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Afternoon Market Recap for Oct. 16, 2019

Grain prices mixed midweek

Corn and soybeans slide lower, while wheat picks up moderate gains

Grain markets saw mixed results Wednesday, with corn and soybeans sliding lower amid harvest pressure and uncertainty over the latest round of U.S.-China trade negotiations last week. Wheat prices firmed on some technical buying, meantime, as Egypt made purchases at higher prices this week than it had earlier in October.

It’s been a relatively cold start to the month so far, but slightly above-normal daytime highs are building in the Plains and should arrive in the Midwest by the weekend. As the week closes out, expect very little moisture to reach the central U.S. Only some light precipitation is expected for parts of the western Corn Belt through Saturday, per the latest 72-hour cumulative precipitation map from NOAA.

On Wall St., a round of weak retail sales data and some lingering worries over the ongoing U.S.-China trade war were slightly offset by some strong earnings reports, leaving the Dow up 17 points in afternoon trading to 27,042. Energy futures moved higher on hopes that OPEC will extend supply cuts, leaving crude oil up nearly 1% this afternoon to back above $53 per barrel. Gasoline and diesel also trended higher Wednesday. The U.S. Dollar softened moderately.

Corn prices eased slightly Wednesday on technical selling prompted by harvest pressure, as traders shrugged off lower-than-expected quality ratings from USDA late Tuesday and a large sale reported to Mexico this morning. December futures slipped 1.5 cents to $3.9175, with March futures easing 0.75 cents to $4.0350.

Corn basis bids were steady to mixed Wednesday, moving as much as five cents higher at a Nebraska elevator and as much as 4 cents lower at an Illinois ethanol plant today.

Private exporters reported to USDA the sale of 9.0 million bushels of corn to Mexico. Of the total, 60% is for delivery during the 2019/20 marketing year, which began September 1. The remainder is for delivery in 2020/21.

For the week ending October 13, USDA moved corn quality from 56% rated in good-to-excellent condition a week ago down to 55%, matching analyst expectations. Current quality ratings suggest yield potential of 168.3 bushels per acre.

Corn harvest pace reached 22% complete this past week, versus the prior week’s tally of 15% and analyst expectations of 24%. That puts the 2019 harvest further behind the pace of recent years, including 2018’s 38% and the five-year average of 36%. Only 73% of the crop is fully mature at this time.

EIA’s weekly ethanol production report will be delayed until Thursday morning due to Monday’s Columbus Day holiday. Production has been in a general trend for the past month, bottoming out two weeks ago with a daily average of 958,000 barrels. November futures were down more than 1.25% this afternoon, to $1.394, after trade groups expressed major concerns with the EPA’s latest plans for lost biofuel demand, which deviate from what President Trump promised earlier in October.

Grains traveling the nation’s railways continue to fall below last year’s pace, with another 20,911 carloads this past week. Cumulative totals for 2019 reached 884,519 carloads, which is trending 6.1% lower than a year ago.

Growers hoping to get caught up on fertilizer applications after being stiffed by weather for 2019 crops may have to go back to the Cubs’ old moto: wait until next year. With more fall applications in jeopardy, what are the implications for fertilizer prices? Click here to learn more about what factors are currently in play in the latest Fertilizer Outlook column from Farm Futures senior grain market analyst Bryce Knorr.

Preliminary volume estimates were for 216,286 contracts, firming fractionally above Tuesday’s final count of 214,940.

Soybean prices fell moderately Wednesday amid building harvest pressure and reports from USDA yesterday afternoon that crop quality firmed by a point, bucking analyst expectations. November futures dropped 6 cents to $9.28, with January futures down 6.25 cents to $9.4225.

Soybean basis bids were steady to firm across the central U.S. Wednesday, gaining 1 to 5 cents across multiple interior river terminals and moving as much as 10 cents higher at an Indiana processor today.

Soybean harvest is now 26% complete – up from last week’s mark of 14% but still moderately behind 2018’s pace of 37% and the five-year average of 49%.

From a quality standpoint, analysts were expecting USDA to lower ratings by a point, but conditions instead improved by a point, with 54% now in good-to-excellent condition.

Preliminary volume estimates were for 193,007 contracts, moving below Tuesday’s final count of 237,268.

Wheat prices firmed on a round of technical buying Wednesday, following overseas markets higher and supported by a large purchase from Egypt announced earlier this morning. December Chicago SRW futures gained 6.25 cents to $5.1325, December Kansas City HRW futures added 4.25 cents to $4.2525, and December MGEX spring wheat futures picked up 5 cents to $5.51.

The spring wheat harvest is one step closer to completion, reaching 94% last week. That’s up from 91% a week ago, but that crop has been completely out of the ground by mid-October in recent years.

And winter wheat planting is moving right along, now at 65% complete – up from the prior week’s tally of 52% and in line with 2018’s pace of 64% and the five-year average of 65%.

Egypt purchased 14.9 million bushels of wheat in an international tender that closed earlier this week. More than half of the total was sourced from Russia, with the remainder coming from France and Ukraine.

Japan issued a regular tender to purchase 4.3 million bushels of food-quality wheat from the U.S., Canada and Australia that closes late tomorrow. Of the total, about 31% could be sourced from the U.S.

Preliminary volume estimates were for 85,603 CBOT contracts, bouncing moderately higher than Tuesday’s final count of 56,056.

grainstable

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