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Afternoon Market Recap for Sept. 16, 2019

Corn, wheat ride booming energy wave higher

Soybean also hang on for small gains after China announced another purchase

Grain prices grabbed small to moderate gains to start the week, after booming energy futures caused some technical buying. Soybeans also edged higher after China purchased another 9.4 million bushels of U.S. soybeans, announced this morning.

Daytime highs in the central U.S. should come in significantly warmer than normal for this time of year through early next week, when they will finally regress to normal levels. The latest five-day cumulative precipitation map from NOAA calls for 1” or more rainfall throughout the Northern Plains through September 21, but rainfall totals elsewhere in the central U.S. will be much more stingy during this time.

Energy futures stole some headlines Monday after news of a coordinated attack on some Saudi Arabia facilities pushed crude oil, gasoline and diesel prices 10% to 14% higher this afternoon. That spike in energy futures created headwinds on Wall St., however, with the Dow dropping 130 points in afternoon trading to 27,088 on fears the move could slow the global economy. The U.S. Dollar firmed moderately.

Corn prices moved around 1.5% higher Monday on some technical buying partly prompted by a dramatic rise in energy prices today. Favorable weather forecasts prevented a bigger jump, however. December futures added 5.25 cents to $3.74, with March futures up another 4.5 cents to $3.86.

An uptick in farmer sales in recent days had corn basis bids falling 2 to 5 cents lower across several Midwestern locations Monday. Most locations held steady today, however.

Corn export inspections slumped week-over-week after reaching 16.6 million bushels, versus the prior week’s tally of 24.1 million bushels. As with soybeans, corn totals fell on the low end of trade guesses, which ranged between 14 million and 27 million bushels. Mexico was the No. 1 destination, with 8.6 million bushels.

Corn crop quality dropped 3 points last week, and analysts expect USDA to dock the crop another point in this week’s crop progress report, out later this afternoon. That would put current corn quality at 54% in good-to-excellent condition.

In the European Union, 2019/20 corn imports continue a relatively brisk pace after reaching 177.2 million bushels as of September 15 – trending 63% higher year-over-year so far.

Analyst APK-Inform cut its projections for corn production in Ukraine by 0.8%, still landing at a relatively large 1.320 billion bushels. Corn comprises nearly half of the country’s total grain production.

Preliminary volume estimates were for 177,558 contracts, sliding 21% below Friday’s final count of 225,648.

Soybean prices saw some technical buying due to a large sale to China, plus some spillover strength from corn and wheat. Favorable weather forecasts this week kept gains in check. November futures gained 1.25 cents to $9.00, with January futures adding another 1.5 cents to $9.1375.

Soybean basis bids were steady to weak, falling 2 to 5 cents lower across a handful of Midwestern locations Monday after seeing an increase in farmer sales in some areas.

For the third consecutive session, private exporters reported to USDA a large soybean sale to China for delivery during the 2019/20 marketing year, which began September 1. The latest sale is for 9.4 million bushels. That’s on top of 29.5 million bushels announced last Thursday and Friday, as well as 5.0 million bushels of soybeans for delivery to Mexico announced last Tuesday.

Soybean export inspections reached 24.5 million bushels for the week ending September 12, which was moderately below the prior week’s tally of 35.9 million bushels and on the low end of trade estimates that ranged between 22 million and 36 million bushels. China was the No. 1 destination, with 7.6 million bushels.

Ahead of this afternoon’s crop progress report from USDA, analysts expect the agency to lower soybean quality ratings by a point, to 54% in good-to-excellent condition as of September 15.

The U.S. soybean crush for August reached 168.085 million bushels, exceeding analyst estimates for two straight months. Last month’s total crush was fractionally behind July’s tally of 168.093 million bushels and well ahead of year-over-year results of 158.885 million bushels, making it the biggest August crush on record.

Preliminary volume estimates were for 142,515 contracts, dropping slightly below Friday’s final count of 159,521.

Wheat prices moved higher in tandem with corn after an attack on some Saudi Arabia oil facilities spiked energy futures more than 10% higher today and prompted some technical buying. December Chicago SRW futures gained 5.25 cents to $4.8875, December Kansas City HRW futures added 8 cents to $4.0775, and December MGEX spring wheat futures picked up 3.5 cents to $5.0750.

Wheat export inspections managed better totals week-over-week, with 16.9 million bushels, versus 15.2 million bushels for the week ending September 5. However, this week’s tally still landed on the low end of trade guesses that ranged between 14 million and 23 million bushels. Egypt was the No. 1 destination, with 3.4 million bushels.

Ahead of this afternoon’s crop progress report from USDA, analysts expect the agency to show 81% of this year’s spring wheat harvest complete, up from 71% a week ago. Analysts also expect USDA to report 8% of the 2019/20 winter wheat crop now planted, with individual estimates ranging from 4% to 15%.

European Union soft wheat exports for 2019/20 are trending 34% higher year-over-year after reaching 187.4 million bushels as of September 15. EU barley exports are also trending 26% higher year-over-year over the same period.

Analyst APK-Inform trimmed its wheat harvest forecast by 0.8%, for a total estimated production of 1.003 billion bushels.

Australia is predicting the country’s wheat exports will tumble 7.7% lower year-over-year, reaching 396.8 million bushels, as it continues to struggle with prolonged drought conditions.

Algeria issued an international tender to purchase 1.8 million bushels of milling wheat from optional origins but often buys considerably more grain than the nominal amount. The deadline is September 17, with grain for shipment starting in early November.

Preliminary volume estimates were for 65,830 CBOT contracts, dipping slightly below Friday’s final count of 71,015.

grainstable

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