern locations today.

Conflicting statements from the Trump Administration over whether some tariffs will be lifted in the phase one trade deal has left the fate of U.S.-China trade negotiations in doubt. There is still some optimism a partial trade deal between the two countries will be signed as early as December, if contested details can be hammered out and a venue can be identified.

Darci Vetter, global lead with Edelman and former chief agricultural negotiator for the U.S. Trade Representative, is among those skeptical that significant progress is on the horizon, however. “The question is, what’s in [the deal]?” she said Monday morning, addressing the 2019 ABA Agricultural Bankers Conference. “I wouldn’t even choose to use the word deal. I’d go with ceasefire or truce.”

Nobody is arguing that China’s trade practices are fair, Vetter adds: “The question is, do we have the right tactics to address them?”

European Union’s 2019/20 soybean imports reached 176.4 million bushels as of November 10, which is trending mostly even year-over-year. EU soymeal imports are up 15% from a year ago, meantime, with EU palm oil imports down 18%.

Preliminary volume estimates were for 157,104 contracts, dropping moderately below Friday’s final count of 222,355.

Wheat prices were mixed but mostly lower after worries over export demand spurred some technical selling. December Chicago SRW futures dropped 4.5 cents to $5.0575, December Kansas City HRW futures firmed 2.25 cents to $4.2375, and December MGEX spring wheat futures lost 3.25 cents to $5.1525.

European Union soft wheat exports for 2019/20 reached 356.4 million bushels as of November 10, which is trending more than 50% above last year’s pace. EU barley exports are also up 38% year-over-year so far.

Russia’s wheat exports through the first nine months of 2019 are down 30% from a year ago, at 832.8 million bushels.

Ethiopia issued an international tender to purchase 2.9 million bushels of milling wheat, with a deadline of November 26, as the country continues to attempt to fill the gap from lower production due to drought this past year.

South Korea issued an international tender to purchase 2.2 million bushels of feed wheat from optional origins that closes November 12. The grain is for arrival in early March.

Egypt’s supply minister said the country plans to buy as much as 227.8 million bushels of imported wheat in its current fiscal year. The country’s strategic reserves are already sufficient through mid-March.

Preliminary volume estimates were for 122,242 CBOT contracts, falling moderately below Friday’s final count of 149,400.


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