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Afternoon Market Recap for Feb. 13, 2020

Traders hold out hope for soybeans, while corn and wheat futures move lower

Grain prices were mixed but mostly lower Thursday. Soybeans represented the lone bright spot, carving out modest gains as the phase-one trade deal with China becomes enacted starting this weekend. Corn saw downward pressure from the prospect of bigger South American crops, meantime, and traders shrugged off a healthy round of wheat export data today, sending most contracts 0.5% to 1% lower.

A blast of arctic air will freeze parts of the central U.S. later tonight, bringing the coldest temperatures of the season so far to some areas. The latest 72-hour cumulative precipitation map from NOAA shows mostly dry conditions probable for much of the Midwest and Plains through the weekend, however. Further out, the agency’s 8-to-14-day outlook anticipates drier, warmer weather in store for the central U.S. from February 20 to 26.

On Wall St., investors are still skittish about the possible global economic impacts from China’s coronavirus outbreak, with the Dow easing 43 points in afternoon trading to 29,507. Energy futures were narrowly mixed Thursday afternoon, with crude oil up nearly 0.4% to stay above $51 per barrel. Diesel also found small gains, with gasoline easing slightly. The U.S. Dollar firmed slightly.

Corn prices dropped nearly 1% Thursday in a choppy session, as fading export sales this past week triggered some technical selling. March futures fell 3.5 cents to $3.7950, with May futures down 2.5 cents to $3.8475.

Corn basis bids were steady to slightly mixed Thursday, moving as much as 2 cents in either direction across Midwestern locations today.

Corn export sales for the week ending February 6 reached 38.1 million bushels, which was moderately below the prior week’s tally of 49.1 million bushels but in the middle of trade guesses, which ranged between 27.6 million and 51.2 million bushels. Last week’s total also slipped 9% below the prior four-week average. Japan was by far the No. 1 destination, with 15.1 million bushels.

Corn export shipments reached a marketing-year high, with 30.8 million bushels after jumping 31% higher than a week ago and 41% above the prior four-week average. Mexico (9.0 million), Japan (8.0 million) and Colombia (7.5 million) accounted for the bulk of that total.

Brazil’s Conab expects the country’s corn production for 2019/20 to climb to a record 3.957 billion bushels, moving 1.8% higher than January estimates and 0.5% above 2018/19 production, if realized. High prices, solid demand and favorable weather has created an uptick in planted acres, reaching a projected 44.479 million acres this season.

Consultancy Strategie Grains fractionally raised its estimates for 2019/20 European Union corn production from a month ago, to reach 2.649 billion bushels.

In Argentina, the Buenos Aires Grains Exchange estimates’ the country’s 2019/20 corn production will top 1.929 billion bushels in its first crop estimate of the season – its second-largest haul on record, if realized. Argentina ranks No. 3 in world corn exports.

U.S. weather forecasters predict ENSO-neutral conditions are likely to hold on through this spring and summer, with a 60% and 50% chance of that happening, respectively. Click here to learn more about how shifts in ENSO conditions can affect grain production around the world.

Preliminary volume estimates were for 415,094 contracts, trending moderately lower than Wednesday’s final count of 461,635.

Soybean prices got a modest boost from technical buying partly triggered by trade optimism. March futures rose 3.75 cents to $8.9625, with May futures adding 2.5 cents to $9.06.

Soybean basis bids trended 2 to 4 cents higher at two interior river terminals Thursday, while holding steady across other locations in the central U.S. today.

Soybean export sales sputtered, in contrast, slipping 8% below the prior week’s tally to 23.7 million bushels in old crop sales plus 200,000 bushels in new crop sales. The total was still good enough to inch 2% above the prior four-week average and hang on the low end of trade guesses, which ranged between 22.0 million and 36.7 million bushels.

Soybean export shipments were even more lackluster, tumbling 58% lower from a week ago and 50% below the four-week average, with 22.5 million bushels. Bangladesh was the No. 1 destination, with 3.2 million bushels.

U.S. soybean export shipments to China fell to a 10-month low, with just 2.5 million bushels for the week ending February 6. That was the lowest weekly tally since last April. China remains the world’s top overall soybean buyer for 2019/20, meantime.

Pay attention this weekend, according to Naomi Blohm, senior market adviser with Stewart Peterson. That’s because “with the February USDA report now out of the way, the next potential market-moving event stems around the important Feb. 15, 2020, Phase One trade deal date,” she writes in the latest Ag Marketing IQ blog. Will Chinese purchases of U.S. soybeans finally swing higher starting then? Click here to learn more.

Brazilian soybean production potential is on the rise, according to Agroconsult, which raised its estimates by 1.6% to reach 4.641 billion bushels – a record harvest, if realized.

Egypt purchased 41,500 metric tons of soyoil in a local tender that closed earlier today.

Preliminary volume estimates were for 399,343 contracts, moving moderately ahead of Wednesday’s final count of 346,603.

Wheat prices moved lower on a round of technical selling Thursday, with traders shrugging off a solid round of export data from USDA this morning. The strengthening U.S. Dollar has created some headwinds lately. March Chicago SRW futures dropped 3.25 cents to $5.4425, March Kansas City HRW futures fell 4.25 cents to $4.6675, and March MGEX spring wheat futures lost 4.5 cents to $5.2675.

Wheat export sales jumped 90% higher than a week ago and stayed 10% above the prior four-week average after totaling 23.6 million bushels in old crop sales plus another 1.6 million bushels in new crop sales. That tally nearly beat out all trade guesses, which ranged between 11.0 million and 25.7 million bushels.

Wheat export shipments also improved 25% week-over-week and 26% above the prior four-week average, with 18.6 million bushels. Nigeria was the No. 1 destination, with 3.6 million bushels.

The Strategie Grains consultancy has slightly trimmed its projection for European Union soft wheat production, now at 5.093 billion bushels, spilling nearly 0.9% lower from a month ago.

South Korea purchased 2.5 million bushels of feed wheat, likely from Canada, in a deal that closed yesterday. The grain is for shipment between late May and mid-June.

On the heels of a 2.2-million-bushel hard milling wheat purchase yesterday, Jordan issued an international tender to purchase another 4.4 million bushels from optional origins, with a deadline of February 18.

Preliminary volume estimates were for 171,854 CBOT contracts, sliding slightly below Wednesday’s final count of 186,566.

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