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Afternoon Market Recap for Sept. 17, 2019

More China purchases can’t lift soybeans

Corn and what also slump on a round of technical selling Tuesday

With Monday’s energy price hike dissipating, traders returned to watching weather forecasts and large global grain supplies Tuesday, which kicked off another round of technical selling that pushed grain prices down another 0.5% to 1.5% lower today. Soybean losses were limited as some fresh optimism arrived regarding U.S.-China trade relations, with another large export sale also reported this morning.

Daytime highs will clock in much warmer than normal over the next several days, particularly across the Plains. And per the latest 72-hour cumulative precipitation map from NOAA, much of the Midwest – especially the eastern Corn Belt – will be dry through September 20, although parts of Iowa, Minnesota and North Dakota could gather another 1” or more rainfall during that time.

On Wall St., bank stocks moved lower, pushing the Dow down 23 points in afternoon trading to 27,053. But losses were minimized as President Donald Trump signaled a U.S.-China trade deal could be inked soon. Energy futures fell as fears subsided somewhat over an attack on Saudi Arabian oil facilities earlier this week. Crude oil, diesel and gasoline all reversed between 3.5% and 5% lower this afternoon. The U.S. Dollar softened moderately.

Corn prices slid around 1.5% lower Tuesday on a round of technical selling prompted by falling energy futures, favorable weather forecasts and crop quality that held mostly steady this past week. December and March futures each dropped 6 cents to $3.68 and $3.80, respectively.

Corn basis bids were mostly steady to weak Tuesday, slipping 1 to 5 cents lower across a handful of Midwestern locations today. An Iowa ethanol plant bucked the trend after moving 5 cents higher to drum up additional farmer sales there.

In USDA’s latest crop progress report, out Monday afternoon, the agency’s assessment for corn quality stayed at 55% rated good-to-excellent, but the breakdown of those ratings shifted slightly, moving from 45% rated good and 10% rated excellent a week ago to 44% rated good and 11% rated excellent this past week.

Physiologically, 93% of the crop is now at dough stage, which is still a bit behind 2018’s pace of 99% and the five-year average of 98%. Other maturity stages highlight just how far behind this year’s crop really is, meantime. Just 68% of the crop is dented, versus a five-year average of 87%. Eighteen percent is mature, versus a five-year average of 39%. Harvest progress has reached 4%.

Following attempts from the Trump Administration to broker a deal between the agriculture and energy sectors regarding a biofuels policy, U.S. biofuel credits have trended 30% higher this past week, with D6 credits trading at 26 cents each as of Tuesday.

In China, dwindling corn stocks are making it increasingly unlikely the country will implement plants for a nationwide mandate to blend 10% of its fuel with ethanol. China’s domestic corn stockpile has shrunk from 7.874 billion bushels in 2017 down to current levels of about 2.205 billion bushels.

Preliminary volume estimates were for 212,197 contracts, rising slightly above Monday’s final count of 208,317.

Soybean prices fell moderately lower despite another large sale to China and slightly lower quality ratings from USDA. Favorable weather forecasts and spillover weakness from corn and wheat were enough to move the needle into the red. November futures tilted 6.25 cents lower to $8.9375, with January futures down 6.5 cents to $9.0725.

Soybean basis bids were steady to mixed Tuesday, moving as much as 5 cents higher and 8 cents lower across Midwestern locations today.

For a third straight business day, private exporters announced to USDA a large soybean sale to China. The latest was for nearly 9.6 million bushels for delivery during the 2019/20 marketing year, which began September 1. President Donald Trump described the latest round of purchases as “big league,” but said a deal between the two countries may not arrive until near or just after the 2020 presidential elections.

Soybean crop quality fell a point for the week ending September 15 – in line with analyst expectations – to 54% in good-to-excellent condition.

Physiologically, 95% of the crop is setting pods. That’s up from 92% a week ago, but in a typical year, the entire crop has reached that maturity stage by mid-September. And just 15% are dropping leaves, versus 2018’s pace of 50% and the five-year average of 38%.

Preliminary volume estimates were for 137,937 contracts, slipping fractionally below Monday’s final count of 138,127.

Wheat prices followed corn and soybeans lower on a round of technical selling as traders returned their focus to large domestic and global stockpiles. December Chicago SRW futures fell 4.5 cents to $4.8425, December Kansas City HRW futures dropped 6.25 cents to $4.0275, and December MGEX spring wheat futures dipped 2.5 cents to $5.0525.

Spring wheat harvest is progressing slower than analyst estimates, reaching just 76% last week. That’s up from 71% a week ago but still well behind 2018’s pace of 96% and the five-year average of 93%.

And winter wheat planting progress has reached 8%, starting off sluggishly compared to 2018’s pace and the five-year average, both at 12%.

Ethiopia issued an international tender to purchase 14.7 million bushels of milling wheat from optional origins, with a deadline of October 23. The country continues to struggle with drought conditions that have lowered its wheat production substantially.

Japan made offers to purchase 4.7 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closes Thursday. Of the total, 53% is expected to be sourced from the U.S.

Preliminary volume estimates were for 63,434 CBOT contracts, sliding slightly below Monday’s final count of 65,822.

grainstable

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